How Do You Create A Supply Chain Model?

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A successful supply chain is essential for a successful business. The process of product development, obtaining raw materials, manufacturing components, assembling the finished product, and delivering it to the customer is central to practically any company involved in filling customer orders.

Because of the vast diversity of businesses, there is also a vast diversity of supply chain planning initiatives. A supply chain of a restaurant won’t be the same as that of a clothing retailer or an electronic manufacturer. In the same vein, these global supply chains will share some, but not all, of the potential risks that come with them.

To introduce some order into supply chain management and speed up achieving business goals, creating a supply chain model is a good idea. With an effective and successful supply chain strategy in place, you will be able to:

  • Have better inventory management and inventory control
  • Reduce costs
  • Increase efficiency
  • Meet customer demands without issue

According to the supply chain theory (according to the Supply Chain Council), there are six types of supply chain strategic plans. To understand which one will be the best in your case, we will help you learn more about them and how you can implement them into your key business processes.

Successful Supply Chain Models

  • Continuous flow supply chain model

This model is meant for established, stable companies. It is the most traditional form of a supply chain, and those that benefit from it are mostly companies that manufacture the same type of goods day in and day out. The continuous flow model is perfect for situations of high demand that don’t vary much.

  • Fast supply chain management processes

More flexible than the previous one, the fast supply chain strategy is ideal for limited-edition products with short life cycles. Businesses that frequently change products and follow all the latest trends should employ a fast supply chain to quickly get the finished product out before a trend expires.

  • Efficient supply chain process

These types of strategic plans are designed for businesses that are in highly competitive markets. If your company delivers highly competitive products based on price, efficient supply chain models are a great option. As the very name says, end-to-end efficiency is the primary goal here.

  • Custom-configured supply chain model

The custom-configured model is meant for businesses that manufacture multiple product configurations. It is a hybrid supply chain operations planning model because it is a combination of the continuous flow model and the agile supply chain strategy. If your products have custom configurations during assembly or other manufacturing operations, this would be an ideal option.

  • Agile supply chain management processes

Businesses that produce specialty order items benefit from agile supply chain operations planning models. These models can increase production when there is increased demand in some areas but remain steady in areas where there’s no movement at the given moment. If you’re expecting unpredictable demand for made-to-order products, invest in an agile supply chain execution.

  • Flexible supply chain management processes

Lastly, flexible models give a business freedom to easily switch production on and off. Businesses with seasonal demand peaks that don’t move much finished product during the off-season are the focus of this model.

Efficiency vs. Responsiveness

All six of these types of supply chain processes can be sorted into two categories: efficiency and responsive models.

In the efficiency supply chain category, we have the efficient model, the fast model, and the continuous flow model. These emphasize efficiency in managing inventory, speed, and a low-cost supply chain process. Their downsides are that you may find yourself with excess inventory at some point and that they are not cost-effective for all types of businesses.

The responsive supply chain category contains the agile model, the custom-configured model, and the flexible model. These models respond on-demand, and flexibility is crucial in the way these supply chain networks operate. Disadvantages to a responsive supply chain execution are that humans may not be the best predictors of trends, and untrained or undertrained staff may cause critical errors in the supply chain.

Create Your Own Supply Chain Model

The key takeaway from these generic types of supply chain processes is that you don’t have to adhere to them completely. Most successful businesses and their supply chain teams took the foundations of these models and put a twist on them to build a supply chain roadmap that suits their needs. Supply chain optimization should be tailored to your company, regardless of what the theory says.

Here are the necessary steps to create your own supply chain strategy:

  • Identify the critical components in your supply chain network
  • Define what the supply chain managers should focus on (what their role is)
  • Increase the levels of forecast accuracy (anticipate the changes in supply and demand and what your competitors are doing)
  • Build flexibility and resiliency into your supply chain strategy
  • Manage risks, such as operational risks, natural disasters, and political instability
  • Measure performance – continually review and adjust individual elements of the supply chain

Once you complete your supply chain planning and feel like you have a reliable supply chain management model, don’t feel like you can’t change it later. Nothing is set in stone – as your business evolves, your supply chain strategy should evolve alongside it so that no parts of it suffer or lag behind. Constant monitoring and evaluation are vital, as we highlighted in the last bullet point.

Hire Help

Supply chain operations planning and effectively managing inventory is no easy feat. If you’re not specialized in supply chain management, building a good supply chain model and integrating it into your business can be quite a demanding task. If your budget allows, you could consider hiring a logistics company to help shoulder the weight of some parts or the entirety of your supply chain and reduce the cost of your supply chain process.

A logistics company that offers supply chain services will share its critical resources, such as logistics managers with expertise in supply chain management and an extensive network of suppliers, to help you build the best supply chain for your company. Redbird Logistics Services, in particular, handles supply chain network optimization, warehousing, inventory management, project and reverse logistics, and much more. We would be happy to give you a hand and meet all of your supply chain needs. Feel free to contact us on our website!

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