HS 0107: Push Systems

A focus for this blog is on the SCOR human skill 107 called the Push System, a manufacturing strategy that operates based on forecasted demand and planned production schedules. Most supply chain theory is based in the world of Pull systems, as in customer demand is what is dictating stock & production. This is not always possible or practical. In my experience, if you work in areas like Milk production, you can’t tell a cow how much milk to produce to meet demand, the cows are going to eat the grass and make the milk, you need a plan for how to handle the milk that is coming at you. This is a push system.

What is a Push System?

A Push System is a manufacturing methodology in which production is driven by a forecasted production plan. This approach involves producing goods based on projected demand, and materials flow in the same direction as the flow of information from management to the market. The goal is to anticipate customer demand and align production schedules accordingly, allowing for efficient planning and utilization of resources.

In a Push System, inventory levels are managed by producing to stock, which means that products are made in anticipation of future orders. The primary focus is on ensuring that there is enough inventory to meet customer demand without delays. This approach contrasts with a Pull System, where production is initiated only when there is an actual demand or order from a customer.

Key Processes Involved in Push Systems

The Push System involves several critical processes to ensure smooth production flow and inventory management:

1. Determine Level of Collaboration Arrangement (S1.7): This process involves deciding on the extent of collaboration between different supply chain partners. Effective collaboration is essential in a Push System to ensure that all parties are aligned with the projected production plans and inventory levels.
2. Establish Order Signal (S3.1): An order signal is generated based on the forecasted demand, which triggers the production process. This signal ensures that the production line starts manufacturing goods in line with the planned schedule.
3. Return Product (R1) and Return MRO (R3): Managing returns, whether they are product returns or maintenance, repair, and overhaul (MRO) returns, is a crucial aspect of the Push System. Proper management of returns helps maintain optimal inventory levels and reduces the risk of excess stock.

The Role of Technology and Training in Push Systems

Effective implementation of Push Systems requires a solid foundation in technology and continuous learning. Here are some essential skills and experiences that support Push System operations:

• Enterprise Resource Planning (ERP): Proficiency in ERP systems is vital for managing inventory, production schedules, and forecasting demand accurately. ERP systems integrate various business processes and provide real-time data, enabling better decision-making.
• Microsoft Office Suite: Skills in tools like Excel, PowerPoint, and Word are essential for data analysis, reporting, and communication within the supply chain.
• Supply Chain Management Knowledge: Understanding supply chain principles, strategies, and the flow of materials and information is fundamental to managing a Push System effectively.
• Training in Advanced Techniques: Continuous learning through advanced training programs, such as Six Sigma, Lean, and specific ERP software training, helps supply chain professionals stay updated with the latest methodologies and tools.

Benefits and Challenges of Push Systems

Benefits:

1. Efficient Resource Utilization: By planning production schedules in advance, companies can optimize the use of their resources, such as labor and machinery, and minimize downtime.
2. Inventory Availability: Push Systems ensure that inventory is available to meet anticipated customer demand, reducing the risk of stockouts and lost sales.
3. Predictable Production Flow: With a forecast-driven approach, production processes are more predictable, allowing for better planning and coordination across the supply chain.

Challenges:

1. Forecasting Accuracy: The success of a Push System heavily relies on accurate demand forecasting. Inaccurate forecasts can lead to overproduction or underproduction, resulting in excess inventory or stockouts.
2. Inventory Holding Costs: Maintaining inventory based on projected demand can lead to higher inventory holding costs, especially if the forecasted demand does not materialize.
3. Inflexibility to Demand Changes: Push Systems may lack the agility to respond quickly to sudden changes in demand, potentially leading to inefficiencies and wasted resources.

Conclusion

The Push System is a valuable strategy in supply chain management, particularly for companies that operate in environments with predictable demand patterns. By leveraging technology, effective planning processes, and continuous learning, organizations can optimize their inventory management and production processes, ultimately enhancing their overall supply chain performance. However, companies must be mindful of the challenges associated with this approach, particularly in terms of forecasting accuracy and inventory management, to fully capitalize on the benefits of a Push System.

By understanding the intricacies of Push Systems and incorporating best practices, supply chain professionals can better navigate the complexities of modern supply chain management and drive their organizations toward greater efficiency and success.