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Process Views of Supply Chain

The document discusses two process views of supply chains: 1) The cycle view divides the supply chain into a series of cycles performed at interfaces between successive stages. 2) The push/pull view divides processes into those executed in response to customer orders (pull) or in anticipation of orders (push). It then provides examples of Dell and detergent supply chains to illustrate push/pull processes, and discusses how the two views impact operational vs. strategic decision making.

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Showkat Hossain
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29 views

Process Views of Supply Chain

The document discusses two process views of supply chains: 1) The cycle view divides the supply chain into a series of cycles performed at interfaces between successive stages. 2) The push/pull view divides processes into those executed in response to customer orders (pull) or in anticipation of orders (push). It then provides examples of Dell and detergent supply chains to illustrate push/pull processes, and discusses how the two views impact operational vs. strategic decision making.

Uploaded by

Showkat Hossain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PRESENTATION on

Process Views of
Supply Chain
Group - 7
Process Views of Supply Chain

Cycle view Push/Pull View


Processes in a supply chain are Processes in a supply chain are
divided into a series of cycles, divided into two categories
each performed at the interfaces depending on whether they are
between two successive supply executed in response to a customer
chain stages order (pull) or in anticipation of a
customer order (push)

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Cycle View of Supply Chain

3
Sub Process in Each Cycle

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5
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Push/Pull View of Supply Chain

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Characteristics of the Push and Pull Portions of the
Supply Chain

Portion Push Pull

Objective Minimize cost Maximize service level

Complexity High Low

Focus Resource allocation Responsiveness

Lead time Long Short

Processes Supply chain planning Order fulfillment

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Push-Based Supply Chains

• Production and distribution decisions based on long-term forecasts.


• Manufacturer demand forecasts based on orders received from the retailer’s
warehouses.
• Longer reaction time to changing marketplace:
• Inability to meet changing demand patterns.
• Obsolescence of supply chain inventory as demand for certain products
disappears.
• Variability of orders received much larger than the variability in customer demand
due to the bullwhip effect.
• Excessive inventories due to the need for large safety stocks
• Larger and more variable production batches
• Unacceptable service levels
• Product obsolescence
11
Pull-Based Supply Chains

• Production and distribution demand driven


• Coordinated with true customer demand rather than forecast demand
• firm does not hold any inventory and only responds to specific orders.
• Intuitively attractive:
• Reduced lead times through the ability to better anticipate incoming orders from the
retailers.
• Reduced inventory since inventory levels increase with lead times
• Less variability in the system
• Decreased inventory at the manufacturer due to the reduction in variability.

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Push-Pull Strategy

• Some stages of the supply chain operated in a push-


based manner
• typically the initial stages
• Remaining stages employ a pull-based strategy.
• Interface between the push-based stages and the pull-
based stages is the push–pull boundary.

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Push-Pull Supply Chain Timeline

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Identifying the Appropriate Push/Pull Strategy

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Impact of Demand Uncertainty and Economies of
Scale

• Demand Uncertainty:
• Higher demand uncertainty leads to a preference for pull strategy.
• Lower demand uncertainty leads to an interest in managing the supply chain
based on a long-term forecast: push strategy.
• Economies of scale:
• The higher the importance of economies of scale in reducing cost
• The greater the value of aggregating demand
• The greater the importance of managing the supply chain based on long-
term forecast, a push-based strategy.
• Economies of scale are not important
• Aggregation does not reduce cost
• A pull-based strategy makes more sense 16
Implementing a Push-Pull Strategy

• Achieving the appropriate design depends on many factors:


• product complexity
• manufacturing lead times
• supplier–manufacturer relationships.
• Many ways to implement a push–pull strategy
• location of the push–pull boundary.
• Dell locates the boundary at the assembly point
• Furniture manufacturers locate the boundary at the production point

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Impact of the Push-Pull Strategy

• Push portion
• Low uncertainty
• Service level not an issue
• Focus on cost minimization.
• Long lead times
• Complex supply chain structures
• Cost minimization achieved by:
• better utilizing resources such as production and distribution capacities
• minimizing inventory, transportation, and production costs.
• Supply Chain Planning processes are applied.
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Impact of the Push-Pull Strategy

• Pull portion
• High uncertainty
• Simple supply chain structure
• Short cycle time
• Focus on service level.
• Achieved by deploying a flexible and responsive supply chain
• Order-fulfillment processes are applied

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Push/Pull Processes for the Supply chain of Dell

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Push/Pull Processes for the Supply chain of
Detergent

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Are the following Systems push or pull?

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Cycle View Versus Push/Pull View

Which view is more useful when considering


operational decisions and which view is more
useful when considering strategic decisions?

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THANKS!

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