How does a push supply chain differ from a pull supply chain?

A push supply chain operates on the principle of producing goods based on forecasted demand. This means that companies create products and push them through the supply chain to the marketplace in anticipation of customer needs. Forecasting plays a critical role in this method, as businesses rely on historical data and market analysis to predict future consumption, allowing them to manufacture products ahead of demand.

Conversely, a pull supply chain is defined by its reliance on real-time signals from customers or the marketplace. In this system, production and inventory levels are determined based on actual demand rather than forecasts. This approach reduces the risk of overproduction and minimizes excess inventory, as production is initiated in response to current consumption patterns. As a result, companies can respond more dynamically to changes in customer preferences and market conditions.

The correct choice highlights this fundamental distinction in operational philosophy between push and pull systems, clarifying how their approaches to demand forecasting and fulfillment differ significantly.