HC5 Supply chain intergration
The challenge in supply chain integration is to coordinate activities across the supply chain
so that the enterprise can improve performance. These challenges are met not only by
coordinating production, transportation, and inventory decisions, but, by integrating the
front end of the supply chain, customer demand, to the back end, the production and
manufacturing portion of the supply chain.
Supply chain strategies worden vaak gecategorizeerd in push of pull strategies.
Tegenwoordig is er ook vaak een hybrid approach. We kunnen beide strategieën uitleggen:
Push-based vs pull-based supply chain
In a push-based supply chain, production and distribution decisions are based on long-term
forecasts. Typically, the manufacturer bases demand forecasts on orders received from the
retailer's warehouses. Smaller demand uncertainty leads to an interest in managing the
supply chain based on a long-term forecast. Moreover, the higher the importance of
economies of scale in reducing cost, the greater the value of aggregating demand, and thus
the greater the importance of managing the supply chain based on long-term forecast
In a pull-based supply chain, production and distribution are demand-driven so that they are
coordinated with true customer demand rather than forecast demand. In a pure pull
system, the firm does not hold any inventory and only responds to specific orders. This is
enabled by fast information flow mechanisms to transfer information about customer
demand (e.g., POS data) to the various supply chain participants. Higher demand
uncertainty leads to a preference for managing the supply chain based on realized demand.
Moreover, if economies of scale are not important, a pull-based strategy makes more sense
De voordelen van een pull-based supply chain zijn:
Significant reduction in inventory level
Reduction in system costs
De nadelen zijn:
Difficult to implement (especially when lead times are long)
Difficult to take advantage of economies of scale since there is not planned far ahead
To conclude; push-based supply chain systems are used for high economies of scale
(planned far ahead) and low demand uncertainty. Pull-based supply chain systems are used
for low economies of scale and high demand uncertainty.
The challenge in supply chain integration is to coordinate activities across the supply chain
so that the enterprise can improve performance. These challenges are met not only by
coordinating production, transportation, and inventory decisions, but, by integrating the
front end of the supply chain, customer demand, to the back end, the production and
manufacturing portion of the supply chain.
Supply chain strategies worden vaak gecategorizeerd in push of pull strategies.
Tegenwoordig is er ook vaak een hybrid approach. We kunnen beide strategieën uitleggen:
Push-based vs pull-based supply chain
In a push-based supply chain, production and distribution decisions are based on long-term
forecasts. Typically, the manufacturer bases demand forecasts on orders received from the
retailer's warehouses. Smaller demand uncertainty leads to an interest in managing the
supply chain based on a long-term forecast. Moreover, the higher the importance of
economies of scale in reducing cost, the greater the value of aggregating demand, and thus
the greater the importance of managing the supply chain based on long-term forecast
In a pull-based supply chain, production and distribution are demand-driven so that they are
coordinated with true customer demand rather than forecast demand. In a pure pull
system, the firm does not hold any inventory and only responds to specific orders. This is
enabled by fast information flow mechanisms to transfer information about customer
demand (e.g., POS data) to the various supply chain participants. Higher demand
uncertainty leads to a preference for managing the supply chain based on realized demand.
Moreover, if economies of scale are not important, a pull-based strategy makes more sense
De voordelen van een pull-based supply chain zijn:
Significant reduction in inventory level
Reduction in system costs
De nadelen zijn:
Difficult to implement (especially when lead times are long)
Difficult to take advantage of economies of scale since there is not planned far ahead
To conclude; push-based supply chain systems are used for high economies of scale
(planned far ahead) and low demand uncertainty. Pull-based supply chain systems are used
for low economies of scale and high demand uncertainty.
