Push/pull boundary

For a hybrid Push-Pull strategy, a second important decision is to define where to locate the Push-Pull boundary in the supply chain. Harrison (2003) states that the Push part is applied to the portion of the supply chain where demand uncertainty is relatively small, and thus, managing this portion based on long-term forecast is appropriate. On the other hand, the Pull part is applied to the portiOTi of the supply chain where uncertainty is high, and hence, it is important to manage this part based on realized demand. One illustrative example is Dell, who implemented the Push-Pull strategy by locating the boundary at the assembly point. 

As shown in Figure 11.1, any production framework actually defines a production process push-pull boundary across the order fulfillment cycle. On the left of the boundary, we have the production resources made available by the push-based planning processes. Customer orders arise, on the right of the boundary, to compete for these limited short-term production resources. The ATP system executes at the interface of the push-driven flow and pull-based flow systems. It plays a critical role in making best use of available resources, including raw materials, work-in-process, finished goods, and even production and distribution capacities, to commit customers order requests over a period of time across a supply chain. By doing so, it coordinates activities across the push-pull boundary of a supply chain. 

Depending on where the push-pull boundary is positioned and how many echelons are considered in a supply chain network, different ATP strategies can be used by structuring push-based and pull-based ATP models properly. In general there will be a push component and a pull component, but the importance and complexity of the underlying models will vary by context. 

Consider the snpply chain involved when a cnstomer orders a book from Amazon. Identify the push/pull boundary and two processes each in the pnsh and pull phases. 

A push/pull view of the supply chain is very useful when considering strategic decisions relating to supply chain design. The goal is to identify an appropriate push/puU boundary such that the supply chain can match supply and demand effectively. 

All processes in a supply chain fall into one of two categories, depending on the timing of then-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 pusWpull boundary in a supply chain separates push processes from pull processes, as shown in Figure 1-5. Push processes operate in an uncertain environment because customer demand is not yet known. Pull processes operate in an environment in which customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase. 

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