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Cycle Views of Supply Chains: 1. Customer Order

The document discusses different views of supply chain processes: 1) The cycle view defines each process, owner, and outcome in a series of cycles from customer to supplier. 2) The push-pull view categorizes processes as either pull (reactive to customer orders) or push (speculative). 3) Examples of push strategies include long production forecasts while pull strategies are demand-driven with minimal inventory. A hybrid can reduce the disadvantages of each.

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Judi Cruz
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102 views4 pages

Cycle Views of Supply Chains: 1. Customer Order

The document discusses different views of supply chain processes: 1) The cycle view defines each process, owner, and outcome in a series of cycles from customer to supplier. 2) The push-pull view categorizes processes as either pull (reactive to customer orders) or push (speculative). 3) Examples of push strategies include long production forecasts while pull strategies are demand-driven with minimal inventory. A hybrid can reduce the disadvantages of each.

Uploaded by

Judi Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CYCLE VIEWS OF SUPPLY CHAINS

A cycle view of the supply chain clearly defines the process involved and the owners
of each process. This view is very useful when considering operational decisions because it
specifies the roles and responsibilities of each member of the supply chain and the desired
outcome of each process.

Process divided into series of cycles. Each cycle occurs at the interface between two
successive stages of the supply chain.
● Customer order cycle (customer-retailer)
● Replenishment cycle (retailer-distributor)
● Manufacturing cycle (distributor-manufacturer)
● Procurement cycle (manufacturer-supplier)

1. Customer Order
● Cycle Involves all processes directly involved in receiving and filling the
customer’s order
● Customer arrival
● Customer order entry
● Customer order fulfillment
● Customer order receiving

2. Replenishment Cycle
● All processes involved in replenishing retailer inventories (retailer is now the
customer)
● Retail order trigger
● Retail order entry
● Retail order fulfillment
● Retail order receiving
3. Manufacturing Cycle
● All processes involved in replenishing distributor (or retailer) inventory
● Order arrival from the distributor, retailer, or customer
● Production scheduling
● Manufacturing and shipping
● Receiving at the distributor, retailer, or customer

4. Procurement Cycle
● All processes necessary to ensure that materials are available for manufacturing
to occur according to schedule
● Manufacturer orders components from suppliers to replenish component
inventories
● However, component orders can be determined precisely from production
schedules (different from retailer/distributor orders that are based on uncertain
customer demand)
● Important that suppliers be linked to the manufacturer’s production schedule.

PUSH - PULL VIEW OF SUPPLY CHAIN


● Supply chain processes fall into one of two categories depending on the timing
of their execution relative to customer demand
● Pull: execution is initiated in response to a customer order (reactive)
● Push: execution is initiated in anticipation of customer orders (speculative)
● Push/pull boundary separates push processes from pull processes
● Useful in considering strategic decisions relating to supply chain design –
more global view of how supply chain processes relate to customer orders
● Can combine the push/pull and cycle views
● The relative proportion of push and pull processes can have an impact
on supply chain performance.

Two Categories Push/Pull View of Supply Chains


1. Executed in response to a customer order (pull process)
2. Executed in anticipation of customer orders (push process)

Supply Chain Integration – Push Strategies


● Classical manufacturing supply chain strategy
● Manufacturing forecasts are long-range
– Orders from retailers’ warehouses
● Longer response time to react to marketplace changes
– Unable to meet changing demand patterns
– Supply chain inventory becomes obsolete as demand for certain products
disappears
● Increased variability (Bullwhip effect) leading to:
– Large inventory safety stocks
– Larger and more variably sized production batches
– Unacceptable service levels
– Inventory obsolescence
● Inefficient use of production facilities (factories)
– How is demand determined? Peak? Average?
– How is transportation capacity determined?
Examples: Auto industry, large appliances, others?

Supply Chain Integration – Pull Strategies


● Production and distribution are demand-driven
– Coordinated with true customer demand
● None or little inventory held
– Only in response to specific orders
● Fast information flow mechanisms
– POS data
● Decreased lead times
● Decreased retailer inventory
● Decreased variability in the supply chain and especially at manufacturers
● Decreased manufacturer inventory
● More efficient use of resources
● More difficult to take advantage of scale opportunities
Examples: Dell, Amazon

Supply Chain Integration – Push/Pull Strategies


● Hybrid of “push” and “pull” strategies to overcome disadvantages of each
● Early stages of product assembly are done in a “push” manner
– Partial assembly of product based on aggregate demand forecasts (which are more
accurate than individual product demand forecasts)
– Uncertainty is reduced so safety stock inventory is lower
● Final product assembly is done based on customer demand for specific product
configurations
● Supply chain timeline determines “push-pull boundary

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