T H E O L I V E R W I G H T - W H I T E P A P E R S E R I E S

Push Versus Pull -

Perception Versus Reality
by Daniel Araujo and James Correll

Introduction
“Push” and “Pull” are terms that have become synonymous with specific supply chain designs. In recent
years, these words also have come to characterize the “quality” of said supply chains. The preconceived
impression is that “Push” is inappropriate, while “Pull” is the preferable or acceptable methodology. In addi-
tion, Push and Pull have been relegated to certain inappropriately pre-assigned techniques. As an illustra-
tion, Push is typically aligned with Material Requirements Planning (MRP), while Pull is placed alongside
Kanban. This, by extension, transfers these techniques (practices) to the corresponding level of appropriate-
ness.

In the market, we see many professionals and organizations making decisions on which techniques to use
and how to structure the management of their supply chains influenced only by those preconceived judg-
ments. Few, however, actually base their decisions on a sound analysis of their business practices and
requirements. This paper explains why Push and Pull cannot be automatically associated to one or another
technique and describes other factors that have a critical influence on how to configure the supply chain.

Push: The Concept and the Practice

Push is typically defined as the model in which the delivery of materials, the production of goods and/or
the shipment of goods to customers, is done according to a predefined schedule. In fact, Push means to
procure or produce some material or product without an immediate demand to use it. As the material
or product shows in inventory, there will be efforts to “push” it to the next stage of the supply chain
and ultimately to the consumers. Poorly-managed schedules tend to create many conditions to push
materials and products without a true demand for them. For example:
Schedules tend to accommodate “waste” (safety stock, safety lead time, lot sizing, queues, set-ups,
Daniel Araujo and Jim Correll are etc.), which makes schedules exceed the expected demands;
principals of Oliver Wight Americas. Supply chain is often slow to react to the true demands;
Both work with senior management
Demand management and supply chain management are not coordinated, leading to inefficiency
of client companies in the areas of
manufacturing planning and behav- and the failure of meeting demands, resulting in higher inventories. This further decouples the
ior changes required to obtain bot- supply chain from the true demands;
tom-line results. They have many Personnel are not sufficiently trained and, combined with inaccurate data, produce inappropriate
years of international experience
schedules. The mismatch between the formal schedules and the real execution erodes the
guiding companies to Class A per-
formance. credibility of the whole model.

As a result, where these distortions happen, the schedule-driven model presents low efficiency, slow
response, high inventories and low customer service levels. However, we can attest that, for almost 40
years, Oliver Wight clients have demonstrated that the schedule model can be operated in the Pull
mode supporting high customer service levels, low inventories, fast response to changes, and the ability
to synchronize actions throughout the supply chain.

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 T H E O L I V E R W I G H T - W H I T E P A P E R
Pull: The Concept and the Practice
Pull is the determination to produce exactly what the customers
need, in the quantity and time closest to when they need it. The
concept, admittedly, has been one of the most important factors of
competitiveness in industry. Toyota is considered the most success-
ful applicant of the Pull concept. It uses Pull principles to condition
its corporate culture, strategy, value chain configuration, and its
day-to-day operations. This consistency from culture and strategy to
day-to-day operations makes Toyota a perfect representation of
Pull.
To emulate the Toyota model, a company needs to either redefine
its business and culture to conform to their ‘Pull’ operational model
or to rethink the elements in the model according to their chosen
business definition. However, many companies have tried to repli-
cate the Toyota success without understanding and reconciling cul-
ture, strategy, value chain configuration and day-to-day operations.
The result has been frustration and failure instead of expected suc-
cess. The frequent distortions of the schedule-driven model and
the widely-advertised success of Pull at Toyota have led to the mis-
taken and harmful association of Pull to some techniques and Push
to others. In fact, it is our contention that most supply chain man-
agement techniques can be applied in a Pull or in a Push mode,
depending on the culture and competence with which they are
applied.
The Value Chain and its Alignment to the
Business
Each company in the market can choose to define its business in a
variety of ways. Different companies succeed and become market
leaders with different operational models. Therefore, it would be
arbitrary to define a single way as the best for all companies.
As Treacy and Wiersema postulate (The Discipline of Market
Leaders)*, the choice of a different value discipline is enough to
drive the definition of the culture of the organization, its strategies,
and operational model in different directions. Other decisions, like
those related to the product portfolio, the market, and the physical
location, also can lead to very different business models. As the
Toyota application clearly demonstrates, the configuration of the
value chain needs to be consistent with the cultural, strategic, and
operational choices of each company.
Consistency between the culture, strategies, operational choices
and the value chain configuration is critical to evolve into a Pull
model and a prerequisite to the appropriate choice of the supply
chain management techniques. As an illustration, Pull, in a busi-
ness of one-of-a-kind, engineer-to-order, will require a different cul-
ture, strategies, operational choices, value chain configuration and
techniques as compared to a high-quantity producer of a standard
product with few options. In the same market, one producer may
choose standardization while another may choose customization.
We cannot say that one is right, and the other is wrong. Each
company must have the right to choose different value proposi-
tions. But we can say that applying the same culture, strategies,
operational choices, value chain configuration, and
* Addison-Wesley Publishing Company, 1995
2.
S E R I E S
techniques of the standard business to the customization business
is wrong. In a business where, for an extended time overall
demand will by far exceed overall capacity to supply, manage-
ment will probably choose a strategy of maximizing the use of
supply resources in detriment to some demands. The best strate-
gy for this business may not be a pure Pull, at least in the fore-
seeable future.
The Choice of Techniques
Even if a chosen business model establishes some preference for
one technique over another, at different points in the value chain
different techniques may be appropriate to plan and manage the
demand, the production activities, the resources, and the supply
of materials. Knowing when and where to apply each of the dif-
ferent techniques is critical to attain the maximum performance
in converting materials, productive resources, and technology into
the products demanded by the customers. Unfortunately, instead
of understanding the business environment and defining the
appropriate suite of techniques, management often focuses on
one or another methodology and tries to apply it across the
board. This often leads to devastating results.
The distortions in the application of the schedule-driven model
and some misconceptions about Pull and Push have led to the
unwise fixation on reactive techniques (like Kanban) to the detri-
ment of ‘dependent-demand’ techniques (like MRP) in the belief
that the former are necessarily Pull and the latter primarily Push.
In fact, both can be either Push or Pull depending on their appli-
cation.
A lean MRP operation maintains the supply chain constantly syn-
chronized to the variations of demand and benefits from the lean
culture and techniques to pursue the lowest lead times, lot sizes,
and inventories. The cases of the automotive industry which syn-
chronize the delivery of suppliers directly to the point of use in
the assembly lines are straight applications of the ‘dependent-
demand’ (MRP) logic. And, while the final trigger to deliver the
components to the production line will be determined by the
imminent execution in the line, all the preceding actions to make
it possible were supported by the production line schedule and a
back-scheduling technique. Assuming the same lean environ-
ment, a dependent-demand technique permits organizations to
operate with much lower inventories and to react much faster to
variations of demand than a reactive/replenishment technique.
On the other hand, a distorted application of MRP allows lot sizes
to grow to cover for manufacturing inefficiencies, safety stocks to
be abused to cope with long lead times, and changes to demand
to be filtered from MRP because the supply chain has not been
enabled to respond. This results in inadequate schedules and
inventories being pushed forth or simply being wasted.
A Kanban environment without the lean culture will present the
same sins in which the supply chain ‘stabilization’ will be prof-
fered as an absolute virtue, even when “true” demand may be
far from stable. Distortions in the use of Kanban will be less
noticeable in an environment of standard products, stable
demands, and high volumes. However, it will create major prob-
lems if those conditions are not present.
 P U S H
For many individuals, ‘demand-driven’ and ‘schedule-driven’ are
mutually exclusive concepts. This common misconception has con-
tributed to many unwise choices. Part of the reason for the mis-
conception is that inappropriate scheduling can lead to the supply
chain losing sight of the true demands, as previously explained.
But the illusion created by Kanban in a high-volume, repetitive
demand environment also contributes to the misconception. Under
these conditions, it looks like the supply actions are only executed
when there is an actual demand to fulfill. In reality, the true
demand depletes an inventory below its ‘reorder point’ which then
triggers a supply action to replenish the inventory. The units
replenished are not intended to meet the demand that actually
happened but, rather, the demand that is expected to happen later.
The supply action is, therefore, based on the assumption that the
demand that just happened will happen again, in the same pattern,
and in the immediate future. This is called the ‘naïve forecasting
technique’.
Since the forecasting technique encoded in Kanban is not apparent,
most people believe that the utilization of Kanban can spare them
from the risks of forecasting. In fact, because forecasting in Kanban
is hidden, it makes it more difficult to measure the deviations of
forecast, to perceive when the Kanban parameters need to be
adjusted to a changed pattern of demand, and to improve the fore-
casts. Again, where demands are very stable, these distortions and
misconceptions produce less visible effects.
Should a company redefine its business just to make Kanban an
appropriate technique? This is a strategic decision that cannot be
made lightly and based on the virtues of the technique alone. For
different stages of the chain and for different materials, products,
and market segments, different techniques will be appropriate
based on the volume, regularity, and predictability of demand,
response time required by the customers, set-up costs, capacity,
and other factors.
The Real Choices in Supply Chain Management
As explained, Pull will be achieved only if the strategic orientation
of the business and the culture of people are Pull, making the
choice and the operation of the techniques conditioned to that
concept. As we manage the supply chain with the strategic direc-
tion selected and by using the most appropriate techniques at each
point, we should understand that there are really only two ways to
plan for products and materials: looking backward and looking for-
ward.
Replacing an item when one unit is taken is considered by many as
‘forward-looking’ under the assumption that the consumption that
just happened will repeat itself in the near future. This assumption,
as explained for Kanban, carries inside a hidden forecasting tech-
nique which is called “naïve,” as previously noted. There are two
problems with this assumption. First, the forecasting model is hid-
den so it cannot be measured for accuracy and, therefore, cannot
be improved. Second, the belief that future demand is represented
by what was taken in the past is dangerous. To predict the future,
one must look into the future. Still, this model works well in the
short term for highly repetitive, stable demand items for which the
future tends to quickly repeat the past.
3.
V S . P U L L - P E R C E P T I O N V S . R E A L I T Y
Nevertheless, even when those conditions are present, the business
needs a longer view which must be accomplished by an appropriate
forward-looking forecasting process.
Many companies, determined to extensively use ‘backward-looking’
as the primary method in their supply chains, work to adapt por-
tions of their businesses to the prerequisites of stable, repetitive
demand. A positive way to do this is to recognize that much of the
variability of demand is artificially induced rather than inherent to
the true market demand. By eliminating distortions in commercial
conditions and in inventories throughout the chain, most of the
artificial variability can be eliminated. Another way to linearize the
demand seen by the supply chain is to buffer it from the true mar-
ket demand with inventory.
In companies fully committed to stable supply chains, decisions are
always made to buffer variations of demand with inventories and/or
with customer lead times.
In a Class A environment, the S&OP (especially in its evolved form
of Integrated Business Management) and MS processes decide the
best balance between the costs of buffering and demand variations
and the costs of adjusting the supply chain to the variations of
demand.
Forward-looking needs to be understood in two basic situations:
independent and dependent demand. For products or items in the
supply chain where demand is decided directly by the consumer,
the only way to determine what the demand will be is by under-
standing the factors that affect the consumers’ demand: trends,
seasonality, events, companion products, fashion, etc. As there are
always multiple scenarios possible in the future, any determination
of future independent demand must be accompanied by the specif-
ic assumptions on which it is based.
The risk of the assumptions used determines the potential error of
the forecasted demands, and the potential error determines the
parameters for the supply chain techniques to use. Should a safety
stock or safety time be maintained, and how much? Can a 99-per-
cent customer service level be targeted or is 95 percent already
challenging for this market or product segment? It should be
noted that this consideration equally applies to backward-looking
techniques - the size of a Kanban system directly depends on the
size of deviations of demand against the assumed average.
Conceptually, only the last step of a supply chain, that is, direct
contact with the end consumers, needs to be treated as independ-
ent demand. All the previous steps can be treated as having the
demand dependent upon that last one. This is a potential advan-
tage because it restricts the large risks of forecasting at every step
in every chain. All the previous steps can have the demand calculat-
ed using techniques far more reliable than forecasting.
This is a major difference between the backward-looking and the
forward-looking models. In backward-looking, at every step the
demand is forecasted (though not in a visible way) based on the
immediate past consumption, with all the risks of forecasting using
a naïve technique. The compounded risk of all the Kanban forecast-
ing points throughout the chain tends to be higher than the risk of
specialized forecasting at the last step only. The compounded risk
of forecasting in all Kanban points is paid with a high buffer
 T H E O L I V E R W I G H T - W H I T E P A P E R
inventory between the supply chain and the market, with more
restrictive demand management practices on the market or with
inventory costs distributed according to the size of the multiple
Kanban points.
A second difference between the two models is that in a back-
ward-looking model, such as a chain of successive Kanbans,
there is a physical delay in recognizing a change in demand and
passing it backwards. Assume a very fast-responding supply
chain where every step works in daily demand cycles. The mar-
ket consumes, from the last step in the chain, its predicted
demand of 100 units but, unknowing to the chain, tomorrow’s
demand will be only 50. The previous step interprets today’s
consumption of 100 as the order to replenish in that quantity,
as if tomorrow’s demand will be 100. One cycle later, in the
third-to-last step in the chain, the consumption of 100 in the
second-to-last step is interpreted as an order to replenish in that
quantity. With the delay inherent to the process time in each
cycle, the replenishment order will be passed backward, step by
step, eventually reaching the first supplier in the chain. By that
time, several early steps may be producing to replenish a
demand that occurred several days (or weeks) before, while
actual demand in the market already may be quite different.
In a forward-looking model, any change in demand input at the
end of the chain can be immediately transmitted backwards
throughout the entire chain. It is very likely that several steps
will not be able to change their schedules for today or even for
some of the future days, but the whole system can benefit from
knowing that the demand has already changed and begin to
make corrections as soon as it is feasible to change the sched-
ules. Wall-Mart is normally considered the top reference for this
practice, with the ability to immediately transmit to its suppliers
the actual demand observed in the check-outs of the stores.
Backward-looking and forward-looking are critical choices to
make in supply chain management design as it impacts differ-
ently the last steps of the chain, characterized by independent
demands, and the earlier steps, which can be treated as
dependent demands if forward-looking is chosen.
Where To Meet Your Customer
This is another critical choice when selecting forward-looking as
it presents three basic options:
Œ The first is “make-to-order” which links the product build
schedule (and subsequently the assembly schedule) to actual
customer orders.
Œ “Make-to-stock/assemble-to-order” is the second option. It
anticipates what the customer wants in base units and options,
orders them at lead time, but only assembles the final product
when actual customer orders are received. The advantage is
that a limited number of forecasted items can be configured
into a huge number of end items.
Œ The third option, “make-to-forecast”, anticipates the end
items the customer wants and produces them in advance so
they are available when the customer orders them. As forecasts
always include some error, products are often made to cover for
an upside demand or a demand that happens earlier than fore-
S E R I E S
casted. This creates a safety stock effect. It is important to
note, however, that products are essentially made to a forecast-
ed demand, and the planned inventory should be a conscious
decision based on the potential error of forecasts and the tar-
geted customer service level for each product and market seg-
ment.
Ideally all products would be “make-to-order” because of the
reduced inventory carrying costs and the elimination of the risks
of customers not buying the products. However, manufacturing
lead time and customer unwillingness to wait often makes this
option inadvisable. To determine the correct option, an under-
standing is required of the characteristics of demand at each
stage of the supply chain and for each product and market seg-
ment (see Basic Characteristics of Product Families).
Conclusion
Understanding the differences in demand and supply character-
istics is extremely important to determine the appropriate model
for managing products. Toyota has addressed this by limiting its
product design and market strategy to only Type 1 products. For
example, instead of adapting the techniques to the defined
business strategies, Toyota conditioned its business definition
and strategies to the techniques chosen and has excellent disci-
pline throughout its entire supply chain to execute them.
Many companies try to apply the Toyota approach without first
changing their product design and market strategy to conform
to the Type 1 approach, resulting in poor customer service and
high inventory. However, conforming product design and mar-
ket strategy to Type 1 products in many companies is not a rec-
ommended business decision. An increasing number of cus-
tomers today are asking for more and more choices. Not satisfy-
ing their needs can significantly impact sales in a negative man-
ner.
To compete in the future, the selection and application of the
correct model to the various characteristics is critical for manu-
facturing companies. This will require more and more companies
to better understand the models and the characteristics for their
application. And that means going deeper than the usual
“Push” vs. “Pull”, Kanban vs. MRP, debate and focusing on the
business strategies, the customers’ real requirements, and the
actual supply chain characteristics.
Evolving from Push to Pull also requires the identification of
every element which stands in the way of Pull. Doing it for
each item or group of items permits prioritizing the work and
planning the journey as illustrated in Figure 1.
4.
 P U S H V S . P U L L - P E R C E P T I O N V S . R E A L I T Y

Figure 1

Figure 2

Basic Characteristics of Product Families

Within a family of products, there are four basic characteristic types:

Type 1 - Regular/Predictable/High-Volume Demand. These fit very well in the “make-to-forecast” or “make-to-stock” option. Depending
on the potential error of forecast and on the customer service policy, higher or lower inventory can be planned (down to zero).

Type 2 - Occasional/Unpredictable/Low-Volume Demand. These tend to be too costly and risky to “make-to-stock”, so the “make-to-
order” or the “make-to-stock/assemble-to-order” model is applied. Here the customer assumes the risks of forecasting his/her demands
and placing the order with enough time for the manufacturer to make and/or assemble it.

When used, the “make-to-stock/assemble-to-order” model should be applied upstream in the supply chain until it reaches a stage where
demand starts to be predictable (by aggregation of several demand sources) or where the needed materials are generic and readily avail-
able in the market or there is a willingness to stock selected items.

Type 3 - Occasional/Predictable/Low Volume. These should be made to forecast, with the intention of keeping inventory at zero. This
model is a variation from Type 1 because, in that mode, the regularity of demand permits the maintenance of stock that soon will be
consumed. An example of Type 3 items are those to be consumed in a planned maintenance event. They may be highly predictable as
to quantity and timing, and the following demand may be quite far in the future, so maintaining a permanent level of inventory may be
unnecessary and costly. Another example may be products to support other specific events, such as a conference with a known number
of participants.

Type 4 - Occasional/Low Predictability/Immediate Customer Need. If these items are strategically relevant to the business, the customer
need will drive to the “make-to-stock” option, in spite of the risks and costs involved. An example of this is service or spare parts. While
by most criteria these inventories would be considered of very low performance, the cost of the equipment down time waiting for supply
justifies the option to maintain a representative quantity in stock. Another example is one-time-only products that companies like Avon
include in a sales campaign. They are a relevant part of the business strategy, but there isn’t any past experience to predict market reac-
tion. If they are not sold during the campaign, they cannot be sold later; if demand exceeds the forecast, there will be lost sales. Other
examples include seasonal and perishable products, event dependent products (Super Bowl), time-stamped products (calendars), etc.
In addition to the predictability, regularity and volume of demand, the decision of ‘Where to Meet Your Customer’ needs to consider the
acceptance of the customer to wait for the product and what the competition is offering.

5.
 T H E O L I V E R W I G H T - W H I T E P A P E R S E R I E S

About this book:

This third edition of Gaining Control focuses on the lat-
est concepts, software and processes that exist today
and provides detailed explanations and step-by-step
instructions on how and where to apply these tools to
achieve success in managing and controlling your manu-
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as described in the Oliver Wight Class A Business
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Highlights of the Book:

This book defines such concepts as Finite Capacity
Scheduling (FCS) and Advanced Planning and Scheduling
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potential and pitfalls. Other concepts explored and
updated include Lean and Agile manufacturing, Six
This synopsis has been developed to assist in Sigma, and customer centricity, all of which can be applied individually or in combination to attain
executive communications. efficient operations in a single- or multi-plant environment. This updated edition includes many prac-
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