A pull strategy is when a manufacturer stimulates consumer demand to obtain product distribution through its channel of distribution. Manufacturers use promotional activities such as aggressive personal selling and trade advertising to induce intermediaries like wholesalers and retailers to order its products for stocking and sale to end users.
Companies like Vistaprint, which produces products such as t-shirts and business cards only after receiving an order from a customer, are known to employ this type of supply chain management. It reduces waste and inventory costs, while ensuring that customers receive their ordered products in a timely manner.
Businesses can also implement this supply chain management strategy in their manufacturing facilities by using Just-in-Time (JIT) production. JIT manufacturing enables manufacturers to produce the right products at the right time, in response to actual customer demand, which eliminates the need for them to keep large quantities of inventories in warehouses. It also enables them to respond more quickly to changes in customer demand, which can help improve their customer requisition rate and brand loyalty.
Nevertheless, this type of supply chain requires effective coordination and communication between various stakeholders, as it can lead to the bullwhip effect, which amplifies demand fluctuations in an upstream supply chain to create excess inventory, inefficient resource allocation, and increased costs. To mitigate this issue, companies can adopt new technologies such as artificial intelligence and predictive analytics to enhance visibility and enable accurate demand sensing. They can also foster strong relationships with suppliers and develop collaborative forecasting techniques to ensure that demand information flows fast upstream and downstream, enabling more accurate planning and execution of supply chain processes.
