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Lecture_8

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Supply Chain Digitization

Module I: Week – 02, Lecture – 08


has been launched by IIM MUMBAI, under the directives of the Ministry of Education, Government of India and as a
Supply Chain Segmentation:
part of our role as the nodal institute for PM GATI Shakti.
Push Vs Pull
Prof. Priyanka Verma
GENPACT Associate Chair Professor
Operations & Supply Chain Management Area
Indian Institute of Management Mumbai
*This course has been launched under the directives of the Ministry of Education, Government of India and as a part
Module - 2 of IIM Mumbai’s role as the
NPTEL: nodal
Supply institute
Chain for PM Gati Shakti Master Plan.
Digitization
Supply Chain Segmentation Strategies

Inventory-
Based Customer
Segmentation Segmentation

Demand-Based Product
Segmentation Segmentation

Value Chain Geographic


Segmentation Segmentation

Channel
Segmentation

Module - 2 NPTEL: Supply Chain Digitization 2


Choosing the Right Supply Chain
• For choosing a right supply chain understand the nature of products and supply chain’s priorities.
• Nature of products (Functional or Innovative)
• Supply Chain priorities ( Efficient or Responsive)

Functional Innovative
Nature of Demand Stable Volatile and uncertain
Product life cycle Longer Shorter
Lead time Long Short
Average stockout rate Low High
Product variety Low High

Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.

Module - 2 NPTEL: Supply Chain Digitization 3


Efficient Vs Responsive Supply Chain

• Nature of product > Supply Chain is efficient or responsive.

Efficient Supply Chain Responsive Supply Chain


Primary Focus Cost efficient Flexible and responsive
Production Strategy Forecast driven Demand driven
Inventory Level Low High
Lead time Long Short
Example Everyday household products Consumer electronics with high
technology

Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.

Module - 2 NPTEL: Supply Chain Digitization 4


Product Segmentation – Supply Chain

• Matching supply chain with nature of products

Efficient Supply Chain Responsive Supply Chain


Primary Focus Cost efficient Flexible and responsive
Production Strategy Forecast driven Demand driven
Inventory Level Low High
Lead time Long Short
Example Everyday household products Consumer electronics with high
technology

Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.

Module - 2 NPTEL: Supply Chain Digitization 5


Matching Supply Chain with Product types
Functional Innovative
products products

Responsive Efficient supply

(Push)
chain
Match Mismatch

supply chain
(Pull) Mismatch Match

Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.

Module - 2 NPTEL: Supply Chain Digitization 6


Push Strategy Pull Strategy
A "push" supply chain strategy refers to a
A "pull" supply chain strategy is an approach
method of production and distribution where
to production and distribution where goods
Definition goods are produced and pushed through the
are produced based on actual customer
supply chain based on forecasts or
demand.
predictions of demand.
• Demand-Driven Production
• Forecast-Driven
• Reduced Inventory
• Mass Production
• Customization
Characteristics • Inventory Accumulation
• Quick Responsiveness
• Limited Customization
• Lower Obsolescence Risk
• High Initial Investment
• Efficient Resources
• Demand Variability • Lead Time
• Obsolete Inventory • Coordination
Challenges
• Limited Responsiveness • Uncertain Demand
• Production Limits
Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.
The Supply Chain Timeline

Suppliers PULL STRATEGY Customers


PUSH STRATEGY

Low Uncertainty High Uncertainty

Source: Fisher, M. L. (1997). What is the right supply chain for your product?. Harvard business review, 75, 105-117.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2022). Designing and managing the supply chain.
Push-Pull boundary Examples
Push-Pull boundary

Manufacturing
Suppliers Distributors Customers
(Assembly lines)

Push Strategy Pull Strategy

Push side: Forecast driven production, initial inventory buildup, and bulk shipment to distribution centers.
Pull side: Customized shipments to retailers or customers, and real-time inventory management.
Push-Pull boundary Examples
Push-Pull boundary

Manufacturing
Suppliers Distributors Customers
(Assembly lines)

Pull Strategy Push Strategy

Push side: Forecast driven production, Ordering raw materials, initial inventory buildup, and production
planning
Pull side: Order fulfilment as per demand, lead time and delivery management, and real time inventory
management

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