Professional Documents
Culture Documents
Supply Chain Integration
Supply Chain Integration
Supply Chain Integration
Push-
Pull
boundary
Demand
Uncertainty
H
Pull
I II
Computer Furniture
IV III
Books & CDS Grocery Economies
Push L of Scale
L H
Pull Push
Implementing push-pull strategy
• Due to fall in demand the high tech companies were loaded with
rapidly depreciating goods
• Change in strategy:
• Continue to produce stock but in die banks i.e. to keep inventory in
flexible form
• Implement “build-to-order” strategy
• New order will be built on customer order
Visible Improvements
• The average cycle time for semi-conductors is 117 according to research
(from fab to customer)
• Plenty of time for demand to change direction
• Altra collaborated with Nortel & Motorola on product development
• Introduced software system (SCM i2 Tech.) which is linked to fabs,
suppliers, and distributors
Visible Improvements
• Result: reduced cycle time from 10 to 1day and long term cycle time
from 4 weeks to 1 week.
• UMC’s customer can forecast collaboratively using UMC’s web portal
such that it automatically finds the best slot for the customer order.
Freak/Flop show
• Even after using SCM software , it couldn’t prevent inventory glut.
Growth changed from 40 % to negative 10%
• Reasons: New technology creates constraints in supply. Ordering overly
creates glut on the manufacturer’s side
Check on Business History
• Flextronics an EMS company had unusually high inventory glut but they
had a good reason for that because they wanted to obtain better
understanding of with customers of consumer demand.
• The company wanted to create material hub but there was some
disputes with the distributors who complained of surplus inventory. The
case was opposite in the year 2000 when there was a shortage and the
distributors made good margin.
IBM – The Crystal Ball
• IBM follows the pull strategy or just-in-time basis. Their
suppliers have visibility of their inventory level
• The pull strategies IBM applies in order to make it
effective are:
• Commonality across platforms & products
• The number of suppliers kept small
• Electronic purchase transaction to have faster
collaboration with suppliers
• Rationally exuberant sales force who knows their
customers in and out, the main strategy for their
forecast, meet frequently to discuss & anticipate
demand
Thank You