Exploring Four Types of Supply Chains: Push, Pull, Make-to-Order and Make-to-Stock

Introduction

A supply chain is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to customer. The four main types of supply chains are push, pull, make-to-order, and make-to-stock. Each type has its own advantages and disadvantages, and is better suited for certain industries and businesses. In this article, we’ll explore the four types of supply chains, understand the pros and cons of each, and learn how to choose the right supply chain for your business.

A Comparison of the Four Types of Supply Chains

Before diving into the different types of supply chains, it’s helpful to understand the differences between them. The two main categories of supply chains are push and pull, which refer to the way products move through the supply chain. Push supply chains are based on forecasting, while pull supply chains are based on actual demand. Additionally, supply chains can be divided into make-to-order and make-to-stock, which refers to when products are manufactured. Finally, supply chains can be linear or networked, which refers to the structure of the supply chain.

Push vs. Pull Supply Chains

Push supply chains are based on forecasting. Manufacturers anticipate future demand and produce products before they are ordered. This type of supply chain is best suited for companies that have stable demand, such as consumer packaged goods. Push supply chains are often used by large manufacturing companies because they can take advantage of economies of scale and reduce costs. On the other hand, pull supply chains are based on actual demand. Manufacturers only produce products when they receive an order. This type of supply chain is best suited for companies that have fluctuating demand, such as fashion retailers. Pull supply chains are often used by small businesses because they require less capital and inventory.

Make-to-Order vs. Make-to-Stock Supply Chains

Make-to-order supply chains are when products are manufactured after an order is placed. This type of supply chain is ideal for businesses that have unique products, such as custom furniture makers. Make-to-order supply chains are often used by small businesses because they require little upfront capital and can quickly respond to customer needs. On the other hand, make-to-stock supply chains are when products are manufactured before an order is placed. This type of supply chain is ideal for businesses that have standardized products, such as food manufacturers. Make-to-stock supply chains are often used by large businesses because they can take advantage of economies of scale and reduce costs.

Linear vs. Networked Supply Chains

Linear supply chains are when products move through a single path from supplier to customer. This type of supply chain is best suited for businesses that have simple supply chains, such as booksellers. Linear supply chains are often used by small businesses because they require less coordination and are easier to manage. On the other hand, networked supply chains are when products move through multiple paths from supplier to customer. This type of supply chain is best suited for businesses that have complex supply chains, such as automotive manufacturers. Networked supply chains are often used by large businesses because they can take advantage of economies of scale and reduce costs.

Exploring the Different Types of Supply Chains

Now that we’ve compared the different types of supply chains, let’s dive deeper into each one. We’ll explore the advantages and disadvantages of each type so you can decide which one is best for your business.

Push Supply Chains

Push supply chains are based on forecasting. Manufacturers produce products before they are ordered. There are several advantages to this type of supply chain. First, manufacturers can take advantage of economies of scale and reduce costs. Second, manufacturers can ensure that products are available when customers need them. Third, manufacturers can build relationships with suppliers and secure reliable supplies. However, there are some drawbacks to push supply chains. First, manufacturers may end up producing too much or too little. Second, manufacturers may be stuck with excess inventory if demand doesn’t meet expectations. Third, manufacturers may be unable to respond quickly to changes in demand.

Pull Supply Chains

Pull supply chains are based on actual demand. Manufacturers only produce products when they receive an order. There are several advantages to this type of supply chain. First, manufacturers can respond quickly to changes in demand. Second, manufacturers can avoid excess inventory and reduce costs. Third, manufacturers can build relationships with customers and ensure satisfaction. However, there are some drawbacks to pull supply chains. First, manufacturers may be unable to take advantage of economies of scale. Second, manufacturers may not be able to ensure that products are available when customers need them. Third, manufacturers may be stuck with unreliable supplies.

Make-to-Order Supply Chains

Make-to-order supply chains are when products are manufactured after an order is placed. There are several advantages to this type of supply chain. First, manufacturers can respond quickly to customer needs. Second, manufacturers can customize products to meet customer demands. Third, manufacturers can build relationships with customers and ensure satisfaction. However, there are some drawbacks to make-to-order supply chains. First, manufacturers may not be able to take advantage of economies of scale. Second, manufacturers may not be able to ensure that products are available when customers need them. Third, manufacturers may be stuck with unreliable supplies.

Make-to-Stock Supply Chains

Make-to-stock supply chains are when products are manufactured before an order is placed. There are several advantages to this type of supply chain. First, manufacturers can take advantage of economies of scale and reduce costs. Second, manufacturers can ensure that products are available when customers need them. Third, manufacturers can build relationships with suppliers and secure reliable supplies. However, there are some drawbacks to make-to-stock supply chains. First, manufacturers may end up producing too much or too little. Second, manufacturers may be stuck with excess inventory if demand doesn’t meet expectations. Third, manufacturers may be unable to respond quickly to changes in demand.

Linear Supply Chains

Linear supply chains are when products move through a single path from supplier to customer. There are several advantages to this type of supply chain. First, manufacturers can control the entire process and reduce costs. Second, manufacturers can ensure that products are delivered on time. Third, manufacturers can build relationships with suppliers and secure reliable supplies. However, there are some drawbacks to linear supply chains. First, manufacturers may not be able to take advantage of economies of scale. Second, manufacturers may not be able to respond quickly to changes in demand. Third, manufacturers may be stuck with unreliable supplies.

Networked Supply Chains

Networked supply chains are when products move through multiple paths from supplier to customer. There are several advantages to this type of supply chain. First, manufacturers can take advantage of economies of scale and reduce costs. Second, manufacturers can respond quickly to changes in demand. Third, manufacturers can build relationships with customers and ensure satisfaction. However, there are some drawbacks to networked supply chains. First, manufacturers may not be able to ensure that products are available when customers need them. Second, manufacturers may be stuck with excess inventory if demand doesn’t meet expectations. Third, manufacturers may be stuck with unreliable supplies.

Understanding the Pros and Cons of Each Type of Supply Chain

Each type of supply chain has its own advantages and disadvantages. Let’s look at the pros and cons of each type so you can decide which one is best for your business.

Advantages of Push Supply Chains

The advantages of push supply chains include economies of scale, ensuring products are available when customers need them, and building relationships with suppliers.

Disadvantages of Push Supply Chains

The disadvantages of push supply chains include producing too much or too little, being stuck with excess inventory, and being unable to respond quickly to changes in demand.

Advantages of Pull Supply Chains

The advantages of pull supply chains include responding quickly to changes in demand, avoiding excess inventory, and building relationships with customers.

Disadvantages of Pull Supply Chains

The disadvantages of pull supply chains include not being able to take advantage of economies of scale, not being able to ensure that products are available when customers need them, and being stuck with unreliable supplies.

Advantages of Make-to-Order Supply Chains

The advantages of make-to-order supply chains include responding quickly to customer needs, customizing products to meet customer demands, and building relationships with customers.

Disadvantages of Make-to-Order Supply Chains

The disadvantages of make-to-order supply chains include not being able to take advantage of economies of scale, not being able to ensure that products are available when customers need them, and being stuck with unreliable supplies.

Advantages of Make-to-Stock Supply Chains

The advantages of make-to-stock supply chains include taking advantage of economies of scale, ensuring products are available when customers need them, and building relationships with suppliers.

Disadvantages of Make-to-Stock Supply Chains

The disadvantages of make-to-stock supply chains include producing too much or too little, being stuck with excess inventory, and being unable to respond quickly to changes in demand.

Advantages of Linear Supply Chains

The advantages of linear supply chains include controlling the entire process, ensuring products are delivered on time, and building relationships with suppliers.

Disadvantages of Linear Supply Chains

The disadvantages of linear supply chains include not being able to take advantage of economies of scale, not being able to respond quickly to changes in demand, and being stuck with unreliable supplies.

Advantages of Networked Supply Chains

The advantages of networked supply chains include taking advantage of economies of scale, responding quickly to changes in demand, and building relationships with customers.

Disadvantages of Networked Supply Chains

The disadvantages of networked supply chains include not being able to ensure that products are available when customers need them, being stuck with excess inventory, and being stuck with unreliable supplies.

What Industries Benefit from Different Types of Supply Chains?

Different types of supply chains are better suited for different industries. For example, push supply chains are often used by manufacturing companies because they can take advantage of economies of scale and reduce costs. Pull supply chains are often used by retail companies because they require less capital and inventory. Make-to-order supply chains are often used by food service companies because they can quickly respond to customer needs. Make-to-stock supply chains are often used by pharmaceutical companies because they can ensure that products are available when customers need them. Linear supply chains are often used by technology companies because they require less coordination and are easier to manage. Networked supply chains are often used by automotive companies because they can take advantage of economies of scale and reduce costs.

How to Choose the Right Supply Chain for Your Business

Choosing the right supply chain for your business can be challenging. Here are three steps to help you choose the best fit.

Identifying Your Company’s Needs

The first step is to identify your company’s needs. What type of products do you sell? How often do your customers order? What is the size of your supply chain? Answering these questions will help you narrow down your options.

Evaluating the Different Types of Supply Chains

The second step is to evaluate the different types of supply chains. Consider the advantages and disadvantages of each type so you can decide which one is best for your business.

Choosing the Best Fit

The third step is to choose the best fit. Once you’ve identified your company’s needs and evaluated the different types of supply chains, you can make an informed decision about which one is the best fit for your business.

The Benefits of Optimizing Your Supply Chain

Optimizing your supply chain can bring many benefits to your business. Here are three of the most important benefits.

Improved Response Time

Optimizing your supply chain can improve response time. According to a study by McKinsey & Company, “Companies that have optimized their supply chains report an average 10 percent reduction in lead times, compared to those that have not optimized.” This means that your business can respond more quickly to customer needs and increase customer satisfaction.

Increased Efficiency

Optimizing your supply chain can also increase efficiency. According to the same study, “Companies that have optimized their supply chains report an average 20 percent improvement in on-time performance, compared to those that have not optimized.” This means that your business can reduce waste and increase profits.

Reduced Costs

Finally, optimizing your supply chain can reduce costs. According to the same study, “Companies that have optimized their supply chains report an average 15 percent reduction in inventory costs, compared to those that have not optimized.” This means that your business can save money and increase profits.

Utilizing Technology to Improve Your Supply Chain

Technology can also be used to improve your supply chain. Here are three ways to use technology to optimize your supply chain.

Automation

Automation can help streamline processes and reduce costs.