From Push to Pull Logistics

From Push to Pull Logistics

Freight distribution has undertaken a paradigm shift between “manufacture-to-supply” (inventory-based logistics or “push” logistics) to “manufacture-to-order” (replenishment-based logistics or “pull” logistics). The paradigm is shifting from maintaining inventories aimed at approximately satisfying the demand (forecasted) to a comprehensive data collection system ensuring, mainly through on-demand transport, that supply matches closely with demand. This trend is strengthened by logistical processes, namely a better integration between transport modes and inventory control. Of particular relevance to the logistics industry has been the emergence of major coordinators and integrators (third and fourth-party logistics providers) that have taken the task of improving segments of the supply chain.

While a push logistics system involves a limited integration level between suppliers, manufacturers, and distributors, a pull logistics system tries to achieve a higher level of efficiency through integration. Freight flows between components of the supply chain tend to be more frequent in smaller batches and subject to tight time constraints. Also, the sharing of demand dependent data (such as point-of-sale data) helps better synchronize supply with demand. Reverse logistics also tend to be better integrated to achieve a higher level of customer service and promote environmental strategies such as recycling. The emergence of e-commerce in the 1990s has further expanded the concept of pull logistics with a higher level of synchronization between demand and supply and the control of parcel freight distribution through third parties or occasionally through the acquisition of distribution services.