Supply Chain Management: Push Strategy

The first entry in the comparison between push and pull strategy in supply chain is the push strategy.
The push strategy in the supply chain is ideal for a scenario in which the estimated demand defines the
inputs of the process. Basically, it is reasonable to consider push supply chain strategy as an approach
based on forecasts. Organizations using the push strategy depend on forecasts for determining the
amount of stock they have to order.

Here is an outline of the notable traits of push strategy that make it unique in the comparison of push
and pull strategy in supply chain.

1. Businesses with better predictability in their supply chains are more likely to choose the push
strategy.
2. Push supply chain strategy has the primary trait of demand that could be forecasted easily.
3. Businesses opting for a push supply chain strategy are likely to have better feasibility of planning
production for coping with estimated needs.
4. Push supply chain strategy presents the mandatory requirement of a large, accessible inventory
or committed storage space.
5. Retailers can get an adequate amount of time for ensuring effective preparation of facilities for
storing inbound inventory.
6. Businesses do not have desired flexibility for adapting to consistently fluctuating demands with
the push supply chain strategy.

Supply Chain Management: Pull Strategy

Pull supply chain strategy is driven by actual consumer demand. It’s hard to find an example of a wholly
pull-based supply chain, with the exception of custom, made-to-order items. If you’re a high-end custom
jeweller, you might have a consultation with a client, discuss the needs for a specific piece of jewellery,
purchase special metals or gemstones and then produce the piece. One benefit of pull supply chain
strategy is the ability to carry little inventory, to invest inventory dollars only when you know you have a
buyer. Another is being able to charge a premium for custom merchandise.

In order to improve your understanding of pull supply chain strategy in discussions on push vs pull
strategy in supply chain, it is important to notice its unique traits.

1. Businesses could opt for a pull supply chain strategy for avoiding the costs of procuring
inventory that they will not be able to sell.
2. Pull supply chain strategy also focuses on the facility of rapid response for a particular demand
or order.
3. The verification of customer demand is an essential factor for introducing products in the supply
chain with a pull strategy.
4. Pull supply chain strategies don’t involve requirements for the business to have backup
inventory.
5. Product demand is the sole determining factor for production and distribution levels in a pull
strategy for the supply chain management.
6. The pull supply chain strategy also points out towards possibilities of creating risks in scenarios
where supply could not address demands
3 OBSTACLES TO EFFECTIVE SUPPLY CHAIN COLLABORATION – AND WHAT TO DO ABOUT THEM

Enterprises are aware of the need for greater supply chain collaboration, but such efforts frequently fail

Traditional ways of viewing supplier relationships, organizational silos and legacy systems all inhibit
effective collaboration

To stay competitive, companies must be innovative by leveraging supplier collaboration tools and
redesigning processes where necessary

1. Culture and mind-set

All too frequently, organizations are hesitant to move away from traditional definitions of supplier
relationships. Companies typically don’t manage relationships with suppliers for mutual benefit but for
their own, by focusing on cost-cutting. That’s understandable, but one-sided relationships tend to
generate one-directional information flows, meaning signals from suppliers don’t flow back up the
supply chain.

True bi-directional collaboration enables partners to make the right decisions that will help their
business serve their partner’s business too. Getting to that two-way partnership requires tools for real-
time data sharing and an organizational shift in how companies work with their suppliers.

2. Organizational silos

Enterprises contain both internal silos – supply chain and procurement, for example – as well as external
silos between companies and their supply network.

These silos, created by non-integrated processes, systems and objectives, are the points where
collaboration tends to break down.

Supply chain collaboration software is designed to fill the gaps and break down silos to allow for tighter
collaboration in a company’s supply network.

Collaboration can’t happen without the processes and tools to create end-to-end and multi-tier visibility
across the supply chain and share data and coordinate responses to disruption.

3. Outdated systems

For supply chains operating with manual processes and fragmented ERP systems, lack of real-time
information sharing, communication and coordination capabilities make collaboration with suppliers
difficult to achieve.

Supply chain collaboration tools connect people, data sources and systems to improve visibility. By
achieving greater insight into suppliers and partners and adopting a solve-together mindset, enterprises
can ultimately operate with less need to push problems to suppliers through service-level agreements or
price negotiations.
Why is technology important in supply chain management

Business processes have been digitalized in the past couple of decades, and it has become a necessity
rather than an option. Why not? IT integrates various operations carried out by different companies in
the supply chain. It speeds up the business processes and prevents bottlenecks. Companies are closer to
achieving on-time procurement, shorter inventory, and better efficiency, especially in manufacturing. IT
allows companies in the supply chain to meet the needs of consumers.

The Role of IT in Supply Chain Management

IT is leaving a mark everywhere. Nothing remains untouched. No wonder every aspect of a business is
now under its command! The role of IT in Supply Chain Management is highlighted in the following
points.

1. Integrated and Coordinated Supply Chain :- A supply chain can only work efficiently when it is
properly integrated and well-coordinated. IT performs this crucial task by bringing in multiple
technologies and combining them to optimise the supply chain. These technologies make data collection
possible and much easier and more accurate. In turn, this allows precise and detailed data analysis
leading to sound business decisions.

2. Increased Productivity :- Smooth flow of information, new technologies and effective communication
increase the productivity of all entities in the supply chain. It is like a trigger for product movement.
Instead of going back and forth, IT provides the link that passes the needed information continuously.

3. Cost Reduction :- IT permits optimum utilisation of resources and assets. Old data is used to study the
trends, and technology is used to analyse it for improving performance. When resources are used
optimally, they result in cost reduction. In a supply chain, the role of IT becomes more prominent
because it motivates all parties to use their respective resources in the most cost-efficient manner.
When IT is used as it should be, there is a dramatic fall in overall expenses.

4. Product Improvement :- IT consists of tools and applications which can be used to gain early
awareness. In a market where consumers always want something new, the product will either have to
evolve or it will go out of demand. To stay in business, you must introduce product improvement and
innovation sooner rather than later. The kind and extent of product improvement can be validated with
the help of IT.

5. Supply Chain Visibility :- Information makes the entire supply chain visible to supply chain managers.
The manner in which the information flows from one collaborator to the other and the impact it has on
others is used by the managers in making strategic decisions.
Supply chain management strategies

1. Customer-Centricity

This supply chain strategy focuses on customers' needs and preferences first. To ensure customer
centricity, business owners need to improve their demand forecasting accuracy. This will enable
companies to prepare their inventory products and levels to meet projected future demands.

2. Predictive Business

Minor setbacks, such as machine malfunction and delayed shipment due to weather or traffic, will occur
from time to time. Businesses can prevent these issues from developing by addressing them quickly with
the latest predictive technology. For example, companies commonly use digital twins to perform
predictive assessments on their products and machinery. Digital twins are technological solutions that
can predict when service disruptions in machines may arise and can give users early warnings of any
potential downtime.

3. Intelligent Automation

Businesses from across all industries have integrated automation in their supply chain management.
This can be seen in the form of autonomous forklift trucks, drones that deliver products to customers,
and software solutions that streamline warehouse facility management. Manufacturing businesses are
maximizing the potential of their supply chain by utilizing smart automation, which is a solution that
uses AI, robotic processes, and other software engineering practices to automate complex business
operations. Manufacturers use this tool to mass-produce customizable products that meet consumer
demands.

4. Total Visibility

To properly manage the supply chain, business owners need to have full visibility into every role and
process that is related to it. Not only do executives need to monitor the production, movement, and
delivery of products, they also need to frequently assess data related to sales and project potential
supply chain disruptions. Having full supply chain visibility in real time will enable management to
identify any anomalies and quickly make adjustments to inventory or production processes. In addition
to improving business responsiveness, executives will be able to minimize risks and spending.

Agile Supply Chain

The agile supply chain basically refers to the use of responsiveness, competency, flexibility, and
quickness to manage how well a supply chain entity operates on a daily basis. Unlike the lean supply
chain, the agile supply chain uses real-time data and updated information, as reported by Martin
Christopher in Industrial Marketing Magazine, to leverage current operations and real-time data against
demand forecast, which helps to improve the overall efficiency and productivity of the given entity.

Another key benefit of agility in the supply chain is focusing on avoiding potential shortages and
eliminating excessively stocked inventory. In a sense, overstocking inventory was a typical response to
the lean concept. Since the lean concept focuses on making processes more effective and efficient,
many supply chain entities often ended up with a huge stock of merchandise.
Responsive Supply Chain

At its most basic level, a responsive supply chain will be nimble and agile enough to be responsive to
your customer’s needs while still serving as a solidly efficient model for a particular company. Indeed,
the demands of a responsive supply chain are similar to that of a value chain model that champions
efficiency.

In other words, responsive supply chains are expected to meet such baseline business activities as:

 Order fill accuracy

 Scalable delivery
 Ongoing communication
 Customer satisfaction

Clearly, these are all goals of an efficient supply chain. How then do they differ from a responsive supply
chain? The devil’s in the details as they say, and a responsive supply line leverages the available
technology, information systems, and transportation to meld a supply chain responsive to a demanding
buying public.

Reverse logistics

Reverse logistics refer to monitoring the life-cycle of your products after they arrive at the end
consumer. This could include how your product could potentially be reused, how it should be properly
disposed of after use, and any other way where your expired product can create value.

The reverse logistics that directly impact supply chains the most are the return of products from the end
consumer back to the manufacturer. For the rest of the article, we’ll explain more about this process,
and ways you can use it to your advantage.

Benefits of reverse logistics

Reduced costs. By planning ahead for returns and making the return order right, you can reduce related
costs (administration, shipping, transportation, tech support, QA, etc.)

Faster service. This refers to the original shipping of goods and the return / reimbursement of goods.
Quickly refunding or replacing goods can help restore a customer’s faith in a brand.

Customer retention. Dealing with errors is just as important as making sales. If a customer had a bad
experience with your product, you have to make it right. Fulfillment blunders can create educational
opportunities. Learn how to keep your customers happy and engaged with your company – even after
you’ve made a mistake.

Reduced losses and unplanned profits. Recover the loss of investment in your failed product by fixing
and restocking the unit, scrapping it for parts, or repurposing it in a secondary market. With a good
reverse logistics program in place, you don’t have to leave money on the table. Take a product that
would otherwise just cost your company money and turn it into an unforeseen asset.
Green supply chain

It is the integration of eco-friendly methods into the conventional supply chain so as to minimize waste
and carbon footprints and increase efficiency.

And a business can transform its traditional supply chain to a green one by including the “environment”
factor in each and every stage of the supply chain – from product development to manufacturing to
distribution to end customers. This can be done either via digital transformation or by simply creating
relevant policies.

Benefits of Creating a Green Supply Chain

Cost Reduction

Companies can save costs by implementing digital technologies that help in going green. IT Solutions
that help in low consumption of power, substituting energy sources and recycling can create a positive
impact on the financial sheets of a business. While implementing green initiatives, businesses focus on
reducing the greenhouse gas emissions which in turn leads to making shorter trips and reducing
shipments. This results in lowers costs as vehicles use less fuel and suffer minimized wear and tear.

Sustainability of Resources

If a business has implemented green practices in its supply chain, there should be a process or policy in
place in the supply chain that lets them be re-produce and recycle at the same pace at which their
product is consumed.

Being Compliant

According to the second annual CDP Supply Chain Report that summarized climate change information
from 710 suppliers, 6 percent of leading companies already deselect suppliers who fail to manage
carbon. According to current projections, this number is set to rise to 56 percent in the future. Whether
to comply with government regulations or meet the expectations of the customers or clients, businesses
are finding motivation to go green.

Digital Transformation helps in Reducing Risk

You must have heard stories about how a dangerous product slipped through the cracks and entered
the supply chain. This is not just fatal for an employee but the company as a whole. When there are
digital security solutions in place that ensure transparency, the chances of such incidents are very rare.

Building Brand Reputation and Gaining Competitive Advantage

With information readily available online these days, having a green supply chain will help you in
building your brand reputation. Businesses that develop environment-friendly and technologically
advanced products would be able to build and sustain their brand image.
Challenges of creating a green supply chain

Larger businesses around the world are trying to create green supply chains to help the planet and to
help their businesses present themselves better. Unfortunately, green supply chains are very hard to
deploy even for the most successful businesses in the world:

1. Supplier compliance:

The idea behind green supply chains rests on trust and good faith. To implement green supply chains, a
company must procure its raw materials from other green supply chains. However, getting your
suppliers to comply to your ideals is near impossible in most cases. Even first-tier suppliers often violate
green supply chain requirements.

Since most of your suppliers will originate in different countries, getting them to go along with your
ideals will be difficult. One solution to this challenge is for every business, whether buyer or supplier
should themselves try to be a part of the green supply chain wave.

2. Lack of knowledge/ignorance:

Global supply chains are massively complicated webs of buyers and sellers around the world. It is very
difficult for companies to know about lower-tier suppliers and other companies that are involved in their
supply chains. Most major companies only deal with first-tier suppliers for their business needs.

This lack of knowledge and ignorance is why many companies get called out for unfair practices. An
example would be the existence of Nike’s sweatshops in China. Despite a business’ best intentions,
there’s only so much that can be done.

3. Increased Costs

According to the above-mentioned report, survey participants were generally divided over whether cost
is a motivator or a barrier to creating a more sustainable supply chain. 38% believed that increased costs
are the largest hurdle to overcome on the way to a sustainable supply chain, while a third stated that
cost savings were the top incentive for implementing sustainability measures in their supply chain.

4. Difficulty in Monitoring Complex Supply Chains

Especially for large companies offering many different products, supply chains are complex beasts. A
single product may have a myriad of different materials suppliers and manufacturers along its supply
chain. On top of this, smart companies employ several suppliers per piece or product to ensure
continued delivery in case one supplier drops out.

5. Lack of Alignment in Responsibility and Sustainability Framework Across Supply Chains

So your brand wants to switch to sustainably sourced and manufactured wares? A noble goal – but of
course, you have to get your suppliers and manufacturers on board. Or switch to new ones who cater to
sustainable products made in sustainable ways.

One of the reasons why sustainability in supply chains is such a hot topic is because it’s of varying
importance to all the different players. Consumers and governments with their state-enforced
regulations are putting pressure on brands to source and produce more sustainably.
International logistics

International logistics is a process that involves the transportation offinished goods through an
international supply chain. It consists of cross-border shipping and international distribution to
efficiently deliver goods to end users across the globe.

What international logistics involves

Though it’s never been easier for direct-to-consumer (DTC) brands to break into new markets,
establishing an international ecommerce supply chain adds an extra level of complexity.

From the types of products you can sell and transport overseas, to additional costs of shipping
international, there is much more involved ininbound and outbound logistics when building a global
brand.

1. Handling of goods

If you’re looking to expand into new markets, you will need to evaluate your currentphysical distribution
of goods. For instance, if you’re storing inventory and shipping orders from a single warehouse location
in your home country, you will have to calculate how much it will be to ship an international order
overseas (taking landed costs into consideration).There are several options here: you can still ship
international orders from your home country, but you might want to move or expand into a
warehousing location that will reduce shipping costs to reach the border before it gets sent overseas.

2. Mode of transportation

Depending on your budget and delivery timelines, you can choose from different modes of
transportation to carry your goods to the customer: parcel orfreight shipping, and air, sea, or ground
shipping. To make the right decision, you have to consider time, cost, and reliability of each and
determine what works for your margins. Based on where you ship from and where you’re shipping to,
most often several modes of transportation are involved in delivering an order to an international
destination — especially if you’re dealing with cross-border shipping.

3. Transportation process

As the shipper, you send goods to freight forwarders. They liaise with multiple carriers to find the best
shipping options (via freight forwarding). Next, the goods are loaded onto trucks, planes, or ships and
sent on their way to the end customer. At the destination port, after customs clearance, the goods are
unloaded and transported to a specific customer address.

4. Customs and import duties

With global shipping, you will deal with additional fees, including customs andimport duties (taxes). An
import duty is a tax placed on imports by customs authorities in the destination country of the
shipment. These duties vary by country and are dictated by the value of the goods being imported.

All global orders need to be cleared through customs of the country they are entering; this involves
quite a bit of paperwork. You must include the right details (e.g., tariff codes, dollar value, and product
descriptions), so orders don’t get held up.
Challenges of international logistics

Expanding into international markets can be challenging for several reasons, and it mostly all comes
down to logistics. Here are the common challenges that hold ecommerce businesses back from going
global.

Time-consuming

If not managed properly, international logistics operations can be a huge headache for ecommerce
companies. Every aspect of the cross-border supply chain, from choosing the right carrier partners to
tracking the flow of goods and calculating international shipping costs and transit times, takes a lot of
time and energy.

Since there is so much opportunity in going global, many international ecommerce brands reap the
benefits of outsourcing international logistics to athird-party logistics (3PL) like ShipBob that has the
infrastructure, technology, resources, and expertise to ship international orders efficiently and
affordably.

Late shipments

Not only can shipping far from your home country increase transit times, other issues such as customs
can cause delays in delivery. No matter where your customers reside, fast and affordable shipping is
expected. And chances are, if you’re selling ahigh-demand product overseas, there is going to be
competition.

But there are solutions to reduce cross-border shipping delays. One way is tostore inventory within the
country you’re shipping to, which reduces transit times significantly, saves you on shipping costs, and
allows you to worry less about international orders getting held up at customs.

International customs & taxes

Each product has a tariff code associated with it for customs. When you ship the goods internationally,
you will need to ensure that the right codes are assigned to each SKU, and taxes and other import costs
are calculated accurately.

If not managed correctly, your business could face legal action and costly delays if you accidentally
assign the wrong code, undervalue shipments, or fill in the wrong details in your customs paperwork. To
ensure there are no delays at the border, double check all your documentation.

Poor returns management

Returns are often an unavoidable part of a growing ecommerce business. But handling returns can get
tricky, especially with international orders. Return delays will not only frustrate your customers, but it
can also result in profitability cuts in terms of reverse-logistics costs.