AF16 SCM Strategies - Push Pull

AFMI -SCM -BL01M03-Day08-27Nov20 SC08-BL01M03



Agenda/Syllabus

Unit 3 Introduction to Supply Chain Management Supply chain – objectives – importance – decision phases – process view – competitive and supply chain strategies –


AF16 AFMI -SCM -BL01M09-Day10-11Dec20 AF16

BL01M09 "Unit 3 Introduction to Supply Chain Management Supply chain – objectives – importance – decision phases – process view – competitive and supply chain strategies – achieving strategic fit



Supply chain stages includes,

  1. Customers

  2. Retailers

  3. Wholesalers/Distributors

  4. Manufacturers

  5. Component / Raw-material suppliers


The Pull System is a lean manufacturing method that uses the Just-in-Time strategy of not producing goods until an order is received. Instead of forecasting demand, the pull system produces 'as needed


What is Supply Chain Management Process?

Strategic Planning Process. Strategic Planning Process involves the strategic supply chain design and strategic sourcing. ...

  1. Demand Planning Process. ...

  2. Supply Planning Process. ...

  3. Procurement Process. ...

  4. Manufacturing Process. ...

  5. Warehousing Process. ...

  6. Order Fulfillment Process. ...

  7. Transportation Process.


1. Cycle View. The processes in a supply chain are divided into a series of cycle, each performed at the interface between two successive stages of a supply chain. Cycle view of Supply chain process includes, Customer order cycle.


2. What is SCM cycle?

The Supply Chain and its Cycles. A simplistic representation of a supply chain involves a sequence between five stages, from suppliers to the final customer. Each of these stages has its own cycle, which is a sequence of operations and transactions taking place between two stages.


What are the advantages and disadvantages of push and pull supply chains?

Instead of reacting to real demand, a push approach relies on forecasts that are often grossly inaccurate. Other disadvantages of this strategy include high carrying costs, disposals, discounting, missed sales, stock shortages, high debt levels and rescheduled production cycl



3. What is a push strategy?

A push logistics strategy is a forecast-led approach. Companies who use this approach rely on forecasting in order to know how much stock to order. Decisions are made when stock is ordered.

Due to the high volume of SKUs, this approach generally considers each product the same regardless of their varying demands.

Forecasting is achieved at the aggregate level, such as a weekly forecast from the DC to retail stores. Products are then transported to stores based off forecasts rather than individual store demands.

The main advantages of this strategy include enabling long-term planning, readily available stock, economies of scale, and allows for more planning and control.

However, the main weakness of a push strategy is that it takes a long time to react to changes in the marketplace. Instead of reacting to real demand, a push approach relies on forecasts that are often grossly inaccurate.

Other disadvantages of this strategy include high carrying costs, disposals, discounting, missed sales, stock shortages, high debt levels and rescheduled production cycles.

What is a pull strategy?

A pull supply chain strategy utilizes real-time data so that inventory orders are more accurate.

This approach is based off actual consumption at a granular level. This includes store, SKU and daily POS data – in addition to forecasts.

Advantages of a pull strategy include higher service levels, lower carrying costs, decreased inventory levels and fewer markdowns. But perhaps most of all: the pull approach enables supply chains to adapt to demand faster, and allows for SKU and store differences.

However, the pull approach is not without its weaknesses. A pull strategy faces difficulties as lead times begin to increase and demand changes regularly. It’s also more difficult to achieve economies of scale as production and distribution are determined by real demand.


In reality, most adopt both a push and a pull strategy. This is commonly known as a push-pull strategy.

They might use a push-based system to send products to warehouses or stores, but from there they use a pull-based system as they wait for customers to buy the product.

By utilizing both a push and a pull strategy, you can react efficiently to changing customer demands while still creating economies of scale within your existing operations.


To successfully implement a push-pull strategy, you need to establish a foundation of sound systems and processes.


These include:

The ability to be able to consistently communicate with your customers across your supply chain

Planning systems that ensure the right products are in the right place – at the right time

Execution systems that can be efficient at scale

Logistics vendors that will keep your promises to your customers

Being in close proximity to your main customer bases

In order to achieve these objectives, you will need a new breed of distribution and logistics systems. Essentially, technology that is responsive to your omni-channel requirements and aligned to your push-pull strategy.


A stock-keeping unit (SKU) is a scannable bar code, most often seen printed on product labels in a retail store. The label allows vendors to automatically track the movement of inventory.



WAREHOUSE MANAGEMENT SYSTEMS (WMS):

You need a WMS that is flexible and can manage both your push and pull distribution operations. You should also be able to control the processes and workflows in order to optimise each system to work for – rather than against you.


TRANSPORTATION SYSTEMS:

You need logistics systems that are programmed to understand push distribution and transfers, and reduce the cost of freight while not compromising on customer service.


CUSTOMER SERVICE APPLICATIONS:

You need the means to not only meet delivery dates, but enable clear and honest communication with customers at every stage of the buying cycle.


HIGH-VOLUME PARCEL APPLICATIONS:

Parcel shipping has resulted in modern applications with better scalability; that offer increased carrier options and are 100% accurate.


EDI:

Regardless of your partner agreements, you need to keep each partner informed and give them the best chance of executing at a high standard. EDI tools should be scalable and flexible. This in turn accelerates transactions between fulfillment channels and your trading partners. As a result, you can further decrease costs and increase productivity.


In summary, we have established that both the push and pull strategy have strengths and weaknesses. In fact, a push-pull strategy utilizes the advantages, and minimises the disadvantages of both approaches.


In order to implement a successful push-pull strategy, you need to utilise the right technology, leverage existing assets and consider new partnerships – so that you can improve operations and increase your bottom-line.



1. Cycle View

The processes in a supply chain are divided into a series of cycle, each performed at the interface between two successive stages of a supply chain. Cycle view of Supply chain process includes,

Customer order cycle

Replenishment cycle

Manufacturing cycle

Procurement cycle




Resource

https://www.fibre2fashion.com/industry-article/5123/an-overview-of-supply-chain-management

https://iwms.co.za/is-a-push-or-pull-strategy-better-for-your-supply-chain/


CLASS Discussion - Scenario


Your company' which is into production of chocolate candies for children. your products are getting stockout in a particular location, you are deputed to check out the reason. what steps you will take to get the data?

  1. Firstly I will take the sales list of that particular area so that I will get to know the demand in that area

  2. Field analysis

  3. By conducting regular stock counts

  4. Checking out the record maintained of the data of purchase and sale

  5. Personally visit the location and get the data

  6. Looking into suppliers of that particular location, and increases that locations supply and try to not get stockout the product.

  7. To make ensure the marketing channels transport system should be planned

  8. I'll take survey list of that particular area.

  9. Check data of Inventory.

  10. I will send a small team to make a survey of that perticular area and surrounding of that area

  11. Use of modern of new system

  12. Use of modern inventory system

  13. I will find out what is the demand in that particular area so that I can supply the products as per demand required.

  14. Specify the sample, Define the problem, design and research etc

  15. First I will calculate the daily usage and also the stock sent to the particular region and calculate the sales of my candy on day to day basis

  16. Track both demand and outputs supply in that area. Audit Product supply before delivery.

  17. Check whether the production list and sales are in sink are not because if they are not matching then somewhere something is going wrong and then we need to have close inspection about every department everything starting from procurement to delivery .

  18. By using any software installation in warehouse

  19. I will find out what is the demand in that particular area so that I can supply the products as per demand required.

  20. I will find out what is the demand in that particular area so that I can supply the products as per demand required.

  21. I'll take survey list of that particular area.

  22. To get the data ,first i will contact distributor of that particular area and then retailer to know exact reasons

  23. To get the data ,first i will contact distributor of that particular area and then retailer to know exact reasons

What according to you is the biggest change in the market in 2020 and how is this go to change we do business in coming years?

  1. People's tastes are becoming more varied, flexible, and demanding.

  2. Digitalization

  3. By adopting to current condition

  4. By online stores ..

  5. Mobile apps redefining service industries

  6. In payment sector

  7. In shopping sector "

  8. most of all marketing done in Online

  9. "In year 2020 due to continuous lockdown worldwide most of the people turn towards the online shopping.when buyer go to market for shopping he had selected options of commodities.

  10. But through online apps like amazon ,buyer can watch lot of products of same quality without going anywhere.

  11. That's why selling product online with good advertisement and offer is the best way to to attract customers."

  12. In coming years people eat healthy and nutritional rich food. There for food industries produce helthy and nutrition rich food.

  13. Online marketing

  14. "Everyone in this 2020 started preferring online shopping.

  15. So in my view offline shopping products will definitely fall."

  16. If the consumption is more in that perticular area and surrounding i will plan to plant a production unit near that area

  17. Cost of price is more in 2020

  18. "The biggest change is banning China products I think

  19. This may help to boost our make in India products"

  20. More customers are tending towards the online market to avoid the contact with others and also particular about their products used

  21. Increase in demand for streaming services.

  22. E- marketing

  23. "Everyone in this 2020 started preferring online shopping.

  24. So in my view offline shopping products will definitely fall."

  25. In 2020 ,the marketing levels has got down due to coronaviruses, this is the biggest change in 2020 ,







































Lakshminarasimman V Rao | SCM| Class notes | Study Material | AFMI | Corporate Neeti Consulting | Mysuru

corporateneeti.com

All data above is a combination of data from Internet, purpose of this doc is for research and education only and responses received from Class students and interaction.

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