Summary:

1. The supply chain can be broadly classified as Push based Supply chain and Pull based Supply
chain. Push Supply chain is when the products are produced and stocked in anticipation of
demand whereas in the pull supply chain the activities take place in response to an order.

2. The major advantages of the push supply chain are readily available stock, economies of
scale & allows for more planning and control.
The major disadvantages associated with it are high inventory carrying cost, obsolescence,
markdowns and less flexibility to cater to changing demand pattern.

3. The major advantages of pull based supply chain is improve service level, reduced inventory,
fewer markdowns and adaptability to change according to market conditions.

The major disadvantages in this strategy are increased lead times which could lead to lost
sales and difficulties in achieving economies of scale thereby increasing cost.

4. If a product has low demand uncertainty and the economies of scale is high, it can opt for
push-based strategies. Grocery items are example of such strategy.

5. If a product has high demand uncertainty and the economies of scale are also not high, pull
based strategy will be much suitable for such category products. For Example: Customized
Computers, High end Designer Outfits.

6. If a product has high demand uncertainty and economies of scale is also significant, a hybrid
push-pull strategy has to be implemented. For example- Furnitures, where the production
strategy can be a pull based since long term demand forecast may not be accurate but the
distribution can use the economies of scale to reduce transportation cost using push-based
strategy.

7. Depending on the type of product, we can select a strategy. If the product has predictable
demand which does not fluctuate much and does not involve much customization, we can
opt for push strategy as is the case with umbrellas getting pushed into the market just
before rainy season or biscuits getting stocked in the shops in anticipation of demand.
On the Other hand, if the demand of the product is uncertain and is a much-customized
process, we can opt for a pull-based strategy as is the case with designer outfits.

8. The choice of supply chain also depends on the competitive strategy, a firm opts for. If a firm
wants to be efficient i.e. minimize cost it can adopt push-based strategy to take advantage of
economies of scale. However, this brings with it the burden of more inventory carrying cost
& obsolescence if not consumed.
Alternatively, if the firm opts to provide maximum service level, it can opt for a pull-based
strategy in order to customize as per requirement. This will lead to reduction in inventory
carrying cost and loss of sales due to obsolescence.

9. However, seldom are the strategies used independently. A mixture of both strategies in
various stages of the supply chain yields a better result. Many organizations have evolved
over the years to change the strategies from being completely pull or completely push based
to a more middle ground.
 For Ex- Dell initially started out Pull based Supply chain. It used to customize the PCs
according to the requirement of individual customers. However, with more standardization
in PC components, its sales started declining since people did not wait for that long. So Dell
revamped its supply chain and adopted a combination of two. It supplied the standard
components in a push-based form and final assembly used to take place according to the
customers which did not take much time.

10. The world is much interrelated now with businesses linking up with each other from various
corners. This has increased the complexity of the supply chain. In uncertain times, such as
Covid-19 when the businesses are affected in every corner, there might be a supply and
demand disruption.
If entirely pull based supply chain is used, business might have to stop producing because of
unavailability of supply items.
Entirely Push based supply chain might lead to over stocking with no certainty of demand
ultimately leading to obsolescence.
A perfect balance has to be struck so that there is some safety net to fall back to and not
excess of it. This is possible by having a mix of push and pull strategies along the supply
chain.

11. The main aim of the supply chain is to increase the supply chain surplus. To increase this, a
well thought out balance between both the strategies is required. For Example, in Paint
industry, the paint manufacturer produces and distributes the base colour in push-based
strategy. The retailer mixes the base colour to arrive at the colour required by the customer
making it a pull process. This has significantly reduced the inventories significantly across the
supply chain and has increased the supply chain surplus.

12. Therefore, the strategy has to be designed keeping the product properties, demand
variation and competitive strategy of the firm in mind. A combination of push-pull system
helps in dealing much better with the uncertainties. Identifying the ideal push-pull boundary
in a supply chain is the most important factor to increase the overall profitability.