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MU insights | Types of supply chain management: 6 models you need to know

Types of supply chain management 6 models you need to know

Let”s imagine you visit a store. You have been wanting to buy this one newly launched product but it keeps getting sold out. This keeps happening to you enough times to have you curious about the reason or problem that lies behind it. You decide to contact one of the store managers and ask about the reason for the constant sell-out when you assume they should have a large supply in the store of a newly launched product. This is when you get to know the reason: the weak supply chain management.

As illustrated by the above scenario, effective supply chain management is essential for the consistent availability of desired products to meet customer demands and address various other similar problems. Today we’ll be learning all about it and its six major models.

Supply chain overview

Before diving into the types of supply chain management, it is highly important to understand the basics of this system. So, what exactly is supply chain management? The straightforward answer to this question is that it is the entire system of acquiring raw materials, overseeing production, and managing the final product supply to the relevant end-users or retailers.

A strong and effective supply chain system is essential to ensure all the stores are properly stocked with the products customers desire. If an efficient system is not maintained, problems like product shortages can occur. Eventually, it will affect the customers as well as the store itself.

Types of supply chain models

There are a total of six supply chain management models. These models are built and designed in such a way that they individually cater to the various demands and needs of different industries, retailers, businesses, etc. One supply chain model may be suitable for a certain industry or business environment but not the best option for another one. We will be discussing all six models i.e., Continuous flow, fast chain, efficient chain, agile, custom-configured, and flexible. Let’s look at each one.

Continuous flow

The continuous flow model is best suited in the case that manufacturers are constantly selling the same products. Additionally, these products are usually the type that does not require many future updates or changes.

This model works well when there is a uniform or stable demand for these products in the market. In such a business environment, this model produces efficient results as the products are produced and manufactured constantly in a stable manner. It can help make the best use of the available or allotted resources. A common example of an industry that uses this continuous flow model is the petroleum refining industry.

Overall, the continuous flow model helps reduce inventory which further helps reduce transportation and warehouse costs. It also provides fast response time and enhanced quality control amongst various other benefits.

Fast chain

The fast chain model is best suited for manufacturers working with constantly changing products. The fast chain caters to the instability of the products in the market. The products, in simple terms, have a very short lifecycle. They can be easily replaced by a new trend that starts in the industry. Therefore, if manufacturers belong to an industry that has products being launched based on the constantly changing trends then this is a model to opt for.

When you hear the word ‘trend’ what comes to your mind? Take a moment to think about it. You might be thinking of the fashion or electronics industry. As there are many technological advancements taking place with time, there’s a constant need for change. This is when the fast chain model comes to play its part.

Overall, the fast chain model ensures the products are readily available, meets the changing demands of the market, and produce fast and effective products for the end-users or retailers.

Efficient chain

If your company is in a highly competitive industry, this model can be the one to go for. The efficient chain model helps manufacturers or businesses that have to compete with various other businesses having the same target market or audience.

The model is designed to provide products and services in such a way that they come at the lowest price. Reducing the price of a product or service means that there needs to be an efficient use of the available resources. There should be maximum utilization of the available raw materials, machinery, and various other assets such that minimum cost is achieved.

A common industry or market where this model is used or preferred is the retail industry. This is due to the fact that the retail industry is highly competitive and the product’s quality and price do play a major role in customer purchasing decisions. The efficient chain model helps in cost reduction, quick responses to market demand fluctuations, better profit margins, and much more.

Agile

The agile supply chain model is most efficient for industries that have products that will have to meet changing customer demands. The agile model caters to products that are designed to meet unique or very specific requirements by the customer. Therefore, if your products belong to a constantly evolving or changing business environment this is a model to opt for.

In simpler terms, the agile model caters to the industry’s demand for adaptability and quick and effective responses to changing or unique customer requirements. Can you think of an industry where a customer may give specific orders or requests for a product?

One of the major industries where this model is applied is the custom manufacturing industry. For example, customers may ask for custom clothing with specific design and color requirements. The Agile model focuses on effective communication, adapting to changing customer demands, optimizing inventory, and quick responses to customer demands.

Custom-configured

By the name itself, you can get an idea of how the custom-configured model works. It is a model that deals with products that are customized according to customer’s specific requirements or demands. You may think that the agile model does the same and since requirements and demands can be constantly changing the continuous model also comes to mind. The custom-configured model is a combination of both the agile and continuous flow models.

An industry where this model is best suited is the automotive industry. Taking the specific example of cars, customers usually provide specific instructions or information on what exact specifications they want. They can even ask to customize the vehicle as per their requirements. This model offers flexibility, effective coordination and communications, a variety of options, and customer-specific products.

Flexible

The flexible model is a model that adapts according to the ongoing business environment or situation and market demands. You can visualize the flexible model that is designed by incorporating chunks of the other five supply chain models. It is suitable for industries that may have inconsistent market demands i.e., there may be periods of very low market demand and some with high market demands.

It is suitable for an industry where they may be changing customer demands or in general, very specific customer requirements. It uses the strengths of the various other supply chain models to produce efficient outputs. As its name suggests, the flexible model adapts to customer or market demands, provides scalability to businesses, and keeps a customer-centric approach.

Conclusion

After reviewing the six different models of the supply chain mode, it is safe to say that these models are an essential part of the business industry and impact customer satisfaction. Each model has its own strengths and caters to specific types of industries, products, or markets. After learning about these models, you can get an idea of how supply chain management works and which model works best for which specific business environment. In today’s competitive market landscape, having an effective supply chain model is essential for the success of any business.

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