You probably won’t be surprised to learn that supply chains grow more complicated as socioeconomic and market dynamics increasingly emphasize the need for enterprises to respond to a demand-driven environment.
However, businesses must now account for a slew of new issues, such as increased protectionism and nationalism impacting all sides of the political spectrum. Many are being forced to reconsider their risk exposures and adopt new sourcing strategies due to this.
Here are 6 supply-chain techniques to help businesses thrive in today’s market.
What Is A Supply Chain?
Supply chains refer to a full system of making and distributing goods or services, starting with acquiring raw materials and ending with the product delivery to end-users. It describes every stage of the manufacturing process that are fed into the finished product or service, such as:
- Actions involved at each stage
- Transferred data
- Natural resources converted into valuable components
- Human resources
Why Should Every Company Understand Its Supply Chain?
A key element in completing an external analysis in an innovation process is mapping out the chain. The relevance of adequately outlining the supply chain is that it assists a company in outlining its own niche and figuring out where it wants to stand in the long run.
When formulating corporate-level plans, a business has to decide whether to focus on a particular part of it or grow it into another aspect or unrelated areas.
Every step of the supply chain, for example, is effectively a separate sector, such as the extraction of raw materials and manufacturing.
Additionally, it allows a company to understand the different groups at various levels and provides insights into the desirability or competitiveness of niches that the business may want to enter.
Examples of Supply Chains
Let’s take a look at two separate supply chains:
1. Generic Supply Chain
Finding and extracting raw materials is the first step in the generic supply chain. The logistics provider delivers materials to a manufacturer, refining and processing them into a final product.
After that, it’s sent to a distributor, who wholesales the finished product, which is then supplied to a shop. The cycle is complete when the consumer purchases the item.
2. Supply Chain for an e-Commerce Company
When a product order is placed, it is received by the warehouse, which guarantees that the product is ready for delivery. The order is subsequently delivered to the shipping firm from the warehouse.
Once again, shipment can be done in-house or through a third-party logistics supplier, and you can invest in supplier management software to keep an eye on your shipment.
Types of Supply Chain Strategies
The six most frequent models are as follows:
- Smooth, continuous flow
- Quick chain
- Chain Efficiency
- Customized configuration
A core difference is that each model will aim to achieve one of two larger ideal goals:
Each logistic approach has characteristics of both efficiency and responsiveness. This is important because your supply chain will be unable to respond to a disturbance if it’s exceedingly efficient. Platforms like Inspectorio can help you execute the perfect strategies for your business.
A system that only responds to an individual or small requests will be inefficient at producing large volumes.
1. The Model of Continuous Flow
The continuous flow paradigm is centered on efficiency. It provides stability in high-traffic settings. This traditional approach works best for manufacturers who offer the same product regularly with little design variation or change.
Additionally, this type is suited for mass production. Its great efficiency level is attributed to the low prices of its products. Manufacturers’ profit margins are determined by raw material pricing.
2. The Quick Chain Model
The rapid chain model is designed to be responsive. It’s perfect for manufacturers who frequently update their product line. This type is ideal for contemporary products with short life cycles. In this case, the manufacturer may flood the market well before the trend cycle concludes.
This method stresses the first adopter’s competitive advantage. The primary motivator of the quick chain, though, is the designer and the marketing department. In other words, if you can invent your own trend, you will be the first to market. In summary, this strategy is driven by art.
3. The Model of an Efficient Chain
The efficient chain model is designed for highly competitive industries where end-to-end sustainability is the ultimate goal. This approach primarily relies on production predictions to adequately burden equipment assets.
In addition, the efficient model is strongly reliant on commodity and raw material costs. Capacity issues plague efficient chains in the post-pandemic world. Labor shortages, material limitations, and delays are all contributing factors.
The bottom line is as follows. When you misjudge a forecast, it can have a cascading effect. This can lead to long lead times and increased pricing for manufacturers up and down the supply chain.
4. The Agile Methodology
The agile strategy is appropriate for firms that deal with niche products. This model has been fine-tuned for small batch sizes of products. It necessitates less automation and more knowledge. Generally, this added value allows enterprises that use this strategy to charge greater costs.
Businesses using the agile model can increase volume. However, once a certain volume threshold is reached, they often prove uncompetitive. Compared to efficient-chain-model organizations, agile businesses are blown out of the water in terms of pricing at bigger volumes.
5. Model with a Customized Configuration
This strategy focuses on offering customized settings throughout manufacturing and assembly. Typically, this setup time comes at the start of a longer manufacturing and assembly run process. Speciﬁc prototype or limited-production creations, for example, fall under custom-configured manufacturing.
This is a personalized strategy with shorter turnaround times and smaller product quantities. The custom-configuration concept is a hybrid of the agile and continuous flow models.
6. The Versatile Model
The adaptable model strives to be the best of both worlds. During peak season, it may respond to high volume demands. On the other hand, flexible model businesses can handle and absorb periods of low or no demand.
To use the flexible supply chain model, a company must have the correct tool (or automated machinery). This technique also necessitates a large supplier network or individuals with extensive experience.
Using the Correct Theories and Methods
The more ideas and procedures you implement in your supply chain, the more difficult the process becomes. Having said that, the correct technique can make your supply chains so much smoother and customer-friendly.
When you form a 3PL collaboration, you and your logistics provider should agree on the optimal technique for your firm. Some methodologies and theories do not apply to every firm, while others may be the answer to an actual problem within your organization.
Additionally, due to the complexities of supply chains, the optimal combination of methodologies and theories may change over time. So, find a partner who can scale up and down with your company.