Answering the question What is Push vs Pull Strategy? isn’t just for manufacturing anymore; but, for service too. In fact, the question also is germane even in areas such as Marketing, where there’s an ongoing debate between inbound vs outbound or push vs pull. In this article, I explain the general strategy and the influence of the Toyota Production System on Push vs Pull. I’ll also introduce the notion of a “pull signal”, or Kanban. And, you can also visit my page demonstrating the Paper Airplane Game, which shows the difference between Push versus Pull.
Maximizing profits in today’s business world can prove to be a tedious voyage, especially when the logistics aren’t fully up to par. When considering the demand for certain products in the market, it is important to understand that projected demand often does not correspond with the actual or consumed demand. Push vs pull, two models of manufacturing which should be separately considered with care in order to ensure the usage of the right manufacturing model for one’s business plan.
In a push system, companies manufacture their products based on projected or predicted demand which can often fail to correspond with the actual or consumed demand, this inaccuracy can cause a huge dent in the company’s budget. An excess in inventory, and the associated required storage space would be the main causes for this. However there are some advantages to a push method. A business which implements a push method will only in rare cases have to worry about a lack of inventory and the customer dissatisfaction that comes with it. Additionally under a push system, businesses and their retailers have the advantage of predictability in their supply chain. This sense of predictability allows the retailers to plan ahead of time as of how to store the product and organize the merchandise accordingly.
A pull method like implemented by Toyota eliminates the disadvantages of the push model. An excess in inventory is not possible since the manufacturing process is only put into work when pull signals are given. These signals are given when actual demand occurs, a customer purchasing a car for example sets the manufacturing chain back into motion so that stock can be replenished accordingly. A pull strategy, like implemented by Toyota, also allows for a single piece flow or a one piece flow system. A one piece flow system eliminates the bulk production, the need for batch sizes, and lot production since only one product at a time is being worked on. This of course is an unrealistic model for manufacturers that produce low cost products such as foods or toys and so forth, however for car manufacturers such as Toyota this can prove to be a quite lucrative and time saving procedure. The single piece flow system additionally cuts unnecessary expenditures such as the need for space caused by excess inventory due to overproduction. This lean manufacturing model also allows a company to reduce the costs of labor associated with space acquirement, and stock handling significantly. Disadvantages to the pull strategy do however exist. When a business operates solely under a pull model it can in some instances fall subject to over demand. An excess in actual customer demand will cause a shortage of supply, which in turn will render the company unable to meet customer demand. Dissatisfaction of the customer is the ultimate result. This can hurt the company’s reputation regarding its reliability.
Even though the implementation of only either one of the systems can prove to be advantageous for some business models, most businesses will have to operate under a hybrid of the two. A company that aims to implement only the push method for example which has stockpiled a certain amount of the product at a distribution center, still has to wait for a pull signal in the retailing location in order to move product to the customer and ultimately manufacture more product as a result. A company which prefers the pull method will still have to plan ahead and predict customer demand in order to acquire the right raw materials to ensure an efficient manufacturing process. Companies and their manufacturers which have decided on implementing the pull method are of course not immune to the changing fluxes of the market and therefore have to purchase certain materials ahead of time which may at a later time go up in price. This too requires a certain amount of prediction regarding customer demand. So even though one can model their business more after either a pull or a push method, it is important to understand that a pure system of either is difficult and oftentimes inefficient to operate under.