Compare Advantages of Push and Pull-Based Supply Chains Essay

Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.

It is becoming apparent that the ever changing environment in the global marketplace requires a swifter response time from businesses and their supply chains. The era when production was moved overseas, so businesses can take advantage of low-cost labor is coming to an end, because businesses are not only competing on price but also on time. The owner of Zara, a Spanish clothing store knows this first hand, and has turned supply chain management on its ear, making his company the “envy of the industry” (Ferdows, Lewis, & Machuca, 2004).

Success for many organizations depends on the firm’s ability to balance product and process changes while exceeding customer expectations for improved cost delivery and quality. In lieu of these issues firms have started to implement principles of supply chain management. Supply chain management mainly involves managing the flow of incoming materials, manufacturing operations, and downstream distribution has to be in alignment that is responsive to change in customer demands eliminating a surplus of inventory.

A supply chain is a net work of firms. Thus, each firm in the chain should build its own supply chains to support the competitive priorities of its services or products. Two distinct designs used to competitive advantage are efficient supply chains and responsive supply chains. Efficient supply chains work best in environments where demand is highly predictable. The focus of the supply chain is on efficient flows of services and materials keeping inventories to a minimum. The firm’s competitive priorities are low-cost operations, consistent quality, and on-time delivery. Responsive supply chains designed to react quickly in order to hedge against uncertainties in demand. Work best when firms offer a great variety of services or products and demand predictability is low. Typical competitive priorities are development speed, fast delivery times, customization, variety, volume flexibility, and top quality. Tables below show the environments and design features that best suit each design.

1. Push Strategy: Most companies use the forecast approach today, in what is called a “Push system”. Companies forecast to feel confident that the goods they order will both find willing buyers and not run out unexpectedly soon. In the Push world, decision points occur at every reorder. How much should be purchased? In other

Specialisation. Inventory allows each of a company’s plant to specialise in the products that it produce. Instead of manufacturing a variety of products, each plant can manufacture a product. Then the finished products can be ship directly to customers or to a warehouse for storage. By specialising, each plant can gain economies of scale through long production and cost savings in transportation. The specialized facilities known as focused

Supply chain management has created much enthusiasm for late years for various reasons. Numerous supervisors now understand that moves made by one individual from the chain can impact the gainfulness of all others in the chain. Firms are progressively thinking as far as contending as a feature of a supply chain against other supply chains, as opposed to as a solitary firm against other individual firms.

17. The marked increase in product offerings, which allows for more customer choice, creates logistical challenges in terms of identification, storage and tracking. Another interface involves the amount of particular SKUs to hold. Marketers often prefer to carry higher quantities of particular items because this reduces the likelihood of stockouts. Product design is often the purview of marketers and can also have important implications for logistical effectiveness and efficiency.

BMW’s build- to- order (BTO) system, KOPV (in English, customer orientated sales and production process) fixes orders into the production system at the dealer, and offers customers a realistic delivery date based on production capacity. The system ensures a well-planned logistics chain, but not all of BMW orders are BTO, with a high number of build-to-stock (BTS) in the US and China, for example. Nevertheless the company applies the same delivery priority to BTO and BTS vehicles. Rather than rearranging the supply chain to move vehicles in a “fast lane” or “slow lane”, BMW adheres to a stable plan. It generally benefits the company as well, since BMW produces cars in more efficient batches and avoids premium logistics costs for distribution. It also tends to help logistics providers by allowing them more time to organize assets for more efficient routes and backhaul

Database systems that will help them keep track of products availabilities. This will also help management to make better decision when to entice customers with discount sales and other technics to help drive down their inventory items.

27. The push/pull view of the supply chain is useful when considering strategic decisions relating to supply chain design, because it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.

Effective supply chain management involves a though and current knowledge of any company. Analyzing market trends and correctly forecasting the potential changes in sales in the upcoming season is necessary to stay on top of changes in any organization that could affect the organization bottom line down the road. In addition, communicating those potential changes to the rest of the supply chain (upstream and downstream) is imperative if the company want to get the maximum possible profit margin while still maintaining product quality and presenting a legitimate value proposition to your customers (Zidane, 2016).

North West Company will move towards a “pull strategy” within its supply chain. Pull production is based on actual or consumed demand and individual store managers will monitor this. The benefit of localization for North West will be a higher inventory turnover rate. The benefit for customers will be a more customized shopping experience based on their community. The potential risks are there are high costs involved in implementing a new database system and procurement decisions will be divided between category managers and store managers. We will implement a new database system and train store managers to purchase inventory based on local and regional needs. This system will allow stores to be a part of

Effective supply chain management can provide an important competitive advantage for a business marketer, resulting in improved communication and involvement among members of the chain, increased motivation, and decreased costs. Tracking the movement of and demand for components used to manufacture a product across a variety of potential and actual suppliers, provides insight and the ability to respond instantly to shortages, surpluses, and changes in market conditions. It seeks to optimize production, decrease manufacturing time, minimize inventory, streamline order fulfillment, and reduce cost.

Push and Pull are two different strategies used in production logistics. “Push” strategy is characterized by an approach in which production and inventory decisions are based on long-term forecasts whereas “Pull; strategy is characterized by demand of the customers. Push strategy schedules work releases on the basis of demand whereas pull systems authorize work releases based on the system status. In push strategy, the product is “pushed down” to the next level of manufacturing, regardless of whether it is needed or not whereas in pull strategy, the manufacturing of a product is only completed when there is a demand for the product. Margherita Corniani explains push and pull strategies as, “A push strategy refers to the development of processes that emanate from the company and go towards the market: the company invents, develops and proposes a product that is destined to find purchasers. Supply is therefore sustained by the company. A pull strategy is the opposite, because it refers to processes that start from the market and go towards the company: demand requests supply and ‘pulls’ it out of the company. We