Supply Chain Management: Push and Pull Based Chains

4000 Words Sep 28th, 2012 16 Pages
SUPPLY CHAIN MANAGEMENT: PUSH AND PULL BASED CHAINS

INTRODUCTION
Fierce competition in today’s global markets, the introduction of products with shorter life cycles, and the heightened expectations of customers have forced business enterprises to invest in, and focus attention on, their supply chains. This, together with continuing advances in communications and transportation technologies (e.g., mobile communication, Internet, and overnight delivery), has motivated the continuous evolution of the supply chain and of the techniques to manage it effectively.
The supply chain is a flow of materials, information and money through a network of suppliers, manufacturers, distributors and customers. A supply chain consists of all the stages
…show more content…
The results of the study indicated little change in technology was required to improve performance, other than further development of EDI and POS systems. However, the study identified a set of best practices which, if implemented, could substantially improve overall performance of the supply chain. As Kurt Salmon and Associates (1993) found: "By expediting the quick and accurate flow of information up the supply chain, ECR enables distributors and suppliers to anticipate future demand far more accurately than the current system allows". Through implementation of best practices they projected an overall reduction in supply chain inventory of 37 percent, and overall cost reductions in the industry in the range of $24 to $30 billion.
The successful adoption of ECR for a manufacturer depends on their ability to maintain manufacturing flexibility which enables them to match supply with demand. Key to this flexibility is a process that tightly integrates demand management, production scheduling, and inventory deployment to allow the company to better utilize information, production resources, and inventory (Weeks and Crawford, 1994).
A further development from ECR was the concept of continuous replenishment (CRP). CRP is a move away from pushing product from inventory holding areas to pulling products onto grocery shelves based on consumer demand (ECR Performance Measures Operating Committee, 1994). Point of purchase transactions are
Open Document