(1) The "Push" and "Pull" approaches are commonly used in Supply Chain Management (SCM) to

manage the flow of goods and information.

The "Push" and "Pull" approaches in supply chain management (SCM) refer to two different strategies
for managing the flow of goods and information within a supply chain. The "Push" approach involves
forecasting demand and producing goods in anticipation of that demand, while the "Pull" approach
involves producing goods in response to actual customer demand.

Example of Push approach: A company manufactures a large quantity of a product based on sales
forecasts and pushes the product into the market.

Example of Pull approach: A company uses a just-in-time inventory system, producing goods only when
customer orders are received.

(2) Characteristics of the Push approach:

a) Based on forecasts: Decisions are made based on anticipated demand rather than actual orders. For
example, a cereal manufacturer may produce a large quantity of cereal boxes in anticipation of high
demand during a particular season.

b) High inventory levels: The Push approach often leads to excessive inventory levels due to producing in
advance. This can increase carrying costs and the risk of obsolescence.

c) Economies of scale: Mass production allows companies to take advantage of economies of scale and
lower production costs.

d) Long lead times: Manufacturing in advance means longer lead times for customers since products are
not produced until there's a demand surge.

e) Lower setup costs: Setting up production lines for large volumes can result in lower costs per unit.

f) Limited customization: Due to mass production, the Push approach is less flexible in terms of
customization options for individual customers.

g) Increased forecasting risks: Relying on forecasts introduces the possibility of inaccuracies, leading to
potential mismatches between supply and demand.

h) Sales-driven: Push strategies are often driven by sales projections and promotional campaigns rather
than immediate customer needs.
Characteristics of the Pull approach:

a) Demand-driven: Production and distribution are triggered by actual customer orders, ensuring a more
accurate alignment between supply and demand.

b) Reduced inventory: By producing only what is needed, the Pull approach helps to minimize inventory
holding costs and the risk of obsolescence.

c) Short lead times: Customer orders are processed promptly, resulting in shorter lead times and faster
delivery.

d) Increased flexibility: The Pull approach allows for greater customization and responsiveness to
individual customer demands and preferences.

e) Higher setup costs: Producing in smaller batches and responding to specific orders can result in higher
setup costs per unit.

f) Reduced forecasting risks: As customer orders drive production, the Pull approach minimizes reliance
on forecasts, reducing the risk of mismatched supply and demand.

g) Customer-centric: The focus of the Pull approach is on meeting the immediate needs and preferences
of customers.

h) Improved product freshness: By avoiding overproduction, perishable goods can be fresher upon
delivery.

(3) Advantages of the Push approach:

a) Economies of scale: The ability to produce in large quantities allows for cost savings through
economies of scale.

b) Fast delivery: With pre-produced inventory, companies can quickly fulfill customer demands without
potentially lengthy production lead times.

c) Stability: The Push approach provides stability in the supply chain by ensuring a continuous flow of
products.

d) Production planning: Demand forecasts aid in better production planning and capacity utilization.

e) Sales promotions: Pre-produced inventory enables companies to run sales promotions and meet
sudden surges in demand.

f) Lower setup costs: Producing in large volumes reduces the costs associated with setting up and
reconfiguring production lines.
g) Order fulfillment: Push strategies can be effective in meeting customer orders when there is a
predictable demand pattern.

h) Supplier relationships: The Push approach allows for long-term contracts and stronger relationships
with suppliers.

Disadvantages of the Push approach:

a) Inventory costs: Holding excess inventory results in higher carrying costs, which can have a negative
impact on profitability.

b) Obsolescence risk: With pre-produced inventory, there is a higher risk of products becoming obsolete
if demand patterns change.

c) Forecasting inaccuracies: Dependence on demand forecasts introduces the risk of inaccurate

predictions, leading to potential mismatches between supply and demand.

d) Limited flexibility: The Push approach may lack the agility to respond quickly to dynamic market
conditions or unexpected changes in customer demands.

e) High storage space requirements: Large inventories require adequate warehouse space, which can
increase operational costs.

f) Difficulty in customization: Mass production makes it challenging to customize products to individual

customer preferences.

g) Disrupted supply chain: If the forecasts are significantly inaccurate, it can lead to supply chain
disruptions due to overstocking or stockouts.

h) Potential waste: Producing in advance increases the likelihood of producing more than what is
needed, resulting in waste.

(4) Factors affecting Push and Pull in SCM:

a) Market demand uncertainty: High demand uncertainty may require companies to rely more on the
Pull approach to respond quickly to changing customer needs.

b) Lead time capabilities: If lead times are short and production can be quickly adjusted, the Pull
approach becomes more feasible.

c) Product characteristics: Products with shorter shelf lives or high customization requirements may
favor the Pull approach.
d) Cost considerations: Push strategies may be more cost-effective when economies of scale and lower
production costs outweigh potential inventory holding costs.

e) Supply chain complexity: Complex supply chains with multiple stakeholders may require a
combination of Push and Pull approaches.

(2) Characteristics of Push Approach:

1. Forecast-driven production: Production decisions are based on demand forecasts rather than actual
customer orders.

2. High inventory levels: Companies using the push approach tend to maintain high levels of inventory to
meet anticipated demand.

3. Economies of scale: Bulk production allows for cost savings through economies of scale.

4. Long lead times: Production lead times are longer due to the need to forecast demand and produce
goods in advance.

5. Risk of overproduction: There is a risk of producing more goods than can be sold, leading to excess
inventory.

Characteristics of Pull Approach:

1. Demand-driven production: Production is triggered by actual customer orders, leading to a more

responsive supply chain.

2. Low inventory levels: Companies using the pull approach maintain minimal inventory, reducing
carrying costs and the risk of obsolescence.

3. Flexibility and customization: Products can be customized to meet specific customer requirements.

4. Short lead times: Production lead times are shorter, as goods are produced in response to immediate
demand.
Reference:

Stevenson, W. J., & Hojati, M. (2007). Operations management. McGraw-Hill/Irwin.

(3) Advantages and Disadvantages of Push and Pull Approaches:

Advantages of Push Approach:

1. Economies of scale: Bulk production allows for cost savings through economies of scale.

2. Efficient production planning: Production schedules can be optimized based on demand forecasts.

3. Stable supply chain: The push approach provides stability in production and supply chain operations.

Disadvantages of Push Approach:

1. Risk of overproduction: There is a risk of producing more goods than can be sold, leading to excess
inventory and potential waste.

2. Limited responsiveness: The push approach may result in a lack of responsiveness to changes in
customer demand.

3. High carrying costs: Maintaining high inventory levels can lead to increased carrying costs and storage
expenses.

4. Obsolescence risk: Products may become obsolete if demand does not meet forecasted levels.

Reference:

Chopra, S., & Meindl, P. (2015). Supply chain management: Strategy, planning, and operation. Pearson.