How does furniture get made.
Well I guess it depends on what type of furniture we’re talking about.
Let’s keep it simple.
Let’s say you’re buying some chairs for a kitchen table what are your options.
Well the easy thing would be to go to the store that sells simple and affordable furniture nothing fancy
but still something that would look good in your kitchen.
The price is probably going to be reasonable and the great thing is you’ll get to take those chairs
home with you today.
The downside is your only options are what they have in stock.
Even if they have the style you want you might not like the colors they have.
Customizing those chairs is not an option because they were probably made a while ago at a facility
that was probably far away in supply chain.
This is what’s called a push strategy meaning we know what the customer is likely going to want.
So let’s make it now before they even know they want it.
And then when they realize they need it it’ll be waiting for them at the store.
It’s fast for the customer.
And since we make the same chair over and over again we’ll realize economies of scale the US will be
able to save some money.
Juxtapose this strategy with the pull strategy here.
The company doesn’t make anything here.
The company waits for the customer to make a specific order which style cheere do they want which materials
and fabric do they want to use in what color do they want their chair.
The idea here is that the customer gets exactly what they want.
Sure they could buy a generic chair at the store.
But here you get a chair that was designed and manufactured just for you.
So while a push company might be said to have a supply chain a strategy that pushes lots of product
towards the customer thus creating a large supply of inventory of pulse system might be referred to
as a demand chain a system that is actually activated by consumer demand.
We don’t make anything until the consumer pulls on the chain.
So let’s compare the two systems which one can provide the consumer with inventory right away push which
one offers customization pull which one will likely have a lower price push which one will likely have
a better design and higher quality pull which one carries lots of finished goods inventory push and
which one carries more raw materials inventory pull.
Neither strategy is better but there is a right time in place for each strategy.
You might be saying Can I have a little bit of both.
Actually you can if you use what’s called postponement.
Postponement is a combination of push and pull.
What you do here is figure out what’s always the same in my product and what are the elements I’m going
to let the customer choose.
Let’s say the design the materials and the product are always the same.
If that’s the case that’s what I’ll push.
So let’s make lots of wooden chairs right now while we let the customer choose.
How about if we let them choose the color of those chairs.
So now we’ll just let those chairs those unpainted wooden chairs sit there when a customer sees the
chair in our showroom and says Paint It Black we’ll paint it black.
If they say painted white we’ll paint it white.
Therefore we let the customer pull the chairs color.
So what does postponement.
Give us some speed some flexibility.
Different elements of quality and also some cost saving options.
These systems are actually everywhere.
Next time you go to a nice restaurant and order a meal I want you to look at your order and ask yourself
which elements of my meal were pushed.
Basically what was probably done long before I got here and which elements were pulled.
Which ones did they have to wait to complete until I actually placed my order.
You see supply chain is everywhere pushing and pulling the things we need in our lives.