View source for Push–pull strategy

{{Short description|Business terms}}
{{Redirect|Push and pull}}
[[File:CONWIP English.png|thumb|390x390px|The original meaning of push and pull, as used in [[operations management]], [[logistics]] and [[supply chain management]]. In the pull system production orders begin upon inventory reaching a certain level, while on the push system production begins based on demand (forecasted or actual demand). The [[CONWIP]] is a hybrid between a pure push and pure pull system.]]
[[File:Technology-Push Market-Pull.png|thumb|390px|The image shows a technology push, mainly driven by internal research and development activities and market pull, driven by external market forces.<ref name="martin044">{{cite book |title= Managing Innovation and Entrepreneurship in Technology-based Firms |last= Martin |first= Michael J.C. |year= 1994 |publisher= Wiley-IEEE |isbn= 978-0-471-57219-0 |page= 44 |url= https://books.google.com/books?id=fnE7R732COMC}}</ref>]]
The business terms '''''push''''' and '''''pull''''' originated in [[logistics]] and [[supply chain management]],<ref name="hinkelman">{{cite book | title = Dictionary of International Trade – Handbook of the Global Trade Community | author = Edward G. Hinkelman & Sibylla Putzi | publisher = World Trade Press | year = 2005 | isbn = 978-1-885073-72-3 | url = https://books.google.com/books?id=vylCkqTg7H0C}}</ref> but are also widely used in [[marketing]]<ref name="peter132">{{cite book |title= A Preface to Marketing Management |last= Peter |first= J. Paul |author2=James H. Donnelly  |year= 2002 |publisher= McGraw-Hill Professional |isbn= 978-0-07-246658-4 |page= 132 |url= https://books.google.com/books?id=KhQjP6KZ9GQC}}</ref><ref name="dowling266">{{cite book |title= The Art and Science of Marketing |last= Dowling |first= Grahame Robert |year= 2004 |publisher= Oxford University Press |isbn= 978-0-19-926961-7 |page= [https://archive.org/details/artscienceofmark0000dowl/page/266 266] |url= https://archive.org/details/artscienceofmark0000dowl|url-access= registration }}</ref> and in the hotel distribution business.
[[Walmart]] is an example of a company that uses the push vs. pull strategy.
== Supply-chain management ==
{{Main|Supply chain management}}
=== Complete definition ===
There are several definitions on the distinction between push and pull strategies. Liberopoulos (2013)<ref name=":0">{{Citation|last=Liberopoulos|first=George|title=Production Release Control: Paced, WIP-Based or Demand-Driven? Revisiting the Push/Pull and Make-to-Order/Make-to-Stock Distinctions|date=2013|url=https://doi.org/10.1007/978-1-4614-6777-9_7|work=Handbook of Stochastic Models and Analysis of Manufacturing System Operations|pages=211–247|editor-last=Smith|editor-first=J. MacGregor|series=International Series in Operations Research & Management Science|volume=192|place=New York, NY|publisher=Springer|language=en|doi=10.1007/978-1-4614-6777-9_7|isbn=978-1-4614-6777-9|access-date=2021-05-02|editor2-last=Tan|editor2-first=Barış}}</ref> identifies three such definitions:
# A pull system initiates production as a reaction to present demand, while a push system initiates production in anticipation of future demand.
# In a pull system, production is triggered by actual demands for finished products, while in a push system, production is initiated independently of demands.
# A pull system is one that explicitly limits the amount of WIP (works in progress) that can be in the system, while a push system has no explicit limit on the amount of WIP that can be in the system.
Other definitions are:
* ''Push'': As stated by Bonney et al. (1999) control information flow is in the same direction of goods flow
* ''Semi push'' or ''Push-pull'' : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt every fixed period.
* ''Pull'' : Succeeding node makes order request for preceding node. Preceding node reacts by producing the order, which involves all internal operations, and replenishes when finished.
* ''Semi-pull'' or ''pull-push'' : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt immediately. There are several levels of semi-pull systems as a node can have stock at several layers in an organization.<ref>{{cite journal|last1=J.|first1=Ashayeri|last2=R.P.|first2=Kampstra|title=Demand Driven Distribution: The Logistical Challenges and Opportunities|date=2005|issue=Department of Econometrics and Operations Research Tilburg University}}</ref>
=== Information flow===
With a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with historical ordering patterns from [[retailer]]s.  It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays (the [[bullwhip effect]]), unacceptable [[service level]]s and product obsolescence.
In a pull-based supply chain, procurement, production and distribution are demand-driven rather than to forecast. However, a pull strategy does not always require [[make to order]] production. [[Toyota Motors Manufacturing]] is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed. In Toyota's case, [[Kanban cards]] are used to signal the need to replenish inventory.
A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is sometimes known as the ''push–pull boundary''.<ref name="harrison">{{cite book | title = The Practice of Supply Chain Management | author = Terry P. Harrison, Hau L. Lee and John J. Neale | publisher = Springer | year = 2003 | isbn = 978-0-387-24099-2 | url = https://archive.org/details/practiceofsupply00terr | url-access = registration }}</ref> However, because of the subtle difference between pull production and make-to-order production, a more accurate name for this may be the ''[[customer order decoupling point]]''.  An example of this is [[Dell, Inc.|Dell]]'s [[build to order]] supply chain.  Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The decoupling point would then be at the beginning of the [[assembly line]].
* Applied to that portion of the supply chain where demand uncertainty is relatively small
* Production and distribution decisions are based on long term forecasts
* Based on past orders received from retailer's warehouse (may lead to bullwhip effect)
* Inability to meet changing demand patterns
* Large and variable production batches
* Unacceptable service levels
* Excessive inventories due to the need for large safety stocks
* Less expenditure on advertising than pull strategy
In a marketing ''pull'' system, the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company [[Ford Australia]]. Ford Australia only produces cars when they have been ordered by customers.
* Applied to that portion of the supply chain where demand uncertainty is high
* Production and distribution are demand driven
* No inventory, response to specific orders
* [[Point of sale]] (POS) data comes is helpful when shared with supply chain partners
* Decrease in [[lead time]]
* Difficult to implement
=== Use of pull, push, and hybrid push-pull strategy ===
Harrison summarized when to use each one of the three supply chain strategies:
* A push based supply chain strategy is usually suggested for products with low demand uncertainty, as the forecast will provide a good indication of what to produce and keep in inventory, and also for products with high importance of [[economies of scale]] in reducing costs.
* A pull based supply chain strategy, usually suggested for products with high demand uncertainty and with low importance of [[economies of scale]]s, which means, aggregation does not reduce cost, and hence, the firm would be willing to manage the supply chain based on realized demand.
* A hybrid push–pull strategy, usually suggested for products which uncertainty in demand is high, while [[economies of scale]] are important in reducing production and delivery costs. An example of this strategy is the furniture industry, where production strategy has to follow a pull-based strategy, since it is impossible to make production decisions based on long-term forecasts. However, the distribution strategy needs to take advantage of economies of scale in order to reduce transportation cost, using a push-based strategy.<ref name="harrison" />
=== Examples in ''push'' and ''pull'' ===
Hopp and Spearman consider some of the most common systems found in industry and the literature and classify them as either push or pull
* ''[[Material requirements planning]]'' (MRP) is a push system because releases are made according to a master production schedule without regard to system status. Hence, no prior [[work in process]] (WIP) limit exists.
* ''Classic [[kanban]]'' is a pull system. The number of ''kanban'' cards establishes a fixed limit on WIP.
* The ''classic base stock system'' is a push system because there is no limit on the amount of work in process in the system. This is because backorders can increase beyond the basestock level.
* ''Installation stock'' is also a push system as are echelon stock systems because neither imposes a limit on the number of orders in the system.
* ''[[CONWIP|CONstant work in process]] (CONWIP)'' is a pull system because it limits WIP via cards similar to ''kanban''. An important difference from ''kanban'' from an implementation standpoint is that the cards are line specific rather than part number specific. However, from a push-pull perspective, CONWIP cards limit WIP in the same manner as ''kanban'' cards.
* (K, S) systems (proposed by Liberopoulos and Dallery<ref>{{Cite journal|last1=Liberopoulos|first1=George|last2=Dallery|first2=Yves|date=2002|title=Base stock versus WIP cap in single-stage make-to-stock production–inventory systems|url=http://link.springer.com/10.1023/A:1014503725395|journal=IIE Transactions|volume=34|issue=7|pages=627–636|doi=10.1023/A:1014503725395|s2cid=59469286}}</ref>) are pull systems if K <∞ and are push systems otherwise.
* POLCA systems proposed by Suri are pull systems because, like ''kanban'' and CONWIP, WIP is limited by cards.
* PAC systems proposed by Buzacott and Shanthikumar are pull systems when the number of process tags (which serve to limit WIP) is less than infinity.
* MRP with a WIP constraint (as suggested by Axsäter and Rosling) is a pull system.<ref>{{cite journal|last1=Hopp|first1=Wallace J.|last2=Spearman|first2=Mark L.|title=To pull or not to pull: what is the question?|journal=Manufacturing & Service Operations Management|volume=6|issue=2|pages=133–148|doi=10.1287/msom.1030.0028|year=2004|doi-access=free}}</ref>
Liberopoulos (2013)<ref name=":0" /> also classifies common systems according to different definitions on the distinction between push and pull.
== Marketing ==
An advertising push strategy refers to a situation when a vendor advertises its product to gain audience awareness, while the pull strategy implies the aims to reach audiences which have shown existing interest in the product or information about it.<ref>{{cite journal|last1=Hosbond|first1=Jens Henrik|last2=Skov|first2=Mikael B.|date=15 November 2007|title=Micro mobility marketing: Two cases on location-based supermarket shopping trolleys|url=https://link.springer.com/content/pdf/10.1057/palgrave.jt.5750058.pdf|journal=Journal of Targeting, Measurement and Analysis for Marketing|volume=16|pages=68–77|doi=10.1057/palgrave.jt.5750058|via=Palgrave Macmillan Ltd|doi-access=free}}</ref> The difference between "push" and "pull" marketing can also be identified by the manner in which the company approaches the lead.  If, for example, the company were to send a sales brochure, that would be considered pushing the opportunity toward the lead.  If, instead, the company provided a subject matter expert as a speaker for an industry event attended by targeted leads, that could be one tactic used as part of a strategy to pull in a lead by encouraging that lead to seek out the expert in a moment of need for that expertise.
== Hotel distribution ==
{{Unreferenced section|date=April 2024}}
The online world has brought this pull–push decision to the hotel distribution business.
* ''Push strategies'' in the hotel distribution business imply that hotel inventory is placed for the distributors or resellers outside the hotel system in one or several extranets that belong to these distributors (online travel agencies, tour operators, and bed banks). The inventory must be therefore updated in these extranets. The hotel servers receive less traffic preventing server crashes but booking must be transferred to the hotel system.
* ''Pull strategies'' are based on distributors interfacing with the hotel property management system. In this case the inventory is "pulled" from the hotel (or hotel chain) system. This method provides a much more precise picture of the real availability and saves time loading the bookings but, requires more IT development and a bigger server (dedicated one).
== See also ==
* [[Supply and demand]]
* [[Digital marketing]]
* [[Publish/subscribe]]
* [[Issue tracking system]]
* [[Lean thinking]]
* [[Decision making]]
* [[Marketing strategy]]
* [[Marketing mix modeling]]
== References ==
{{reflist|2}}
{{DEFAULTSORT:Push-pull strategy}}
[[Category:Supply chain management]]
[[Category:Strategic management]]