Push and Pull Systems

Push and pull systems have been largely used in logistic and supply chain management; however, they can also be used in marketing. A push-pull system can be described as the movement of products and services between two subjects. Consumers pull goods and services to satisfy their needs while suppliers push services and products toward consumers. In marketing, a push is used when a company introduces a new product to consumers. The supplier is tasked to push this product toward the consumers through promotion and distribution. Supply chain management using the push method allows the producers to make products based on the historical orders made by the retailers. However, in pull method production is determined by consumers’ actual demand/orders (Minculete & Olar, 2016). It is also fundamental to understand the advantages and disadvantages of the push-pull model.

Advantages of ‘pull’ system

According to Minculete & Olar (2016), some of the advantages of the pull system include reducing reduces the number of employees required because production and distribution are based on the actual demand by consumers. Additionally, the pull system reduces the company’s waste and total production cost because there is no overproduction. This also results in decreased storage costs and more free space for the company’s operations. Companies that use a pull system enjoy a reduced production cycle, which equates to faster manufacturing resulting in no late penalty cost, and they can also meet consumer needs on time (Chiadamrong & Kohly, 2005). Furthermore, the system attributes to time-saving because there’s no need to plan for future production of goods which may never sell.

A pull system promotes flexibility within a company because the company can promptly respond to changes in customer demand due to accommodation of engineering changes, reduced direct congestion, and dependence on forecasts. Another benefit of this system is better customer satisfaction because products meet specific customer needs. Since there is no overproduction, there is increased defect detection and improved communication among workers who can quickly correct errors found.

Disadvantages of ‘pull’ system

The pull system has certain drawbacks despite the benefits it holds. Pull system increases the risk of lack of stock, meaning that any alteration in demand by customers may result in dissatisfaction if the supplier is unable to fulfill customer’s orders on time. The system may also result in lower product movement management due to reduced delivery predictability and difficulty in tracking inventories. Additionally, the method can be challenging to execute due to the decreased time to operate the business (Minculete & Olar, 2016).

Advantages of ‘push’ system

The push production system reduces the risk of stock-out because companies produce goods in large quantities. It also reduces the loss of consumer loyalty because customers can acquire a product any time they need it. Constant production also makes it easier to control and predict supply chain and control and maintain inventory. Another advantage is that the model allows for long-term planning, which helps the company reduce risks due to poor planning.

Disadvantages of ‘push’ system

The shortcomings of the push system are reduced flexibility because productions are based on forecasted consumer demands (Pyke & Cohen). Obsolete products from the end of holiday peaks or fashion season may result in huge losses as retailers may be forced to sell products at enormous discounts. Additionally, a company may incur additional storage costs resulting from overproduction. Furthermore, the system increases the number of employees a company requires leading to increased costs in the form of training and salaries (Minculete & Olar, 2016).

Conclusion

The above discussion establishes that both push and pull models are effective depending on the circumstances. Therefore, companies should evaluate which strategy satisfies the company’s needs. We cannot ignore their advantages and disadvantages because they can contribute to either failure or success of a business.

References

Chiadamrong, N., & Kohly, P. (2005). A COMPARISON OF THE PUSH AND PULL PRODUCTION SYSTEMS AT THEIR OPTI MAL DESIGNS UNDER THE ECONOMIC CONSIDERATION. ASEAN Journal on Science and Technology for Development, 22(4), 313-330. http://ajstd.org/~ajstd/index.php/ajstd/article/download/168/163

Minculete, G., & Olar, P. (2016). ” PUSH” AND” PULL” SYSTEMS IN SUPPLY CHAIN MANAGEMENT. CORRELATIVE APPROACHES IN THE MILITARY FIELD. Journal of Defense Resources Management, 7(2). http://www.jodrm.eu/issues/volume7_issue2/18_minculete_olar_vol7_issue2.pdf

Pyke, D. F., & Cohen, M. A. (1990). Push and pull in manufacturing and distribution systems. Journal of Operations Management, 9(1), 24-43.