1. Supply Chain Integration 2. Benefits of Supply Chain Integration 3. Push System 4. Pull System 5. Push vs Pull 6. Integration of Push and Pull Strategy 7. Lead Time and its Impact 8.Demand-Driven Strategies

1. Seminar on
“Supply Chain Integration, Push, Pull and Push-Pull Systems, Impact of
Lead Time, Demand-driven Strategies”
Presented by:-
Name: Soumya Priyadarshini
Course/Batch : MHA/2020-22 (2nd Semester)
Subject : Material and Supply Chain Management (HA6006)
School of Public Health

2. CONTENTS:
1. Supply Chain Integration
2. Benefits of Supply Chain Integration
3. Push System
4. Pull System
5. Push vs Pull
6. Integration of Push and Pull Strategy
7. Lead Time and its Impact
8.Demand-Driven Strategies

3. SUPPLY CHAIN INTEGRATION
• Supply chain integration is a large-scale business strategy that brings as many links
of the chain as possible into a closer working relationship with each other. The
goal is to improve response time, production time, and reduce costs and waste.
Every link in the chain benefits. An integration may be done tightly through a
merger with another firm in the supply chain, or loosely through sharing
information and working more exclusively with particular suppliers and
customers. In the latter case, the supply chain isn’t truly “owned” by one company,
but the various links operate almost as if one company to increase efficiency and
benefit everyone through steady, reliable business.
• Supply chain integration can be defined as a close calibration and collaboration
within a supply chain, mostly with the application of shared management
information systems. A supply chain is made from all parties that participate in the
completion of a purchase, like the resources, raw materials, manufacturing of the
product, shipping of completed products and facilitating services.

5. INTEGRATED
SCM
CUSTOMER
ANALYSIS
PURCHASING/
SUPPLIER
PARTNERSHIP
INVENTORY
MANAGEMENT
AND CONTROL
DEMAND AND
LEAD TIME
MANAGEMENT
MATERIAL
MANAGEMENT
MANUFACTURING
REMANU
STORAGE AND
TRANSPORT
ORDER
FULFILMENT

6. PUSH SYSTEM
• In a push-based supply chain, the goods are pushed with the help of a medium, from the source
point, e.g., the production site, to the retailer, e.g., the destination site. The production level is set in
accordance with the previous ordering patterns by the manufacturer. The push supply chain is
represented as the built-to-stock model.
• A push-based supply chain is time consuming when it has to respond to fluctuations in demand,
which can result in overstocking or bottlenecks and delays, unacceptable service levels and product
obsolescence.
• This system is based on the deliberation of customer’s demand. It tries to push as many products into
the market as possible. As a result, the production is time consuming because the producer and the
retailer struggle to react to the changes in the market. Forecast or prediction plays an important role
in the push system.
• Optimum level of products can be produced through long term prediction. This deliberative nature of
the push system leads to high production cost, high inventory cost as well as high shipment cost due
to the company’s desire to halt products at every stage.
• Thus, in the push view of supply chain integration, the manager of a firm may sometimes fail to
satisfy or cope with the fluctuating demand pattern. This system leads to high inventory and high
size of batches.

7. PULL SYSTEM
• The pull supply chain is predicated on known demand from specific
customer needs. This was considered to be a build-to-order model. In
other words, the pull-based supply chain is based on demand-driven
techniques; the procurement, production and distribution are demand-
driven rather than predicting. .
• In this system, the demand is real and the company responds to the
customer demands. It assists the company in producing the exact
amount of products demanded by the clients.
• The major drawback in this system is that in case the demand exceeds
than the amount of products manufactured, then the company fails to
meet the customer demand, which in turn leads to loss of opportunity
cost.

9. INTEGRATION OF PUSH AND PULL STRATEGY
• Mostly we find a supply chain as merger of both push and pull systems, where the medium between the
stages of the push-based and the pull-based systems is referred as the push–pull boundary. The terms
push and pull were framed in logistics and supply chain management, but these terms are broadly used
in the field of marketing.
For example, WalMart implements the push vs. pull strategy. A push and pull system in business
represents the shipment of a product or information between two subjects. Generally, the
consumers use pull system in the markets for the goods or information they demand for their
requirements whereas the merchants or suppliers use the push system towards the consumers.
• In supply chains, all the levels or stages function actively for the push and the pull system. The
production in push system depends on the demand predicted and production in pull system depends on
absolute or consumed demand.The medium between these two levels is referred as the push–pull
boundary. Generally, this strategy is recommended for products where uncertainty in demand is high.
Further, economies of scale play a crucial role in minimizing production and/or delivery costs.
For example, the furniture industries use the push and pull strategy. Here the production unit
uses the pull-based strategy because it is impossible to make production decisions on the basis on
long term prediction. Meanwhile, the distribution unit needs to enjoy the benefits of economy of
scale so that the shipment cost can be reduced; thus it uses a push-based strategy.

11. LEAD TIME AND ITS IMPACT
• Lead time is the time gap between placing an order and receiving the supplies. Before understanding
the impact of lead time first lets study its types. There are several different types of Lead Time, but
there are four primary types of Lead Time:
1.Customer Lead Time – the amount of time taken between order confirmation and order fulfillment
2.Material Lead Time – the amount of time it takes to place an order with a supplier and receive it,
from confirmed order to having it on hand.
3.Factory/Production Lead Time – the amount of time it takes to build and ship a product if all the
materials are available.
4.Cumulative Lead Time – the total amount of time it would take from confirmed order to delivery of
product if you had to order all the materials (if none were on hand). It is the summation of material
lead time and factory lead time.
• Impact
1.If lead time is higher then it will lead to consumption from the safety stock which would result in
stock outs and finally the patient care can be affected. In case of emergency, the patient may die.
2.If the lead time is lower then more amount of capital will get blocked and which may introduce
inefficiency i.e a situation may arise that the quantity of stock may go beyond the maximum stock
levels.

12. Basic lead time formula is:
Lead time (LT) = Order Delivery Date – Order Request Date
• But in the context of inventory management, this formula also accounts for a reordering delay.
Lead time (LT) = Supply Delay (SD) + Reordering Delay (RD)
Supply delay is the time a supplier takes to fulfill a customer order after it’s placed.
Reordering delay is the time gap between a fulfilled order and the placement of the next order.
 For example, let’s say your average daily sales or average daily usage for milk is 20 liters. And
supplier A accepts orders for milk only after every 2 days. This means that the reordering delay for
your milk supplier is 2 days.
Now, let’s assume that A takes 1 day to deliver milk to your warehouse. This makes their supply
delay 1 day.
In this case,
Lead time = Supply delay (1 day) + Reordering delay (2 days) = 3 days

14. DEMAND-DRIVEN STRATEGIES
• A Demand-driven Supply Chain (DDSC) is defined as a supply chain management
method focused on building supply chains in response to demand signals. The main
force of DDSC is that it is driven by customer demand. In comparison with the
traditional supply chain, DDSC uses the pull (Demand pull) technique. It gives the
market opportunities to share more information and to collaborate with others in the
supply chain.
• In a traditional supply chain, inventory or services are provided based on a forecasted
demand and historical sales patterns, however, in a demand driven supply chain
companies that form part of the supply chain work closely to shape market demand by
sharing and collaborating information so avoiding time lags in information flow, with a
view to avoiding the bullwhip effect occurring across the supply chain.
• A Demand-Driven Supply Chain is dependent on aligning all entities across the supply
chain through information flows. A true DDSC can always adapt to the changing
market conditions thereby maintaining or reducing inventory levels and reduce the
invasive problem of expedited orders.