6.6.2 Pull systems
Pull systems are based on real demands and production and manufacturing is done in accordance with demands. In effect, push systems are based on a 'built to stock' concept, while pull systems are based on a 'built to order' concept. At this stage the most obvious question is how long will the customers wait after an order is initiated and before the product is made available? Or what incentive does the customer have to order in advance to wait for a product whereas he or she can walk into another store and buy it off the shelf? Let us look at the supply chain model of Dell computers, which is often cited as a prime example of a pull system.
The following excerpt is taken from Chopra and Meindl (2001):
Dell does not sell through a reseller or distributor but rather directly to the consumer. Demand is not from finished product inventory but from production. The arrival of a customer order triggers production in final assembly. The manufacturing cycle is thus part of a customer order fulfilment process in the customer order cycle. There are effectively only two cycles in the Dell Supply Chain: (1) a customer order and manufacturing cycle and (2) a procurement cycle.
All processes in the customer order and manufacturing cycle at Dell are thus classified as pull processes because they are initiated by customer arrival. Dell, however, does not place component orders in response to a customer order. Inventory is replenished in anticipation of customer demand. All processes in the procurement cycle for Dell are thus classified as push processes because they are a response to a forecast.
Figure 6.7 Push/pull boundary in Dell's supply chain
As evident from the Dell model, when one considers physical products and the extended supply chain, the system will be a combination of the push/pull system.
In your text
Read Section 5.2..2 in your text for a general discussion on pull based systems and their impact on manufacturing and transportation decisions.
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