In the current market environment, supply chain management has become both an art and a science.
We hear that a lot, don't we? The art and science of this or that. We've heard it enough that it doesn't have that much clout anymore.
But the global supply chain faces a multitude ofunique and interconnected challenges. Up and down the supply chain, the same boxes are currently being checked:
- High transport costs
- port delays
- container shortage
- Long delivery times for raw materials
- Difficulty attracting and retaining highly qualified employees
- The pressure on capacity
- Excessive prices
How should we react? Sometimes, when faced with a big challenge, it helps to step back and get back to basic principles.
So let's do that today. Let's briefly review the six classic types of supply chain management models. Sometimes looking back at the basic framework can reveal a solution.
Rethinking First Principles
Now that we've covered our first principles, we're going to mention some next-generation technical tools and solutions for supply chain management. But first, let's consider the artistry and scientific thinking that goes into this type of management.
After all, we're chasing answers, right? The goal is to understand and identify the right way forward. Hopefully the information we're going to cover today will create new connections or inspire at least one new idea. You might read something today that you want to experiment with further.
See? We already think like artists and scientists!
So grab your watercolors or aBunsenbrenner. Let's dive in.
Supply Chain Management: An Art and a Science
„There is an art in science and a science in art; the two are not enemies but different aspects of the whole." -Isaac asimov
First, let's start with some simple definitions.
- Art can be defined as the expression or application of human creative ability and imagination.
- Science can be defined as the study of the structure and behavior of the physical and natural world through observation and experiment.
Supply chain professionals certainly use observation and experimentation to navigate the daily onslaught of troubled waters! And I'm sure you can think of many examples where your creative skills saved the day.
It's pretty rough in the supply chain world these days. Regardless of what logistical patch you call home, the post-pandemic restart is likely to shake your numbers to some extent.
But when the job gets tough, you might want to make sure you have the right tools for the job. Which of the six classic models of supply chain management can provide you with the tools? Let's take a look.
The six models of supply chain management
The six common models are:
- continuous flow
- fast chain
- Efficient chain
- Custom configured
An important distinction is that each model focuses on achieving one of two broader ideal goals:
However, the reality is that any type of supply chain management philosophy includes elements of both efficiency and responsiveness. And that makes sense when you think about it. When your supply chain is extremely efficient, it cannot respond to disruptions. On the other hand, if the supply chain only responds to single or small requests, it will not be very efficient to produce large quantities.
So let's take a closer look at the pros and cons of each model.
Thecontinuous flow modelis designed for efficiency. It offers stability in high volume environments. This classic model is best suited for manufacturers who make the same product repeatedly, with few design variations or changes.
This model is ideal for mass production. Its high efficiency is reflected in low product prices. For manufacturers, margins are based on commodity prices. That sounds like science to me.
The fast chain model
Thefast chain modelis designed for responsiveness. It is ideal for manufacturers who frequently change their product line. This model is best suited for trendy products with a short lifespan. In this example, the manufacturer that can flood the market before the trend cycle ends wins.
This model emphasizes the competitive advantage of the first-time adopter. But the real driver of the fast chain is the designer - and the marketing department. In other words, if you can create your own trend, you're first to market. In short, this model is powered by art.
The efficient chain model
TheEfficient chain modelis for highly competitive industries where end-to-end efficiency is the ultimate goal. This model relies heavily on production forecasts to appropriately stress and sweat machinery assets.
The efficient model also relies heavily on commodity and commodity prices. In the post-pandemic world, efficient chains are struggling with capacity issues. Drivers for this are labor shortages, material shortages and delays.
The bottom line is this. Missing a forecast can create a ripple effect. This can result in long lead times and inflated prices for manufacturers along the supply chain. And you hear a lotartisticLanguage.
The agile model
Theagile modelis ideal for manufacturers who deal in special items. This model is fine-tuned for small product batches. This requires less automation and more expertise. And that added value, in turn, allows companies using this model to command higher prices.
Companies with agile models can increase volume. But beyond a certain volume threshold, they typically prove uncompetitive. Compared to companies with an efficient chain model, agile companies are blown out of the water at higher volumes from a price point of view.
The individually configured model
The custom configuration model focuses on providing custom configurations during production and assembly. This set-up time usually occurs at the beginning of a longer production and assembly process. For example, certain prototypes or limited production designs fall into custom configured manufacturing.
This is a high-touch model that can include shorter turnaround times and small product batches. Essentially, the custom configuration model is a combination of agile and continuous flow models.
The flexible model
The flexible modeltrying to be the best of all worlds. It can respond to high volume demands during a peak season. On the other hand, flexible model companies can handle and absorb routes with little or no demand. This model is like a light switch. Turn it on or off as needed.
To implement the flexible supply chain model, a company needs the right tool (or automated machines) for the job. This model also requires a wide supplier network or staff that has a wide knowledge base.
What's next? Supply chain control towers
As you have seen, each type of supply chain management model has advantages and disadvantages. A company can completely master a supply chain model. Regardless, market forces could render these skills obsolete. Of course, only you know which model is right for your company and under what circumstances.
But one thing is clearly universal: new tools are coming and we need to take advantage of them. A major advance in supply chain management, for example, is theSupply-Chain-Control-Tower.
No, it's not a physical control tower - but it can perform air traffic control for your entire supply chain. In short, control towers are part of theCloudsacceptance and totalDigitization of supply chain management. learn more aboutSupply chain control towers here.
In summary, the technological tools deliver the science. We then provide the creative application. Supply Chain Management is truly an art and a science!
This post was written by Brian Deins.Brianbelieves that every day is a referendum on brand relevance, and he looks forward to bringing that kind of thinking to the world of modern manufacturing and logistics. He employs a full stack of business development, sales and marketing tools built through years of working in the logistics, packaging and Tier 1 supply industries, and serves a client base that includes Fortune 1000 composed of OEMs.