SCM Terminology

Push-Pull Manufacturing


"Push type" means Make to Stock in which the production is not based on actual demand. "Pull type" means Make To Order in which the production is based on actual demand. In supply chain management, it is important to carry out processes halfway between push type and pull type or by a combination of push type and pull type.

Supply Chain Management (SCM) is to create a solution i.e. "supply" for a goal or issue, i.e. "demand". Supply chain models of "Push type" and "Pull type" are opposite in terms of a demand and supply relationship. "Push type" is represented by "Make to Stock" (MTS) in which the production is not based on actual demand and "Pull type" is represented by "Make To Order" (MTO) in which the production is based on actual demand.

One of the major reasons why supply chain management currently receives so much attention is that information technology enables the shifting of a production and sales business model from "Push type" to "Pull type". Pull-type supply chain management is based on the demand side such as Just-in-Time (JIT) and CRP (Continuous Replenishment Program) or actual demand assigned to later processes. Therefore, unlike the Push-type method it is not Make to Stock, which is based on demand forecast. While inventory is kept to a minimum, products can be supplied with short lead times and at high speed. At the point where "Pull type" starts to supply operations triggered by actual demand, it is like an elevator. An elevator starts when a button is pressed even if there is only one passenger. On the other hand, the "Push type" can be considered as an escalator. An escalator continues to supply (push) regardless of whether there is actual demand (passenger). In addition, "Push type" corresponds to a model for trains, buses, and airplanes for which supply (push) is based on demand forecast by time period and route. There may be various forms between "Push type" and "Pull type" depending on inventory forms of materials, work in progress (WIP), and finished items and how to deal with the actual demand in supply chain management.

In the case of sushi, there are boxed sushi sold in a shop, sushi ordered at the counter in a sushi restaurant, and sushi for which an order starts from purchasing live fishes. The place and form which fish for sushi are held in varies from downstream to upstream in a supply chain. An extreme example of a pull-type supply chain sushi restaurant that is unconcerned about lead times is the one that goes fishing when an order is received.

Taken with kind permission from the book:
"Understand Supply Chain Management through 100 words" by Zenjiro Imaoka.