IBM 3- CH. 10

Push strategy

supply chain strategy in which a company builds goods based on a sales forecast, puts those goods into storage, and waits for a customer to order the product.

Push-Pull

supply chain operate on a push system, but completion of the product is based on a pull system.

• gather materials for products, wait for customer orders and than make product

Push strategy facts

• speculation strategy other name

• achieve economies of scale

• pos. customer serbice

• too much unwanted product

• Expensive and time-consuming

• •nventory carrying costs are expensive

• CUSTOMER ORDERS FIRST

Pull strategy facts

• responsive supply chain.

• Eliminates production of unwanted products.

• Products can be customized.

• Minimal inventory carrying costs.

• Rapid response to market conditions.

• Doesn’t allow for economies of scale.

• Difficult to achieve flexibility for production and distribution.

• PRODUCTION done first

Push-pull strategy FACTS

• Combines economies of scale with flexibility.

• Produces more accurate sales forecasts.

• May not be as cost-competitive as the push system.

• Firm incurs costs to store components in inventory.

• Need a distribution system that delivers quickly

Inventory carrying costs

The costs required to make or buy a product, including risk of obsolescence, taxes, insurance, and warehousing space used to store the goods.

Just-in-Time (JIT)

manufacturing process that seeks to make products based on customer orders rather than in anticipation of orders to recieve components from suppliers only when they are needed for production

Balancing inventory carrying cost with meeting customer demand

• Uses JIT to keep products close by having them ready from one call away

• Relies on short and consistent delivery lead times from suppliers 

• High level quality from suppliers and manufacturers

• Elimination of waste

• Small production runs

Rail

• : Intermodal transport and lack of accessibility.

  • Done on train-tracks

  • Good for inside the USA

  • Lack of access outside 

  • Bulk or heavy goods

Motor, primarily trucks

• Provide quick delivery of products 

• Common and most flexible mode 

• Best for short medium distances

Air

• Fastest form of transportation

• Best for urgent, high-value, lightweight or perishable goods

Water

• Cheapest way to move large shipments 

• Used for shipments from across countries/international trade

• Accessible through ports, waterways, weather, and shipping routes

Pipeline

transportation through pipes from liquids and gases

• Best for continuous movement of oil, gas, water, or chemicals, 

• Low labor cost when built

• Not flexible because only certain materials can be used

• High construction job

Cyberspace

electronic transfer of information through digital networks 

• Moves data, not physical goods

• Instant transmission

• Good for communication, financial transactions, software, media, digital services

Supply chain management

The actions the firm takes to coordinate the various flows within a supply chain.

supply chain orientation

guides the actions of company members toward the goal of actively managing the upstream and downstream flows of goods, services, finances, and information across the supply chain.

supply chain process integration

When companies work collaboratively both internally (between functions) and externally (between companies) to provide value to the final consumer.

Supply Chain Flows through Marketing Channels

•  Also called distribution channels

• Wholesaler, 

• United Natural Foods Distributor, 

• Grainger Retailers, Target, 

• Dollar General