Wednesday, October 7, 2009

Push or Pull?

Push or pull? That is a question every supply chain needs to answer. Before you do, it is important to understand what it means & how it affects the supply chains. Understanding what it means depends a whole lot on the context. It also changes the question from push or pull to a question of where should the inflection occur.

Push or Pull as a Business Model:




Push or Pull in a Single Enterprise Supply Chain:



However, in the context of Internet based retail operations, order-inventory interface can move to almost any position. The retailer can choose to fulfill customer orders from the inventories in their own regional warehouses or distribution centers, or, they can choose to fulfill customer orders directly from their suppliers in what is called a drop-ship model.

Push or Pull:

For supply chains, then the question is not push or pull, but rather where in the supply chain should be inflection occur? What is the optimal point where the supply chain changes from a push-based supply chain to a pull-based supply chain. All supply chains must be a combination of push and pull processes -- purely push or purely pull supply chains exist only in theory (imagine a purely pull-based supply chain that must start prospecting for minerals to make steel to make automobiles after an order is placed!).

Deciding where the inventory-order point must be placed is a matter of analyzing much more than just the supply chain operations. The products, market conditions, demand patterns, competitive and other external market pressures must be understood and analyzed to make such a decision. The decision affects the operational costs, response times to fulfill demand, agility (ability to react to changes in demand), as well as flexibility (ability to react to changes in product design or demand location, for example). There are no standard templates, but there are some helpful matrices using the product & demand patterns that aid this decision. We will discuss these matrices in this next article on the subject.


© Vivek Sehgal, 2009, All Rights Reserved.


  1. I think following this drop ship model is very cost productive to any retailer and supplier as it rids off any overhead costs involved in the stocking of products that can add a bigger profit margin for both. This is the very concept that entails a lot of same day courier services London to follow.