Question 1 - While Pull based flow is considered better than Push based flow in many ways in general, it is not always that a pull system can be implemented. Please mention in your own words how and why the pull system is not practically better than push system in certain situations. 

 

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Pull system

Is a control oriented system that operates by receiving signals that more production is needed .(Make to order)

In pull system the company doesnot stock any inventory in advance as the customers order is received the production process starts by purchasing the required parts.

The challange is that if we are producing the products as per the customer orders .the parts is of any specific make or characteristics which is not easily available then we are unable to produce the finished product as per our commitment and the companies image is lost due to nonconfirmity of committed dates to deliver the product.

In such cases push system is given byin instead of pull system.

 

In any business model, the primary aim of the seller is to ensure that the profits made are post the costs incurred in running the setup. For the buyer, the lookout will be the quality of the service/product against the price and time invested.

 

In a push process, the traditional way of “make to stock” is carried out where the resources, materials and energies are aligned to create a flow and send it down stream. The push happens based on the demand forecast and believes in piling up the inventories.

In a pull process, the lean way of “make to order” thrives with the customer demand initiating the flow. The pull triggers the stages in process to get the input/output at the stipulated time, delays are managed and no choking between the stages.

 

From order till delivery of a product/service three major areas needs a control.

Cost structure – With the onset of Lean thinking in business, organizations have focused more on savings and utilization. A pull strategy believes in reducing the cost with (7) waste management. Mergers and acquisitions are cases when companies push each other resources to deliver better options to the customers. Create a new market of hidden consumer base.

The other aspect is of economies of scale - cost advantage due to increased output. A business can capitalize the benefit of the same by creating a demand in the market through value proposition.

Work in process – In a pull process, WIP tries to align with the takt time demand. Cycle time is the key area to be dealt with for efficient throughput. Push mode will encourage teams working for R&D and in creative fields to pursuit their ideas/thoughts relentlessly with no rush. Assuming SMART is used to derive the goal.

The workforce up skilled and ready for the anticipated work scheduled is another push concept. Load leveling can be used to address the variation in the demand.

Value proposition- Quality is another by product of disciplined pulling of the flow. When the demand is understood and inspection is built in at stages of a process, customer gets what he is willing to buy. Pushing will help with many choices to the customer and can also bump customer off-guard when he/she is delighted with something not asked for.

 

Well, it all depends on the FLOW. You can still opt for a hybrid version of the tug(push and pull) with dynamic interface of the system to quickly adapt to the changing demand and the cost to keep up. Having said that, value offered to the customer is more important than the price he/she pays for the service/product. 

Some of the situations in which the "Push" system is generally successful would be one or more of the following. No two situations are the same, even if some appear similar.

 

1	Demand is easily and accurately predictable	Due to an accurate forecasting system, the risk of carrying “dead” inventory is less. Moreover, by planning and pushing a steady volume to the market, supply chain and production are also steadied, thereby eliminating delay losses.
2	Conversion costs between products is low due to late point differentiation	If in spite of an accurate forecasting system, there is a difference in the final product type demanded, the stock of Product A can be converted to Product B at a very low cost and pushed on to the market.
3	Very short time demanded from order to delivery	If a very short delivery time or instant delivery from the point of time an order is placed is demanded by the market or customer, there is no option except to supply from stock and avoid revenue losses due to short supplies.
4	Products do not deteriorate during storage	When there is no constraint on “shelf life”, the risk of inventory to be written off is low. Further more, inventory is being used up sooner rather than later, reducing cost of delays.
5	Carrying cost is less than cost of lost business	When a manufacturer is able to make up for the expense of carrying inventory by exploiting the predictable demand, the likelihood of profiting, “net-net” is high when compared with the potential loss of business, customers and reputation by becoming Just-Short-Of-Time rather than Just-In-Time
6	Long, geographically global supply chains with their own unpredictability	Even with the best e-Kanban-powered pull system, the long winding, supply chain that traverses the entire globe is so packed with potential “delay-bombs”, that some “good-old” stock, which can be pushed becomes the life-saver
7	Shipping costs can be optimised by shipping in bulk	When the costs of transporting raw material or components or sub-assemblies can be whittled down to almost next to nothing by using up (say) full container space, stocking up and pushing is not a bad idea
8	Demand profiles across time periods are static	When there is no fluctuations between days of a week, weeks of a month and months of an year, it is profitable to stabilise production and supply chains by planning and pushing an average volume periodically to the market

What is a push system ?

In a simplistic term,

In push, we keep on making items even if they are not needed for immediate consumption.  Those excessive items are kept as inventory in the warehouse

 

What is a pull system?

In pull, items are made as per the need or in right quantities.  As we near the replenishing stage, a visual signal is sent to the relevant department/team to replenish the items as per customer demand. This visual signal is known as Kanban.

 

Whether a push model is needed or a pull-model is needed can be determined by the type of business that we do. Some business might involve both push and pull. Others might have pull-only model.  Let us compare and contrast, the key take-away points in using a push model and a pull model

 

S.No	Push	Pull
1	Store items excessively (overstocking) in a warehouse	Store items as needed only
2	Production is forecast driven based on patterns/trends	Production is Demand Driven based
3	No WIP limit exists	Fixed limit on WIP(Work In Progress)

 

As you can see above, having pull model effectively eliminates storage waste, provide cost efficiency, effective maintenance and so on... Hence you would think that it would be a good option to have with. However, while we can see the advantages of having pull systems in many situations, there are places where it may not be best suited.

 

Case 1:

Let us take an example from a Hospital. A hospital should have some basic and essential items in abundance. Some of the items could be bandage, plaster, cotton, syringe bottles, saline bags, gloves, nose masks, footwear bags (plastic/polythene) and so on....  Therefore a storage place is needed to have this inventory of items.  Hence a push model is used here.

 

These kind of items need to be in plenty and cannot wait for a patient to arrive at the hospital (read admitted into the hospital), and the hospital staff then buying the essential commodities

required for that patient.  Therefore a pull model will not do justice here. 

 

Case 2:

Other cases, where pull model will not work is that when there is a customer demand and as your (pull) process starts working, if the raw materials needed for the system does not meet the pace required to complete the product , by not being available on time, then the pull model will be a failure. Therefore, in a pull model, it is imperative that all the components of the product/system should be in top condition so that it meets the customer demand at the right time.

 

Case 3:

In a pull model or Kanban, if the visual signal is complex or not properly elaborated to the employees, then the model would be a failure.

 

Let us take an example to depict this scenario.  In a software project, a Kanban board was setup.  In every sprint (a standard working duration in days), the team had to do some amount of work.  Each backlog item (work to do from a list of items specified by the product owner in a prioritized order) in the sprint was put in the kanban board as follows. The kanban board served as visual representation of how each backlog item taken in the given sprint progresses.   

 

To Do	Yet to Start	In Progress	Completed	Done

 

The issue with the above board was people joining the project newly were confused with the various terminologies used in the kanban board. They were either new to this agile way of working or were aware of this Kanban methodology or they were freshers coming out of college, knowing only coding.  There was no proper education of the kanban board used for the project.  Let us understand the meaning of each terminology used in this kanban board.

 

To Do	It talks about the backlog items that need to be done.
Yet to Start	It conveys the items that are not yet started
In Progress	It conveys the items that are in progress
Completed	It conveys the items for which coding and unit testing is done
DONE	It conveys the items which are in completed state and for which system testing is  done, acceptance criteria is met, zero sev1/se2 defect and customer signoff obtained and hence in a potentially shippable state.

 

Now, the new joinees and the freshers alike, began to misunderstand the two terms – Completed and DONE.  Kanban starts in this project, when each backlog item written in a sticky paper in the “To Do” section moves to the subsequent section or column.  While moving through that sequence, the project members repeatedly got confused with “Completed” and “DONE”.

 

Where the coding and unit testing was done, the backlog item ('Flight Status') was wrongly moved to “DONE” because for quite a lot of people they only had waterfall experience and in waterfall, they had been doing only of coding and unit testing. So those people thought “completed” and “done” as same.

 

To Do	Yet to Start	In Progress	Completed	DONE
Flight Cargo handling
			Passenger Reservation
				Flight Status

 

 

That showed that enough Knowledge Transition was not given to the new joinees (to the project) /freshers ( to the Organisation). This resulted in wrong portrayal of achievement to the customers and this got bombed when the sprint demo (at the end of the sprint-demonstration of what is working) happened with customer UAT team and the customer was livid.

 

Another key factor was that, majority of the team considered “To Do” to take care of functional backlog items only and not non-functional backlog items.  This was incorrect as the Sprint would consider all items that were picked up during Sprint planning session.       

                               

As we can see here, Kanban signal if not properly elaborated or too complex, can be a failure

 

Conclusion:

Thus we can say that pull system is not suitable in certain cases /scenarios.

 

Supplier not aligned with the manufacturer is a practical challenge, as planning and scheduling is not happening at close to shop floor, leading to making pull system difficult. Change in the incharge personnel is another challenge as that will create lack in consistently maintaining the practices enabling a pull based system.

Pull based system cannot be implemented in all circumstances as it will increase the lead time of the processes. There would be certain part of process that can be managed with pull system, but certain processes need to be managed through push, to balance between push and pull. In case of healthcare complete pull system would not be practical due to varying health condition and demand.

Push System

- involves future demand forecasting inventory to meet customer requirements. 

- Production is fully dependent on companies future prediction 

- Requires large space for inventory management 

- a lot of resources are required for maintaining inventory. 

-based on predictive demand forecast the production starts.

- cost incurred in managing inventory is high.

- there is a chance of huge loss to company if the market values comes down.

- takes longer time to convert inventory into cash.

- it is based on material requirement planning 

 

Pull System

- it works on the principle of JIT ( just in time ) production.

- the production starts with customer order 

- in short it can be said as, the production starts whenever the requirements arrive.

- it does not require larger area to store the inventory 

- wastage is comparatively reduced in pull system.

-However a minimum and maximum inventory level is maintained.

 

Apart from this sometimes it is difficult to manage pull system. Moreover there are some automotive parts which involves a lot of process to get the end part may create order failure which impacts a company in the name of line stoppages. In case of some EPO or emergency purchase order it becomes really difficult to work effectively on pull system.

In these situations push system works better. So in present scenario companies follow both push and pull system depending on the supply component.

When to go for Push system

1.      Push system should be applied to seasonal products where the company can have a small daily capacity but through proper planning and forecasting could ship very large quantities when their product is in high demand. If we apply pull strategies to seasonal products, we can run out of capacity when the demand for that product is high. Other option is to increase manufacturing capacity, but most of the time in off seasons you will not utilize full capacity.

2.      Products with small demand uncertainty, as the forecast will provide a good indication of what to produce and keep in inventory. Eventually resulting in lesser lead times. When forecasting is very close to the demand graph, having a push system reduced the lead time drastically.

3.      Products with high importance of economies of scale in reducing costs. Some products cost very less when produced in bulk, instead of small frequent orders.

4.      When your products are exported, it is better to deal with push system. If we go for pull system, there will be way too many jets and vessels to be booked for transporting your products.

5.      When customer is not aware about the products. Example of push marketing can be seen in department stores that sell fragrance lines. The manufacturing brand of the fragrance will often offer sales incentives to the department stores for pushing its products onto customers. This tactic can be especially beneficial for new brands that aren't well-established or for new lines within a given brand that need additional promotion. After all, for many consumers, being introduced to the fragrance at the store is their first experience with the product, and they wouldn't know to ask for it if they didn't know it existed.

6.      Push system can be used when the brand loyalty is low. Push system can help in increasing the loyalty, by shifting money used in advertisements and endorsements to improving products and resource allocations.

Overall no company will survive solely on Push or pull system, there has to be hybrid of both the systems. Percentage importance of both the system varies from industry to industries.

While Pull based flow is considered better than Push based flow in many ways in general, it is not always that a pull system can be implemented.

Before proceeding to answer this question let us discuss about what is push or pull system? Both push and pull systems known as Kanban system and used for supply chain management, inventory control etc. A pull system is opposite of the traditional push system. A pull system is the one in which, customer order process withdraws the neeeded items from a supermarket and the supplying process produces product to replenish what was withdrawn.

 

From the definition of pull system , it can  be seen that many manufacturing enterprises traditionally operate in a push system. this refers to the fact that raw materials and subassemblies are pushed through the production process with the anticipation that they will be needed by customer.

Now the main question is how large should be push or pull system or kanbans be? if too small then purchase orders are placed out of stock most of the time and when too large, WIP inventory builds up & incurs carrying costs that may include a tax burden as well.

A system can be designated area on floor , space on self, a rack, a bin or any place that is convenient to draw from and resupply. For example on assembly lines small bins are provided with cards. Another example is of CBU Yard, where it is full of final Cars which are ready to dispatch, after dispatch CBU Yard again filled by fresh new cars which are coming after final inspection from assembly line. This is also a pull system whenever CBU Yard is empty, new cars are being produced to fill the gap.

However pull system is not practically better than push system in certain situations. Let us see how and why is this possible with an example.

This is particularly true for seasonal  products. An air conditioner manufacturer may sell 95% of its products in a three month span. if it were to operate on a strict pull system it would be necessary to greatly expand manufacturing capacity-  capacity that would not be needed the other nine months of the year. instead the company will likely spend most of the year building inventory that it hopes to sell during the rush months.

Same case is of icecream manufacturing, soft drinks manufacturing company. Their sale ratio is much higher in summer than in winter. 

if we talk about car manufacturing companies, here also both system work together during planning and assembly it depends on the situation and forecasting. Company may sell 20 to 30 % more of its cars on various occasion like Dipawali, Holi, New Year. if it were to operate fully on pull system it would be necessary to greatly expand the manufacturing capacity, that would not be neeeded the other time of the year. Instead the company builds inventory in remaining time to cope up the situation that hopes to sell during rush times.

 

 

 

Kanban - Origin

Kanban is popularly considered as a key term in the world of Lean processing and is referred to as a "Pull” system. It started off as a "Signaling Card", which controls the production flow using "Pull" system, that requires to release materials and resources into production as and when the customer demands them. The origin of this system, also often referred to as JIT (Just In Time) method,  may be traced back to 1940s, when a Toyota engineer, Taichi Ohno developed Kanban to improve operational efficiency.

The Kanban "pull" system helps in keeping the inventory of materials and resources under control. However the “Pull” system works only when the business is well dependent on the customer orders. Whereas if we are producing "to stock", it is referred to as a "Push” system”.

 

“Pull” and “Push” systems

Supply chain Management in today's world is greatly supported by the advances in Information Technology that greatly enables to move towards as much "Pull" systems from "Push" system. One interesting analogy that I came across was... the example for "Pull" system is an elevator that starts operating only if a passenger calls it. It could be even a single passenger for whom the process will be performed by the elevator. Whereas, if you consider an escalator that keeps moving, irrespective of whether there are passengers or not is more akin to a "Push" system. (Not considering the fact that even elevators, nowadays are equipped with sensors to start them only when a passenger steps on to it!) 

Very often in various businesses, there could be combination of "Push" and "Pull" systems. 

In an ideal "pull" system, when the order comes from the customer, the signal moves up the supply chain and the processes are activated to produce that part or product. This is possible if all the processes are synced up and able to feed their subsequent processes to meet the order delivery requirements, without having the need to pile up inventory. However in reality, there could be issues between processes to get a perfect synchronization to line up the materials and resources and could result in delay in fulfilling the order. This would necessitate to follow a combination of “pull” and “push” systems, maybe to maintain inventory of critical parts or high lead time parts. The more we are able to overcome these issues, we will tend towards more perfect "Pull" system.

 

More examples on “Pull” and “Push” systems

One of the modern world examples for pull system is on IT enabled services. For example, in the processing of Health Insurance claims, the entire supply chain (predominantly human resource based), is activated based on the order received. Similarly if there is an order for a major software development, a specific project plan is charted and the resources engaged accordingly until the order is fulfilled.

There could be situations where we could be working based on forecast.

One example is on having to stock up consumer durable goods, whose demand may surge during festival seasons. Here we do not wait for each customer order to execute a "pull' system.

Another example could be on cultivation and processing of certain foods that are very seasonal dependent. Since the availability is in abundance during a certain season, maximum processing will be done and preserved as either in-process or final inventory.

 

Conclusion

To conclude, a "Pull" System is always a better one, but is constrained by certain practical factors. We should make attempts to overcome these factors by good governance and usage of Technology and move as much as possible towards a “Pull” system. However, a forced fit of “Pull” system may be detrimental in certain instances, where it makes sense to live with certain “Push” systems, fully or partially.

1. Pull System :- Manufacturing system in which production is based on actual daily demand (sales), and where information flows from market to management.

2.       Push System :- Manufacturing system in which production is based on a projected production plan and where information flows from management to the market.

 

 

Pull system and push system are majorly used to maintain the inventory levels which in turn impacts the business.  

 

Pull system is always producer centric while push system is customer centric. Pull system is not always successful in every industry. Sometimes customer centric is also important for the business to grow.

Examples: a) In case of medical care, sometimes push system should be implemented for essential medicines which are widely used in disaster cases occurs due to natural calamities etc, the essential medicines should be available readily with supply chain forecast to serve the needy. In this case pull system is not that successful as the patient needs the medicines urgently and if this is not forecasted leads to loss of lives.

 

Push system is used in food supply business like hotels, restaurants etc, if the customer demands for a specific food variety and it is not ready will hits the business.

 

 

Push system always requires a good forecasting system or else the inventory costs goes up which impacts business.

Kanban – Pull System:

 

Kanban Pull System is one of the systems used to improve the efficiency and effectiveness of the Process. This system can be used to bring LEAN into the processes.

 

“The literal meaning of the word Kanban refers to visual cards” These visual cards are actually the cards that indicates in it what is required in what qty & when is it required from the process step that is just the previous one. There are visual cards from all the process steps, except from the very first step.

The previous process step is then refers to this card to deliver what is required & in what qty & delivers only on the requirement. 

 

The advantages of this system are many. Few of them are it could help avoid piling up inventories of all types such as Raw material, WIP & Finished. It connects each process steps in a very effective manner, it generates high level communication effectiveness, it also helps indicate the potential issues in the process steps proactively & it helps in minimizing lead times.

 

This is an effective system which brings a lot of cost effectiveness to the organization as well as to even individual. Kanban system reduces complexities in the process flow & thus helps the system be clean & more transparent. In other way it also helps reducing noises & nuisances factors in the system.

Kanban system also helps higher interaction with in each steps very importantly including final step of interaction with customer/consumer. 

 

 

While just-in-time techniques or pull mechanisms help in reducing inventory and are considered more efficient, sometimes it may not be practically possible to have just-in-time techniques due to operational constraints. For e.g. it might make economic sense to order parts or raw materials in bulk, especially due to lower per unit shipping cost and bulk purchase discounts. In such situations, the money saved in terms of inventory might just get consumed in terms of higher shipping costs!

Secondly, it is not always possible to have a perfect JIT technique that can deliver the product to the customer exactly when he wants it. Usually JIT techniques would involve some waiting time for the customer and in today's hyper competitive scenario, very few companies like Mercedes might be actually able to command customer loyalty to the point of making them wait for a product, even as competitors are flooding the market with similar products of comparable price and quality.

Many a times, it is the logistics that makes a product successful, even more than its features. i.e. easy availability near one's place of residence, low waiting period, low price made possible due to large scale manufacturing etc. In such situations, flooding the market might be a better strategy than pull based manufacturing!

To start with, it has been proven that pull system works well in many scenarios. It also leads to savings, less inventory etc.. However, it cannot be implemented everywhere.

In todays world the customer expects to be served immediately - the one who is able to satisfy the demand at that moment is the one who gets the business and in turn the money. Take the case of a normal person who needs some medicine. Can the manufacturer then work on getting one set of pills only for this customer made and shipped - is this feasible? or doable? 

currently, we have seen an outbreak of influenza / dengue etc - in such cases - the demand exists and is known - to a large extent can be forecasted to some degree of accuracy and the end product is needed at a particular point in time. It would not help if the end user has to wait for the product to be manufactured and delivered.

Take the case of vegetables of fruits that are being produced - here too, the demand is to some extent forecastable to some degree of accuracy and have a longer lead time - they cannot be produced in the pull methodology.

Take another case of diamonds - these are generally not produced for one person at a time - they are mined, cut and kept ready in the hope of finding a buyer

Overall, the thought is that where the demand for the product is to some extent forecastable, where the lead time is high and the demand needs to be fulfilled immediately, pull system may not work. The supporting ecosystem (eg: the supermarket which supplies the vegetables and fruits / the drugstore which sells the drug etc) may use the pull system, but the product will be manufactured / grown and kept ready for sale even before the customer has demanded it..

 

Push flow (make-to-stock) production/manufacturing based on market forecast and it is not based on actual demand. There is no control/limit on WIP

A push flow involves taking the product directly to the customer. 

Push System Examples
Trade show promotions: encourages retailer demand
Showrooms : Selling directly to customers
Wholesale retailer: Negotiation with retailers to stock the product
Supply chain: allowing retailers an efficient supply
FMCG : lower value items selling

 

Pull flow (make-to-order) production/manufacturing based on actual customer demand or based on Just in time. in Other ways Limit the WIP.

In Pull flow, if downstream signals to upstream on demand, then upstream signals to produce/manufacture the materials.

Customer actively looking the products and orders. this strategy requires highly visible brand. by branding customer demand can be increased.

Pull Flow Examples
Advertising and mass media promotion : By promotional campaigns gain customer demand
Word of mouth referrals : influence customer for referrals and create demand
Customer relationship management
Sales promotions and discounts

Why pull system is not practical in some situations

Cultivation is an example for this scenario. A farmer cultivates paddy, he is not worried about demand, he crops and sold to agents. Here only push system is possible pull cannot be implemented. main reason a crop take minimum 3 months to cultivate.

In a bakery, puffs cooked first and sold approximate quantity based on periodical sales. This is also a push system

 

From above 2 examples, wherever customer demand cannot be predicted or have higher variations, in those industries pull system cannot be implemented.

 

 

 

 

General Context:

PULL SYSTEM - Customer Pulls / PUSH SYSTEM - Supplier Pushes 

 

Though a pull system is ideal, I can think of one scenario where a push system would be best.

 

SCENARIO 1: A chat process call center keeps requiring staff as call volume increases or a new client is added. Requirements for recruitment are (i) 12 std education (min) (ii) Written English (iii) Typing speed

An internal training module already exists for process training.

Case 1: In case of a pull system, operations requests for new staff which has to wait for recruitment time + relieving time + training time, resulting in business loss due to this time.

Case 2: In case of push system, staff can be recruited trained and kept ready as buffer. Operations requirement will have an instant requirement fulfillment.

 

SCENARIO 2: A pull system will not work in a retail industry as the customer will arrive when they please and will expect the products to be ready for selection.

 

 

Though PULL system is very much desired for any industry due to its many +ve impact on the business , but it is not always a strategic move especially during the 1) new product launching in the market 2) Any competitor launching a new product .

Till the customer get into the product and company had enough voice /need of a customer points to rework, the company has to push the product into market. It may be through advertising , branding , keeping the stock visibility at customer end etcs.

I am considering advertisement and branding is a push mechanism. After the product went into the mind of customer then , it is wiser to shift to Pull. Always company has to closely look the competitor move / listen to voice of the customer and take a decision on pull or push. This is in view of market.

 

But if we consider the internal supply chain , then with a better planning the external push system can be managed thorugh internal pull. 

 

Pull System: Manufacturing/ Assembling process or system in which production is based on actual demand (sales), and where information flows upstream in the Value stream.

Example- Just In Time (JIT) System

 

Push System: Manufacturing / Assembling process or System in which  production is based on a projected production plan and where information flows downstream in the value stream.

Example:- Material Requirement Planning (MRP)

 

Advantages:

Pull System	Push System
Limited Inventory- as it is only on demand	High Inventory-  unprocessed Planned inventory will always be there
Customer Centric- As it is based on demand from Customer- Upstream flow	Producer Centric- as it is based on the projection and the production is planned and the flow is downsstream
Improve Cash Flow- as there is less wastage and higher productivity can be brought about	Make to Stock- As theer is always a “burden” of stock based on projections for trends or a foreseen event
Make to Order	Forecasting Demand

 

Disadvantages

Pull System	Push System
Balanced System must be in Place	Can generate large quantity of scrap(defectives) before errors/ defects are are discovered.
Setup times will greatly impact throughput	Requires maintenance of large and complex databases
Every job is a high stress rush order	Requires diligence to maintain effective product flow

 

The basic difference between pull and push is that a pull system initiates production as a reaction to present demand, while push initiates production in anticipation of future demand. It is evident in practice that both the systems are beneficial or disadvantageous, depending on the type of business process. Thus a fast food restaurant / QSR , where the orders a are placed by the customer in random discretion, with the process of assembling burgers / Pizza out of frozen ingredients ,runs on a pull system, while a catering service, which receives a fixed advance order for a specific number of people,  operates a push system.

In a continuous-flow process, ongoing materials planning is not essential and Pull system work well. Order releases do not change frequently, so a rate-based approach can be used. For example At the shop floor level / QSR, JIT materials-flow discipline combined with pull release is effective as providing the customer the final product within the defined delivery time is of prime importance.

However, In complex environments , where there is a possibility of variation in lead time for inwards as against demands, Pull techniques cannot cope up. Also, It becomes difficult to provide JIT as material flow becomes too complex if shop floor control requires higher levels of tracking and scheduling. For example, A QSR that assembles a burger(Pull System), may have no means of lot tracking—pegging lots to specific customers. But  there may be a  special regulatory or quality control reasons for identifying a lot’s identity, when there is customer complaint about a single product with different ingredients from different lots. – This is when the Push system becomes more relevant as the final product is planned from a well projected and planned inventory flow.

It is however necessary to mention here that, even in the above mentioned example, the floor manager is eventually able to find the source of defect , as the a good QSR management understands that both the systems are not mutually exclusive, and each has its pros and cons. The best solution is often a hybrid that uses the strengths of both approaches. And hence the Push system is used up to the Shop floor, so that, as much as possible the there is no variation or lapse in lead time for inwards of material required to run the production for a defined period. The said raw products or primary products are frozen and kept in prescribed temperatures in the shop floor or production area, in batches, to be used as and when required. Thus the raw product can be tracked to the batch which was used when the final product was served. The Pull System which saves on wastages is applied from the juncture where it suits the business best!!

 

Background:

Push Strategy – is one where an organization depends on its ability to forecast the demand to drive its production. It does not Limit the Work in progress, production continues and is stocked. In a push system, the production order is scheduled and the material is pushed into the production line.

Advantage:

• production does not stop for want of materials.
• company is fairly assured that it will have enough product stocked to complete customer orders

Disadvantage:

• demand is difficult to forecast accurately. So, this could result in shortage of products (lost sales) or excess inventory.
• Storing and liquidating inventory could be an issue resulting in dead stock.

 

Pull Strategy – is one where an organization depends on the demand to drive its production. Finished goods are not produced without a specific customer order. It puts an upper limit on the Work in Progress (dictated by the demand) and intermediates and materials are not acquired /replenished before existing items have been used. In a pull system, the start of each product assembly process is triggered by the completion of another at the end of production line.

Advantage:

• Since the customer order is in hand the exact quantity to produce is known. It prevents Over production and inventory management related issues

Disadvantage:

• Production may stop for want of materials. If supply response is not quick enough to meet actual demand fluctuations, then there could be lost sales.

 

Most organizations use a combination of the two i.e. a Push Pull Strategy.

• It uses a Push strategy to drive its Material Requirements Planning (MRP) process to ensure that it has enough materials for production while trying to maintain the minimum possible inventory.
• Then it uses a pull strategy (per customer demand) to produce the finished good.

 

Example:  A Coffee shop uses Push to stock up on raw materials – Milk, creamer, sugar, coffee powder, but uses a pull to produce a mug of coffee.

 

Why the pull system is not practically better than push system in certain situations?

 

There are situations where a Push system may be better than a pull system. Push System is better suited for Services and products that are at the bottom of the pyramid i.e. high volume consumption and meant for the masses.

 

Example:

Service Industry.

 

An email service provider like Gmail or Yahoo forecasts its demand like number of users creating accounts or storage required by users to build up its storage capabilities, database sizes, servers accordingly. As soon as the usage reaches a level they would increase the capabilities solely based on their demand forecast but not on any actual demands.

 

Pull strategy would help in case of customized software development scenario where a customer would place an order for development of specific software for his need.

 

Manufacturing Industry

 

Push method is more suited when one is manufacturing complex, high variety products which tend to have a lot of work in progress (WIP). Also, products produced for the masses like FMCG goods (toothpaste, soap, shampoo, Demand forecast based push strategy would be better.

 

Pull strategy would help niche product development like customized cars, laptops and so on.

Episode 2, Question 1 - While Pull based flow is considered better than Push based flow in many ways in general, it is not always that a pull system can be implemented. Please mention in your own words how and why the pull system is not practically better than push system in certain situations. 

The two promotional strategy which is applied to get the product to the target market are Push and Pull Strategy. People often juxtapose these two strategies, but they are different, in the way consumers are approached. The term is derived from logistics and supply chain management. However, their use in marketing is not less. The movement of a product or information is the essence of push and pull strategy. While in Push strategy, the idea is to push the company’s product onto customers by making them aware of it, at the point of purchase. Pull strategy, relies on the notion, “to get the customers come to you”.

 

BASIS FOR COMPARISON	PUSH STRATEGY	PULL STRATEGY
Also Called as	Outbound strategy. Since focus is more towards outside reaching the customer	Inbound strategy, since focus is inwards building a brand reputation, etc. to pull customers
Meaning	Push strategy is a strategy that involves direction of marketing efforts to channel partners. Targets the specific audience about movement of products/services and informations through intermediaries to end customer	Pull strategy is a strategy that involves promotion of marketing efforts to the final consumer. Customers / buyers do lots of research over the net and approach the company / intermediaries for the product.
What is it?	It is about devising a plan / ways to place the product to the customer by ways of advertisement.	Create awareness which often resides on websites for customers to become curious and do research. Also creates brand visibility.
Means of communication	Email/Print  outs / Broadcast – a form of advertisements	Customers do researches on the product spreaded by word of mouth,  etc
Objective	To make customer aware of the product or brand.	To encourage customer to seek the product or brand.
Demand Creation	No demand is created. Stocks the products for customers to get awareness & buy	Demand is created by the shopper/ buyer / end customer.
Channels	A direct post card/ Pamplets / email offers, Sales force, Trade promotion, money etc attracts customers to their place.	social networking, blogging, word of mouth, strategic placement of a product, media coverage , Search engines – Do research – buy online
Emphasis on	Resource Allocation	Responsiveness
Suitability	When the brand loyalty is low.	When the brand loyalty is high.
Lead Time	Long	Short
Cost Effectiveness	Expensive as it has to frequently disturb customers by propagandizing the product.	Cost efficient. SEO pulls the end customers. Focus Budget on this to pull customers.
Search for next sales	Yes	No
ROI	Weaker and stays out for a shorter period as long as marketing is live.	Stronger & Lasts longer
Example 1 - Direct Response Print and SEO	You run Direct Response Print offering a free trial for your product and the prospect either visits a landing page or calls to place an order.	You focus on Search Engine Optimization and use key words on your site that are relevant to your product or service. A shopper finds your site online and calls you and places an order.
Example 2 - Direct Mail and Social	You mail out a coupon offering a 20% discount with a limited-time offer. The customer goes online to purchase and uses the offer code they find on the postcard or they call you to purchase.	You mail out a coupon offering a 20% discount with a limited-time offer. The customer goes online to purchase and uses the offer code they find on the postcard or they call you to purchase.
Example 3 – Benchmark Excellence ambassdors Glossary	Benchmark uses intermediaries to build glossary to create awareness & learning’s to the end customers.	Benchmark uses broadcasting messages, online content to pull the customers by building a reputation, brand visibility on the Website

 

Why You Need Both

 

Successful marketers rely on the strength of each approach and often use them together. You need Push to reach out to those who might not have heard of your service or company. A Push approach also is needed for communicating with your qualified leads, lapsed customers and existing customers to increase sales. You need Pull to attract those in the research or buying stage who are searching for your product or service and to promote your business as a thought leader.

Conclusion

Top multinational companies like Amazon, Forbes, Coca-cola, Intel, Nike and many others employ both push and pull strategies effectively. When push strategy is implemented with a well-designed and executed pull strategy, the result is phenomenal, as it generates consumer demand.

Moral of the story:

 

If push strategy is hare, then pull is the turtle.

 

Thanks

Kavitha