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The Four Main Supply Chain Models

Sep 6, 2023

While retail businesses, manufacturers, and other organizations depend on various factors for their success, choosing the right type of supply chain might be the most integral. Supply chains are systems of logistics that include every step necessary for converting a raw material to a finished product ready for consumer use. Entire teams are devoted to managing these phases and all the processes involved so that businesses can sell their products at a profit.

However, one type of supply chain doesn’t necessarily fit all organizations. Different supply chain models are used for different types of products or services to meet various customer needs. An efficient supply chain model can help an organization’s business operations reach or exceed their goals and keep consumers satisfied.

Read on to learn more about the different supply chain models, how they compare, and how to choose the right one for your business.

Understanding Supply Chain Models

There are four main supply chain models in use today: the continuous-flow model, fast model, efficient model, and custom-configured model. Each model plays a specific role in managing and optimizing the flow of a business’s products or services. Supply chain management in general aims to keep costs low, inventory levels stable, and delays minimized, and each model approaches these goals in a different way.

Understanding and implementing the right supply chain model can have a considerable impact on an organization’s bottom line. For example, a designer clothes manufacturer using a continuous-flow model might not be as effective as one using a fast model, as fashion trends come and go quickly. Both company and consumer benefit the most from the supply chain model that meets their unique specifications.

The Importance of Supply Chain Models

The overall efficiency and cost of a supply chain largely hinge on the type of model employed. Many moving parts make up a supply chain, including initial planning and budgeting, acquisition and storage of raw materials, manufacturing of goods, shipping and delivery, and the final sale of finished products. Each of the four supply chain models are designed to optimize these stages depending on the types of products made and their intended market.

A particularly slow turnaround time in the supply chain may hurt the organization’s financial well-being. Similarly, low-quality products or services might cause customers to take their business elsewhere. That’s why proper supply chain strategy is an important first step to identify which model will best serve the entire chain.

The Continuous-Flow Model

Many industries call for constant use and replenishment of specific products or services. These industries include pharmaceuticals, automotive manufacturing, food service, and more. Businesses and organizations involved in these types of supply chains typically adopt the continuous-flow model for maximum efficiency.

Perhaps the most traditional of the supply chain models, the continuous-flow model works well for organizations with high-volume production lines and mostly uniform goods. This model aims to keep each stage of the supply chain moving at a balanced, streamlined pace. Supply chain managers using the continuous-flow model typically emphasize high efficiency, standardization of operations, and quality control. Continuous-flow supply chains pair well with a stable demand for the products and services involved.

The Fast Model

Fast models are useful for businesses that, while still engaging in all the standard phases of the supply chain, need to keep up with shifting consumer demand. These businesses manufacture finished products that tend to have a short market life cycle. Fashion brands, electronics companies, and other consumer goods organizations benefit from the fast model since their products may be perceived as trendy and experience quick turnaround periods.

But it’s not always about trendiness. Many other businesses use the fast model if they focus on speed and responsiveness. Fast model strategies usually seek to maximize returns, minimize delivery times, and keep customers happy with their purchases. Product quality isn’t necessarily ignored, but it tends not to be the highest priority in this model.

The Efficient Model

Competitive industries stick to the efficient model so that their products and services can reach the market as quickly as possible, especially when demand is forecasted to be high. Since efficiency is their main goal, organizations using this model make sure to prepare raw materials and manufacturing processes well in advance to avoid delays.

Supply chain managers who operate under the efficient model keep a keen eye on inventory management and strive to get the most output from production equipment and labor. Additionally, these managers work to balance low costs with good product quality. The types of organizations that use the efficient model vary widely and may include anything from breakfast cereal manufacturers to asphalt companies.

The Custom-Configured Model

Some organizations deal with very specific types of products or have a customer base with unique needs. These organizations fare well with a custom-configured supply chain model. As its name implies, the custom-configured model is designed for customized scenarios in material acquisition, production assembly, and delivery of finished goods. This includes prototype products or products with multiple configurations. A prosthetics manufacturer, for instance, might use the custom-configured model to create and ship their products to hospitals or specialty care clinics.

More flexibility and, in some cases, more investment may be required under this model. Speed is not as important as careful, methodical management of the supply chain, often with specific customer input. Common examples of organizations that use the custom-configured model include furniture stores, computer manufacturers, and makers of musical instruments.

Choosing the Right Supply Chain Model

Selecting the appropriate model for any given supply chain should be a top priority for supply chain leaders and strategists. These professionals should base their choice on the nature of the industry, customer demand, and their overall business goals. But if you help oversee your organization’s supply chain, how exactly do you make the right choice?

First, understand the importance of being adaptable and flexible. Sometimes, businesses need to be prepared to switch models or adapt their existing one in response to market fluctuations. But even in a perfect market landscape, you should be aware of how each model works and tailor a model to your specific supply chain. Ask yourself what types of products or services you’re providing, what kinds of consumers are buying them, and how much your organization is willing to spend throughout each stage of the supply chain.

Leveraging Supply Chain Models for Competitive Advantage

Using the right supply chain model can potentially transform a business’s operations, improving efficiency and providing a competitive advantage. But being willing to switch, adjust, or reassess models when needed is just as important as using the right one. Fortunately, supply chain leaders don’t need to navigate these models alone, as advancements in technology like AI, machine learning, and blockchain are influencing how supply chains are managed. Dedicated software programs can also help determine the best supply chain models and aid in supervising the stages of the chain.

Next Steps

Planning out your ideal career in supply chain management? Consider studying at WGU, where you can enroll in an online, accredited bachelor’s program in business management or supply chain and operations management. Flexible programs like these can provide the skills you need to implement the best supply chain model for your organization. Plus, you can study at your own pace, with no set log-in times for coursework.

Our business programs are designed with input by industry experts and can be completed as fast as you master the material, so that you can potentially save time and money on your way to your dream supply chain management job. Get started today!

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