Push and Pull are production systems that are characterized by organizing manufacturing based on demand and that differ precisely in the choice of when production starts: before or after the product is purchased.
In the Push system, the product is manufactured in advance. Therefore, this model is directly related to demand forecasting, since it is essential to know in advance and with maximum precision what products customers will require, when and in what quantity.
In contrast, the Pull system adapts production to effective demand, which means that the product is manufactured only when a purchase is generated, that is, once the company receives the request from the customer, whom it You are given a specific delivery date. The adoption of this method, which does not contemplate the availability of finished product stock, is common in companies specializing in products made on demand or completely personalized. It is common, for example, in the automobile industry.
¿Which strategy is more effective Push or Pull?
These two options are opposed, so it would be logical to ask which one the company should opt for. As always, both the Push system and the Pull system have advantages and disadvantages.
Production costs are lower as it can be produced on a larger scale.
They usually have a faster and more flexible production system, thus adapting to possible high product demands.
Its biggest negative point is that the forecasts made to buy the demand are not correct. This can lead to having a large amount of stock with the implicit cost that these carries.
Warehouse costs are low since there is practically no work with stock.
There is no need to make forecasts or calculations about what to buy, since this step is carried out when the demand for the product is a reality.
The problem with having this type of system is that, given a strong growth in demand, it is not possible to carry out all the production, thus appearing a stock break that can cause an immediate economic loss.
Faced with this dichotomy, there are many companies that are betting on implementing Push-Pull systems, as is the case of the company Dell. In this case, the raw materials are pre-ordered in advance and stored, while the assembly of the equipment is not carried out until the order is received from a customer.
Despite having treated them as two opposing systems, it is very common for companies to use mixed systems. We can think of a brand of electronic devices. To supply large stores, it is possible that you make demand forecasts and want to carry out that Push process that puts your product in front of your potential customers in stores. This also allows them to have that physical and visual presence in the windows that helps them in their marketing work.
However, to this you can add an online sales and distribution channel, which works on demand, in which the most personalized models have a place and which, due to sales volume, do not consider it profitable to produce, inventory and distribute in mass. to sell in general stores.
It is common to work with Push techniques and with predictive models to which systems are added to know the demand that we are having in real time and be able to adapt to it. Achieve adjusted forecasts that allow that initial push of merchandise and, at the same time, be able to respond in real time to the differences that are occurring with respect to the forecasts.
Lastly, another mixed technique is to Pull to the distribution centers close to the points of sale and, from there, supply the final points of sale according to the demand they are having in real time.
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