The pull-based supply chain is based on demand-driven techniques; the procurement, production and distribution are demand-driven rather than predicting. This system doesn’t always follow the make-to-order production. For example, Toyota Motors Manufacturing produces products yet do not religiously produce to order. They follow the supermarket model.
According to this model, limited inventory is kept and piled up as it is consumed. Talking about Toyota, Kanban cards are used to hint at the requirement of piling up inventory.
In this system, the demand is real and the company responds to the customer demands. It assists the company in producing the exact amount of products demanded by the clients.
The major drawback of this system is that in case the demand exceeds than a number of products manufactured, then the company fails to meet the customer demand, which in turn leads to loss of opportunity cost.
Basically, in the pull system, the total time allotted for manufacturing of products is not sufficient. The production unit and distribution unit of the company rely on the demand. From this point of view, we can say that the company has a reactive supply chain.
Thus, it has fewer inventories as well as variability. It minimises the lead time in the complete process. The biggest drawback in pull-based supply chain integration is that it can’t minimise the price by ranking up the production and operations.