All processes in a supply chain fall into one of two categories, depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order.
With push processes, execution is initiated in anticipation of customer orders based on a forecast. Pull processes may also be referred to as reactive processes because they react to customer demand. Push processes may also be referred to as speculative processes because they respond to speculated (or forecasted), rather than actual, demand.
All processes in a supply chain fall into one of two categories, depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order.
With push processes, execution is initiated in anticipation of customer orders based on a forecast. Pull processes may also be referred to as reactive processes because they react to customer demand. Push processes may also be referred to as speculative processes because they respond to speculated (or forecasted), rather than actual, demand.
The push/pull boundary in a supply chain separates push processes from pull processes. Push processes operate in an uncertain environment because customer demand is not yet known.
Pull processes operate in a predictable environment where customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase.
L. L. Bean executes all processes in the customer order cycle after the customer order arrives. All processes that are part of the customer order cycle are thus pull processes. Orderfulfilmenttakes place from product in inventory that is built up in anticipation of customer orders. The goal of the replenishment cycle is to ensure product availability when a customer order arrives. All processes in the replenishment cycle are performed in anticipation of demand and are thus push processes. The same holds true for processes in the manufacturing and procurement cycles. In fact, raw material such as fabric is often purchased six to nine months before customer demand is expected. Manufacturing itself begins three to six months before the point of sale. The processes in the L. L. Bean supply chain break up into pull and push processes.
Ethan Allen makes customized furniture, such as sofas and chairs, for which customers select the fabric and finish. In this case, the arrival of a customer order triggers production of the product. The manufacturing cycle is thus part of the customer order fulfilment process in the customer order cycle. There are effectively only two cycles in the Ethan Allen supply chain for customized furniture: (1) a customer order and manufacturing cycle and (2) a procurement cycle. All processes in the customer order and manufacturing cycle at Ethan Allen are classified as pull processes because they are initiated by customer order arrival. The company, however, does not place raw material orders in response to a customer order. Raw material inventory is replenished in anticipation of customer demand. All processes in the procurement cycle for Ethan Allen are thus classified as push processes, because they are in response to a forecast.
