R1: Push and Pull Process

Push and Pull Process (P&P Proc.)

Draft:
Push process:
- demand is estimated
- producing starts, then, push the next process to begin until become finish goods
- marketing to sell product (push customer to buy goods)
- spending on advertising without accurate measurement of return (buying power).

Pull process:
- receiving demand to start a production
- producing is acquired by exact demand plus some spare quantities, which pull the prior process to start producing
- marketing still required but in different way (attract customer's attention for what product is and function)
- advertising can be measured better by the order which actually placed.

Pros:
Push:
- more control on production process, because the production line will start whether the order come in already or not yet
- budget is allocated at the beginning, unlikely to change a lot after a decision made

Pull: 
- better cost control, reduce unnecessary expenses
- better controllable inventory, and process length adjustment (ex. JIT, FIFO, etc.)

Cons:
Push:
- the sinking costs, such as inventory holding cost, and maybe the get-rid-off cost for the left over
- a limitation of product's life cycle (ex. expiration date, etc.)

Pull:
- a chance of raw material shortage
- a chance of reschedule on delivering when problems occur during the process
- a chance of paying penalty fee for rescheduling or late delivering
- marketing budget might need to reconsider to attract more customer or remind the existing ones (customer's retention)

latest updated on: 4/18/2011