Summary: Under the sustainable supply chain management, organizations create strategies to minimize the impact of their procedures on the environment. Other types include Lean, Agile, Digital, Risk, Outsourcing, and Customer Centric. Let’s learn about each of them in detail!
Supply chain management is an important aspect of controlling how a product is created and delivered to end customers. Any miscommunication or delay in supply chain stages can impact on the timely delivery of goods and also lead to financial losses. So, it is important to implement the right supply chain model that ensures timely delivery of goods and helps increase your profit margins.
There are different types of supply chain management models that you can consider for managing your supply chain like Lean, Agile, Sustainable, Digital, etc. Let’s learn more about these types in the article below!
Supply chain management refers to management of all the processes starting from procurement of raw materials till the final product is delivered to customers.
The organization keeps a control on goods and services throughout the production, development, and distribution of products in supply chain management. The main purpose of this management is to meet the product demand and maximize customer experience.
There are several types of supply chain management that you can choose for your business based on your requirements and purposes. Here is the enumeration of various types of supply chain that you can consider for your business:
The lean supply chain management focuses on delivering products to customers efficiently with minimum wastage. Under this approach, anything that does not add value to products and customers is removed from the supply chain procedure.
When the Lean model is implemented, organizations find ways to remove wastage and take steps that add value to their services and products.
Example: Mahindra, an automobile manufacturer, uses the Just-in-Time inventory method to eliminate product wastage and enhance operational efficiency.
This type of model is suitable for organizations that deal with trending and variable products. Under the agile model, businesses rapidly respond to consumer’s demands and preferences.
Businesses first see how much demand there is for a specific product, then start their production accordingly. It relies more on the current product demand rather than predictions or forecasting.
Example: Clothing retailer Zara focuses on runway clothing, designs its clothes accordingly, and delivers them to stores at the fastest possible time.
In the sustainable supply chain management model, companies consider the environmental impacts of their procedures like sourcing, storage, and product delivery on the environment.
The main purpose of this model is to reduce environmental impact from energy usage, water consumption, and waste production, and create a positive impact on people and communities.
Example: McDonald, a leading fast-food outlet, globally uses recycled paper bags, boxes, and glasses to serve food instead of plastic bags to mitigate environmental impact.
Suggested Read: Top Logistics and Supply Chain Management Software List
With the digital supply chain model, businesses use digital technologies like software to manage their supply chain, optimize procedures, and forecast product demand.
It provides real-time visibility into every stage of supply chain management. Further, with software-backed collaboration, you can coordinate with members of different departments in real time.
Example: An e-commerce platform like Amazon uses digital supply chain for managing operations. Through software, they can optimize inventory levels, forecast product demand, and collaborate with suppliers in real-time.
The risk management-based supply chain model focuses on finding, accessing, and eliminating the risks involved in a supply chain. The risks that are accessed come under a broad category of economic, political, ethical, and environmental.
After assessing these risks, the company implements strategies to improve operational efficiency, enhance customer service, and reduce costs.
Example: Any Pharmaceutical company adopts a risk management approach to identify possible hazards and ensure that products are produced with industry-specific regulations.
Within this approach, organizations hire third party logistics to manage and optimize the operations of supply chain management. Businesses often hand over the storage and ecommerce fulfillment to 3PLs (Third-Party Logistics) to save time and money and also improve operational efficiency.
Example: Nike, a leading footwear brand, outsource its manufacturing processes majorly to Philippines for efficiently producing and delivering products.
Under this model, businesses concentrate on optimizing supply chain operations to meet customer demand and improve their experience.
It focuses more on increasing demand for products and making changes in supply chain procedures to deliver products on time to customers. Timely delivery improves the customer experience and increases the lifecycle value of your customers.
Example: L’Oréal incorporates customer preferences in their products and adjusts its portfolio for providing personalized products to customers globally.
Supply chain management comprises the Purchasing, Logistics, Resource Management, and Information Workflow functions to procure, produce and deliver goods to consumers on time. Here is a detailed enumeration of these functions:
Suggested Read: Role and Benefits of ERP in Supply Chain Management
Supply chain management works in the following steps:
Step 1: Analyze the consumer needs and demands to formulate a plan for production
Step 2: Procure raw materials from suppliers
Step 3: Allocate resources for different procedures to start production
Step 4: Perform quality checks when the product is produced completely
Step 5: Identify customer requirements and select the right method to distribute goods.
Step 6: Lastly, the products are delivered to customers through the supplier.
Identifying and mitigating risks are important to avoid any loss in the long term. Here are some of the risks that you might need to assess and address for a smooth supply chain operation.
Conclusion
Implementing the right supply chain model can significantly help organizations to improve operational efficiency, enhance product quality, and optimize inventory levels.
It is essential for you to carefully consider your business requirements to choose the best supply chain model that complements your goals. However, you can also implement multiple models simultaneously to optimize the supply chain procedures.
FAQs
There are multiple types of supply chain models that you can use to manage your supply chain. Some of the most common models are Continuous Flow, Fast chain, Efficient Chain, Agile, Custom-configured, Flexible, and so on.
The four components of supply chain management include integration, operations, purchasing, and distribution. Managing these components properly helps in streamlining the supply chain operations.
The supply chain management process is for manufacturers, transportation companies, retailers, third party logistics firms, service firms, government agencies, etc.
Supply chain management helps organizations deliver products quickly, maintaining the product supply and eliminating quality issues. Further, it helps them optimize inventory management to reduce any wastage.
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