The business terms push and pull originated in logistics and supply chain management, but are also widely used in marketing and in the hotel distribution business.
Walmart is an example of a company that uses the push vs. pull strategy.
Supply-chain management
Complete definition
There are several definitions on the distinction between push and pull strategies. Liberopoulos (2013) identifies three such definitions:
A pull system initiates production as a reaction to present demand, while a push system initiates production in anticipation of future demand. In a pull system, production is triggered by actual demands for finished products, while in a push system, production is initiated independently of demands. A pull system is one that explicitly limits the amount of WIP that can be in the system, while a push system has no explicit limit on the amount of WIP that can be in the system.
Other definitions are: Push: As stated by Bonney et al. (1999) control information flow is in the same direction of goods flow Semi push or Push-pull : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt every fixed period. Pull : Succeeding node makes order request for preceding node. Preceding node reacts by producing the order, which involves all internal operations, and replenishes when finished. Semi-pull or pull-push : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt immediately. There are several levels of semi-pull systems as a node can have stock at several layers in an organization.
Information flow
With a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with historical ordering patterns from retailers. It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays (the bullwhip effect), unacceptable service levels and product obsolescence.
In a pull-based supply chain, procurement, production and distribution are demand-driven rather than to forecast. However, a pull strategy does not always require make to order production. Toyota Motors Manufacturing is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed. In Toyota's case, Kanban cards are used to signal the need to replenish inventory.
A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is sometimes known as the push–pull boundary. However, because of the subtle difference between pull production and make-to-order production, a more accurate name for this may be the customer order decoupling point. An example of this is Dell's build to order supply chain. Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The decoupling point would then be at the beginning of the assembly line.
Applied to that portion of the supply chain where demand uncertainty is relatively small Production and distribution decisions are based on long term forecasts Based on past orders received from retailer's warehouse (may lead to bullwhip effect) Inability to meet changing demand patterns Large and variable production batches Unacceptable service levels Excessive inventories due to the need for large safety stocks Less expenditure on advertising than pull strategy
In a marketing pull system, the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company Ford Australia. Ford Australia only produces cars when they have been ordered by customers.