Push or pull?

10/13/2010

Push or Pull?
Predict what customers will say or let them talk
Efficiency is a matter that has been worrying every single company for decades. Since the appearance of Scientific Management formulated by F. W. Taylor around 1910, this concept has been a big concern for enterprise managers. Even though, not all of them execute these ideas in the same way, they do share a commonprinciple: to anticipate a need and push resources towards it. But, are the “push” systems the best approach? The principal assumption of “push” systems is to consider that the demand can be anticipated so that the necessary resources to meet it can be mobilized beforehand in order to reach the most efficient and reliable production system. This kind of strategies supposes a rigidity that limits theinnovation and learning of the process. Sometimes it also restricts the creativity of workers, turning them into simple tools. In a world that requires a constant evolution and innovation, and where demand becomes more unpredictable every day, “push” systems, which make harder to implement incremental process innovations quickly and which strongly rely on a foreseeable demand, must let “pull”strategies take the lead.
Figure 1. Push vs. pull diagram. [1]

A new approach While many companies still count on demand prediction to distribute their efforts, others embrace a more flexible approach, which pull resources considering the needs of the market at each moment. This strategies, called “pull” systems, were born at Toyota Motor’s lean-manufacturing system in the 1950s, whereresources were pulled into the production line as needed, instead of producing large inventories. This model does not affect only manufacturing enterprises and supply chain, but it also has a relevant impact in other fields such as media or pharmaceutical R&D. From a whole supply chain viewpoint, deciding whether a particular supply chain is push or pull is often difficult and generally depends on theperspective of what constitutes the supply chain and where particular participants are placed in the chain. For example, the manufacture of Toyota automobiles is heralded as a leading example of a demand driven supply chain. However, the mining of the iron mineral for ultimate manufacture of automobiles is not. At some point in most supply chains, in their widest sense, demand push meets demandpull, and at this point inventory accumulates. This point is referred to as the push-pull interface or as the supply chain decoupling point.

Pull-type supply chain management is based on the demand side such as Just-in-Time (JIT). While inventory is kept to a minimum, products can be supplied with short lead times and at high speed. At the point where "Pull type" starts to supply operationstriggered by actual demand, it is like an elevator. An elevator starts when a button is pressed even if there is only one passenger. On the other hand, the "Push type" can be considered as an escalator. An escalator continues to supply (push) regardless of whether there is actual demand (passenger). Pull strategies can be applied in very diverse industries Media, and television in particular,represents a clear example of the evolution from push to pull systems. While regular television is based on the prediction from TV producers and executives of what would the viewer like to see, newer concepts are not. Some new providers offer television on demand directly on your TV, and others, such as Netflix or even television channels through their websites, allow direct internet streaming of moviesand TV shows. These newer systems are fundamentally using a pull strategy in the way they deliver the service. They provide all the necessary resources and wait for the customer to tell them what he needs. Li & Fung apparel company can illustrate another example of pulling strategies. Instead of creating a classical supply chain management, which reduces the number of partners, this company is...