What are push and pull models?
A push-based supply chain model utilized demand forecasting to predict what customer demand will be, so products are sourced, produced, and shipped before demand materializes. This means that the product is available as soon as customer demand is presented. A pull-based model works in the opposite way, where products are sourced, produced, and shipped only once customer demand is present.
So which model is better?
Push-models are generally favored when products are mass-produced, or for products where demand will remain relatively constant, such as groceries. The vast majority of our traditional retail stores utilize push methods, as the product is available in store before customers request and purchase it. Pull methods are common among products with high levels of customization, or for products where demand remains consistently low.
In reality, however, no supply chain is entirely "push" or entirely "pull". Instead, supply chains utilize a combination of the two to meet demands as necessary. Supply chains that are more push-focused are unable to accurately forecast demand in all cases and must utilize pull-based methods to meet unexpectedly high demands. Supply chains that are more pull-focused cannot wait until a customer requests a product to begin sourcing and manufacturing, or else the wait for items would be too long for customers. Instead, parts or components are often sourced and manufactured in advance (which is push-based) and await customer demand to be completed or assembled as needed.
Ultimately, a delicate balance of both push- and pull-based models are required to ensure companies are able to compete in today's market. Whether that balance leans towards push or towards pull is dependant on the type of products being provided.
Example of a push-pull supply chain
Consider a company which produces custom-made clothing for customers. This is a pull-focused supply chain, as clothing cannot be made before the customer orders it, or else it is no longer custom made. However, preparations are made using push-focused methods to ensure a fast turnover time for the customer's order. Demand forecasting is used to predict which fabrics will be most in-demand, and these fabrics are created in advance and stored until they are needed for a customer's order. Additional supplies such as buttons, zippers, and thread are procured in advance using push-focused models to ensure that supplies are available immediately upon a customers order. In this case, even though the supply chain leans towards pull models, push-focused methods are also utilized to ensure that demands are met.