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Push vs. Pull Supply Chain: What It Means for Strategic Sourcing During COVID-19

Supply chains have long relied on endless mounds of historical data to predict tomorrow’s seasonal trends. With disruption of global supply chains due to externalities like COVID-19, we have seen that our supply chains are fragile and easily disturbed. Consumers in all markets have felt the impact of these sudden, rapid shifts. As strategic sourcing professionals, knowing which supply chain strategy your organization adheres to is critical to defining your procurement department’s best practices.

What is a Push-Model Supply Chain Strategy?

A Push-model Supply Chain is one where projected demand determines what enters the process. For example, beach umbrellas or beach chairs are pushed to retailers a month before the summer season starts in anticipation of a spike in demand, relative to the winter and spring season.

Components of a Push-Model Supply Chain

  • Companies have predictability in their supply chains

  • Planning production is feasible to meet their anticipated needs

  • It gives retailers time to prepare a place to store inbound inventory

  • This strategy has clearly forecastable demand

  • Requires large inventory on hand or committed storage space

  • Lacks flexibility to meet changing demand

What is a Pull-Model Supply Chain Strategy?

A Pull-model Supply Chain strategy involves inventory management that minimizes stock on hand, focusing on relatively rapid responses to demand fluctuations.  One example of an industry that operates under this strategy is a direct custom computer retailer that waits until and order is received to build the custom computer to spec for the consumer.

Components of a Pull-Model Supply Chain

  • Products enter the Supply Chain when customer demand is validated

  • Companies avoid the cost of carrying inventory that may not sell

  • Risk is created if supply cannot meet demand

  • Demand drives production and distribution

  • Rapid response exists to a specific order/demand

  • No ‘back up’ inventory carried on hand by the buying organization

Real World Push/Pull Supply Chain Dilemmas

Let’s think of push and pull supply chain in terms of a modern-day shopper during the quarantine. As a busy working mom in quarantine juggling homeschooling, work, and sanity, I had two options: to stockpile or to keep just enough on hand to fill my family’s needs. The former meant filling my refrigerator and pantry shelves with items I may need; the latter meant exposing myself to potential risks by frequently leaving home in response to keeping smaller quantities stocked. As neither of these options were appealing (I’m a neat freak and maybe a little bit of a germaphobe), I looked for ways to optimize my personal supply chain by breaking my regular routine of small-batch Trader Joe’s runs with a variety of meat and produce delivery services, virtual shoppers, and food shopping on my own.

The result was a semblance of normalcy, adequate supply, and limited food waste. I essentially had strategically optimized the push/pull supply chain balance of my pantry without even knowing it. We see this trend emerging beyond the home and into the workplace. We predict a mixed push and pull model in a post-COVID environment to guarantee you can meet the market demand rapidly while mitigating the risks associated with significant inventory storage.

Here are some tools I used:

No Waste – Easily track, organize, and manage the food in your home.

Imperfect Foods – Grocery items that help reduce food waste – delivered for up to 30% less than national supermarket chains.

InstaCart – Groceries delivered to your door or ready for pick-up.

How Strategic Sourcing Plans for Uncertainty

Seasonality peaks, lifecycle management, and short productions, when paired with high-demand volatility, global supply disruptions, will make people globally rethink their supply and demand needs. New technologies like sourcing enablement, which use artificial intelligence to power data-driven decisions, allows supply chain managers and strategic sourcing teams to adapt to an environment where the ability to adequately balance supply and demand becomes increasingly ambiguous.

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“It starts with smart sourcing.”

Tools that synchronize data and assess replenishment needs, demand sensors, and inventory management systems that manage the processing of orders will all need to connect to form a network that fortifies operations that maintain a high level of customer service. Moreover, highly developed and systematic supply chains will ultimately allow the organization to respond quickly to build smarter models with higher degrees of customer success. Where does this all begin? It starts with intelligent sourcing.

Enabling buyers and suppliers to collaborate in real-time in a centralized location streamlines the strategic sourcing process. Significant downstream improvements and time-saving measures that allow for procurement managers and buying organizations to deploy nimble adaptations to meet uncertain market conditions are just the tip of the iceberg for organizations that adopt best practices with sourcing enablement. When volatility rises in the supply chain, strategic sourcing professionals need to lean on the relationships they’ve built with their strategic supplier partners to whether the uncertainty.

Sourcing enablement tools remove the needless friction from the sourcing process on both the buyer and seller side, resulting in partnerships that make an impact beyond bottom-line savings.

To see if sourcing enablement is right for your push or pull supply chain strategies, get started now.

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

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