Pattern description

This pattern describes the strategy of a company to decentralize and thus add flexibility to the company's processes in order to be more customer focused. To quickly and flexibly respond to new customer needs, any part of the value chain - including production or even research and development - can be affected.

Inventive problems

Application examples

Toyota has become synonymous with the implementation of pull strategies in production and logistics. In the period following the Second World War, the company developed a production system which was the key to Toyota’s ascent to becoming one of the largest car manufacturers in the world. Introduction of the Toyota Production System obliged the company to reorganise its entire value chain in such a way as to reduce waste and costs, all the while maintaining a clear customer focus. Strategies such as just-in-time (JIT) production, minimising of cycle times, reducing inventory by applying Kanban logistics, or total quality management (TQM) were central to customer-oriented manufacturing. Thus, Toyota is able to react very rapidly to changing customer needs and market situations. Since Toyota only produces what customers order, each fabrication step is initiated directly by the one before, the whole process is set off by a customer’s order. In addition to reducing inventory costs, this approach also avoids overcapacity so that unused capital can be employed more gainfully elsewhere. The production system proved to be so successful that it is still considered state of the art to this day.

In the fashion industry, the From Push to Pull model has been embraced by Spanish apparel and accessory retailer Zara. The company sells its clothes at affordable prices in its retail stores and online. Zara is known for its ability to rapidly offer collections in line with the latest fashion trends. The fashion retailer achieves this by employing over 200 designers and droves of fashion observers around the globe to ensure early recognition of the latest trends and developments. New collections are designed quickly and put together in company-owned production facilities, from where they can be swiftly expedited to Zara’s shops and online stores. Zara’s retail stores are generally located at select locations in city centres to attract a large number of walk-in customers. In this way Zara’s shop windows serve as advertising space and the company is spared from having to fund expensive advertising campaigns. While Benetton pioneered the introduction of elements of the business pattern to the fashion industry, it was Zara who perfected its implementation. By virtue of its flexible customer-oriented business model, Zara overtook its competitor Hennes & Mauritz (H&M) in 2006 as the world’s topselling fashion retailer.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business