Supply Chain 101: Types of Supply Chains

By Cory Levins
6 may 2021

Smart logistic industry 4.0 , QR Codes Asset warehouse and inventory management supply chain technology concept. Group of boxes and Automation robot arm machine in storehouse.

Source: Zapp2Photo / Shutterstock.com

Key Takeaways:

Different supply chain structures and conditions are designed for various purposes.
Commodity manufacturing has different demands from fast fashion manufacturing that has dramatic shifts in seasonal needs.
Artificial intelligence has made it easier for all types of supply chains to meet manufacturer needs, but there are still some basic rules for choosing a type of supply chain.

The process of ordering and receiving materials and goods may look straightforward, at first glance, but there are many ways to source your products. Your timeline for procuring the goods, the level of customization and the seasonal demand for the products may put different amounts of stress on parts of your supply chain. In many cases, you can improve your overall supply chain by working with the manufacturers and distributors you source from to make sure they understand your needs. However, your supply chain may need a complete overhaul to keep up with demand and maximize your profits. It’s essential to start by understanding the range of supply chains possible in our global economy. Here are the basic types of supply chains and their potential applications for your business.

Continuous Flow Model

For businesses that consistently sell the same products with little variation, the continuous flow model is the best option. Typically, this model has the business contracting with the same manufacturers on an ongoing basis. They will have a standing contract for a set number of units each month. This means that it’s best for commodities that people use on an everyday basis. If there are seasonal fluctuations in demand, standing contracts can contain minor adjustments, but there is little room for error. However, this is generally the least analytically demanding model for businesses to use.

Efficient Chain Model

Efficient chains prioritize eliminating waste to maximize profit. In some industries, the razor-thin profit margins and high level of competition make this model an absolute necessity. All suppliers and steps in this model need to have high efficiency to have a meaningful impact on a company’s bottom line. Like the continuous flow model, the efficient chain model ends up with potential excess supply or shortages. Changing the supply line and production process to change the quantity produced may end up interfering with the efficiency that had been achieved. Even if supply and demand are stable, companies must continuously monitor the supply chain for potential sources of waste and loss. Learn More About “What Ss Supply Chain Management?” Fashionable clothes in a boutique store in London.

Fashionable clothes in a boutique store in London.

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Fast Chain Model

As its name implies, the fast chain model prioritizes speed. The company sourcing the goods has a short timeframe to work within and is willing to pay extra for their goods to arrive without delay. This is most common for on-trend goods that won’t be in demand after a few months. Companies must be fully prepared to ship out finished items as soon as they are ready, keeping essentials like cardboard shipping boxes in a variety of sizes on hand.

Agile Model

The agile model is for specialized goods that may need to change at the last minute to accommodate customer needs. Agile models are tricky to accomplish because they require the company to do as much of the production work in advance as possible, and then hurry to finish production just in time to meet demand. Agile models need to be able to adjust quickly to market trends as well as individual customer demands. This model requires a keen eye for market changes and highly trained staff members who have the technical knowledge necessary to change the manufacturing and sourcing process if needed. Source Cardboard Shipping Boxes to Keep Up with Any Supply Chain Model

Custom Configured Model

Similar to the agile model, the custom configured model requires companies to do as much prep work and production in advance as possible. The difference here is that the custom configured model has a set number of options customers can choose from, whereas the agile model responds to a larger number of variables from customers.

Flexible Model

Flexible models allow a business to ramp up production for intense spurts to meet demand, and then decrease production again when demand drops. This requires careful management of both finances and the supply chain itself. Sourcing raw goods in this way can be a challenge, but it’s possible with the right team of providers. Male and Female Industrial Engineers in Hard Hats Discuss New Project while Using Laptop. They Make Showing Gestures.They Work in a Heavy Industry Manufacturing Factory.

Male and Female Industrial Engineers in Hard Hats Discuss New Project while Using Laptop. They Make Showing Gestures.They Work in a Heavy Industry Manufacturing Factory.

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Making the Right Decision

“What is supply chain management?” is important to remember because it looks very different across various industries. However, the core idea of supply chain management is using data to your advantage. As artificial intelligence has improved, data analytics software programs have expanded to allow more accurate predictive analytics. This subfield of data science makes it possible to understand your supply and demand ebbs and flows and to formulate changes to your supply chain. Predicting your supply and demand also affects basic logistics, such as keeping the right amount of small business shipping supplies on hand. It also requires a realistic assessment of how many hours your team can work and how many temporary workers you’ll be sourcing. For a highly automated factory, these concerns may be negligible, but it requires careful planning in some industries.

Safe and Secure Shipping at Every Step

Understanding the different types of supply chains and selecting or modifying your chain to maximize profits is crucial for any business. One of the key areas in the supply chain that you can carefully control is packaging items to avoid losses due to damage that could slow your supply chain down. Air Sea Containers provides a wide selection of shipping containers and works hard to ensure you get what you need on time. Contact us with questions about how we can serve you.