The dynamics between a supplier and a customer

Background

"Push-Pull" refers to the dynamics between a supplier and a customer.  In this discussion, suppliers and customers may be internal – within the organization – or external. 

Suppliers "push" products to their customers by marketing; customers "pull" products from suppliers by placing orders.

A "push" strategy may be interactive, as in the case of a telephone call to a customer.  It may be non-interactive, in the case of a commercial message through the media.  The key point is that a "push" strategy markets finished goods from "warehouses".

A "pull" strategy waits for and responds to customer demand.  This approach, if coupled with sufficiently quick production to meet customer demand, may require no pre-production and no warehoused inventory.

A prime example of a company using mixed – "hybrid" – strategy would be Dell Computer.  Raw materials – components – are pre-ordered and warehoused.  Despite their marketing "push", the computer is not assembled until an order is placed – so the production strategy is "pull".  There is a boundary at the start of the assembly process.
 

Use in Lean Manufacturing

A goal in lean manufacturing is to use a hybrid push-pull system.  This means that:

  • Do not build until an order is placed (whether from an external or internal customer)
  • Do not store products or raw materials
  • Receiving an order for a product triggers orders for its raw materials
  • Low cost and high volume products may be pushed; high cost and low volume products may be pulled
  • It is important to define boundaries between the push and pull systems

For example: you manufacture three models of a widget.  Half the cost of a widget is one component, where each model uses a different but expensive alloy.  Every widget also uses some inexpensive, standard fasteners.  You likely keep the fasteners in stock, but place orders for the expensive alloy component only when a customer orders it.

By Oskar Olofsson



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