In my previous post I had written about my biz plan. That was a perfect example of a 'pull system' strategy (which I realised later). In this post I'll try to explain pull system strategy.
Any company requires resources. If the resources are pushed into the system, we call it a push system. Most companies follow this kind of a push approach where they would predict the demand and stack up their inventory by pushing the resources onto it. It has been a very successful model till date. This is a structured approach. A good example of this push system is the biz model of the Walmart's apparel division. Walmart always looks up to standardising its apparels supplier. Walmart generally abstains itself from dealing with multiple suppliers when it comes to apparels business. But as a matter of fact Walmart has not been very successful in this apparels segment.
Ideally in the current market scenario,Walmart should try to 'pull' in from different suppliers who would have their own unique style of apparel design. Managing your supply chain becomes a lil difficult but still the benefits over weigh your costs. This is what I mean by the pull strategy. You don't push your stocks from a single supplier alone but you pull different resources from different suppliers
It's not the story of the Walmart alone. There are very good examples of companies which have thrived well by adopting this strategy. Amazon.com is one beautiful example. You can buy any book you would like to read on the face of this earth. Amazon.com pulls is from a lot of suppliers.
Another case is our own baazee.com, now ebay.in, which is a very fitting example where you enable p2p selling. Even traditional p2p websites like limewire adopt this pull strategy. e-choupals of ITC is also a wonderful example.
What we do when we blog? We pull in knowledge from various resources and present it for others to easily appreciate. To put it in a better way, corporates are now resorting to corporate-blogging where ideas are pulled in from all the employees.
Lean manufacturing system focused on eliminating wastes or making the inventory management better. You did not push in your inventory. Rather you pulled in when there was a demand. This was probably the first instance of pull systems, tho' I'm not very sure of it.
See I'm not trying to undermine the push systems which have been erstwhile very successful. But in this changing market dynamics, pull systems have evolved well and would definitely rule the roost in the near future. This is not tough to comprehend. What happens when you earn far more than the amount you can afford to spend in buying the costliest car in this earth? You would like to order a car which is specially manufactured for you with your own preferences. So the manufacturer can no longer push his inventory. He has to cater to certain special orders like that of yours. If there are 100 people like you, who'd ask the Mercedes to manufacture customised cars think what would happen? What if there are 10000? Slowly we see that the car manufacturer who was pushing his standardised raw materials into his inventory can't do so anymore. There are people who order special cars and the number of such people keeps changing. So he has to alter his quantitative as well as strategic modelling of his supply chain. This is what we mean by the pull strategy. This may be a hypothetical example, but this is how the world's buying behavior is evolving. We have strong growth rates and huge consumption levels. When the bottom section of the pyramid rises to the top, think what would happen to the top? You'd see a lot of Nokia-Vertu kinda phones in the future.
We see that in contrast to push strategy which is highly structured and resource centric, pull strategy is modular and highly innovative. Mathematical modeling of your processes become slightly tougher but that's the way it works. My take: Pull strategy mixed with push strategy can work exceedingly well.
What we call as pull strategy is something all of us can comprehend and probably think of(like the biz model I had thought of). I never knew the existence of all this push and pull strategy then. Management Strategies are not rocket science. They are something which lies within us. It is just that certain management gurus give it a proper framework. Just think why pull strategy evolved? Just because of the karma of free market economics. The buying power of the junta has increased. So you gotta change your biz strategies to survive. Thus evolved the pull strategy. As simple as that. We call the guy who probably understood this market economics and gave a structural framework to this approach as an innovative entrepreneur.
My final word on this: Whenever you read something try to give them an analytical and strategic framework. Who knows, you might end up as one of the greatest innovators on this earth because innovations are not rocket science. Just think about what it takes to fit a mirror in your bureau. You don't have to spend for a dressing table!
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Lean manufacturing system focused on eliminating wastes or making the inventory management better. You did not push in your inventory. Rather you pulled in when there was a demand. This was probably the first instance of pull systems, tho' I'm not very sure of it
Pull production is a part of Lean Manufacturing.Or rather it can be said as a strategy for Lean.Other strategies for lean are line balancing,JIT and Kaizen(overlaps among these exist)
Nice post
In one of my earlier blogs, I had mentioned the pitfalls of using a ‘Pull Production’ in case of a remanufactured product where there is a combination of new and salvaged percentage of components. Even with a new product manufacturing and pull production, you may not have optimized your global supply chain.
http://www.infosysblogs.com/oracle/2009/02/pull_production_have_you_achie.html#more
Thanks for the comment Sandeep. Your post was splendid, added a new dimension to the idea. I have commented on your blog
That was an awesome post. In the Indian market scenario, the supermarkets have still not achieved that monopoly over the retail market as it is in the US with stores like Walmart, Schnucks, Dierbergs etc. So considering the US market retail chains, for example the Walmart, would you classify its current supply chain as a push strategy or a pull strategy? Another doubt is, most of the supply chains pertain to a mixed push pull strategy- meaning, to some point in the supply chain goods are pushed and then it is pulled. In a scenario like that of Walmart's, that has a vast variety of products, is there a clear distinction that could define the strategy for the Walmart's supply chain in general? Meaning, some products may be pushed and some may be pulled- so how is such a scenario generally defined?
That was an awesome post. In the Indian market scenario, the supermarkets have still not achieved that monopoly over the retail market as it is in the US with stores like Walmart, Schnucks, Dierbergs etc. So considering the US market retail chains, for example the Walmart, would you classify its current supply chain as a push strategy or a pull strategy? Another doubt is, most of the supply chains pertain to a mixed push pull strategy- meaning, to some point in the supply chain goods are pushed and then it is pulled. In a scenario like that of Walmart's, that has a vast variety of products, is there a clear distinction that could define the strategy for the Walmart's supply chain in general? Meaning, some products may be pushed and some may be pulled- so how is such a scenario generally defined?
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