What is the difference between push and pull supply chain strategies?

The distinction between push and pull supply chain strategies is foundational to understanding inventory management and production planning in logistics. The correct choice outlines that push strategies are primarily focused on forecasting demand and producing goods in anticipation of that demand. This means that companies using a push strategy will create products before they are sold based on their forecasts, which can lead to overproduction if those forecasts are inaccurate.

On the other hand, pull strategies operate based on actual demand, meaning products are made only once there is confirmed demand from customers. This system helps minimize excess inventory, as production is reactive to market needs rather than based on predictions. By producing in response to actual sales or orders, businesses can be more agile and reduce the risk of holding unsold goods.

This understanding highlights why understanding the nuances of these two strategies is crucial for effective supply chain management. Managing how and when products are created and delivered can significantly impact operational efficiency and customer satisfaction.