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7 Different Types of Supply Chain Management Models

sahil bajaj

Sahil Bajaj

Senior Specialist - Marketing @ Shiprocket

March 14, 2024

8 min read

In modern business operations, supply chain management (SCM) makes sure that goods are transferred from suppliers to customers in an efficient and effective manner. A supply chain consists of all the companies and individuals working to produce and deliver a product to the end consumer. It starts with raw materials and ends with delivering the finished product to the customer.

Here, we will explore the importance of supply chain models and how they impact businesses. We’ll also look at different types of supply chain management models that serve as valuable tools for enhancing operational efficiency.

different types of supply chain management models

The Significance of Supply Chain Models 

Supply chain management is critical, providing several advantages to logistics and transportation companies that can improve their performance and competitiveness. Here is the importance of supply chain management:

  • Increasing Efficiency: One of the main objectives of supply chain management is to increase business effectiveness. By systematically reviewing and simplifying their processes, businesses can lower waste and maximise the use of their resources. As a result, products and services can be created more affordably and swiftly.
  • Risk management: Supply chain management helps companies to anticipate and get ready for unexpected issues. For instance, a natural disaster could have an impact on the availability of raw materials or drastically increase consumer demand.  When these risks are recognised ahead of time, companies can develop emergency strategies to continue their operations.
  • Competitive edge: Organisations that implement innovative supply chain strategies enjoy a significant competitive advantage. Businesses that are effective at reducing delivery times keeping costs down, and upholding strict quality standards are typically ahead of their competitors.
  • Global Expansion: For businesses aiming to grow internationally, supply chain management is essential. It necessitates the intricate management of international logistics to make sure that goods comply with several international regulations and reach clients worldwide in a timely and efficient manner. 
  • Efficient Operations: Several essential components of supply chain management are necessary for an organisation to function smoothly. These elements include efficient inventory management, cutting expenses, promptly meeting customer requests and optimising operations.
  • Well-Organised Supply Network: A well-structured supply network is the basis of supply chain management. It ensures that every step of the supply chain, from obtaining raw materials to delivering finished goods, functions properly. This ensures customers that their demands will be met promptly and prevents supply shortages. 
  • Excellent Customer Service: The effective implementation of supply chain management leads to increased operational transparency, expedited product delivery, cost savings, and, above all, better customer service. Increasing client satisfaction through better service standards promotes brand visibility and loyalty.

These are some of the benefits of supply chain management for companies aiming to improve operational efficiency, increase customer happiness, acquire a competitive advantage, and grow their worldwide footprint.

An In-Depth Look at Seven Different Supply Chain Models 

Now that you know about the significance of supply chain management, here are the seven types of supply chain management models:

  1. Continuous Flow Model: The goal of the continuous flow model is to keep the flow of goods through the supply chain steady and unbroken. It works well in sectors of the economy where supply and demand are stable, such as the production of essential needs. The key benefits of this approach are its efficiency and low cost of goods.
  2. Fast Chain Model: The fast chain model prioritises speed and rapid response to changes in supply or demand. It is frequently observed in sectors like fashion that have brief product life cycles. Businesses using this model aim to get products to market quickly and stay ahead of trends.
  3. Efficient Chain Model: Designed to maximise efficiency across the supply chain, this model is best suited for highly competitive industries. It depends on precise production estimates to optimise resource allocation.
  4. Agile Supply Network Model: Creating a supply chain that is quick to adjust to shifts in supply or demand is the main goal of the agile supply network concept. It necessitates effective communication, cooperation among supply chain participants, and adaptability in technological procedures.
  5. Virtual Supply Chain Model: The virtual supply chain model improves supply chain operations by utilising virtual technologies like cloud computing and data analysis. It increases efficiency and flexibility in the supply chain network by facilitating better communication and visibility. 
  6. Custom-Configured Supply Chain Model: The supply chain is customised according to specific customer demands or preferences. It entails extensive process and product customisation as well as close customer communication. 
  7. Flexible Supply Chain Model: The flexible supply chain model places a strong emphasis on being able to adjust to shifting market conditions and client requests. It is distinguished by its ability to manage times of both low and high demand. 

These are the different types of SCM that can be used by logistics companies to enhance their productivity and efficiency.

The field of supply chain management constantly evolves due to various causes, such as technology improvements, altering customer expectations, and global events. Here are the latest trends shaping the landscape of supply chain management:

1. Blockchain Technology

Blockchain technology, the technology behind cryptocurrencies like Bitcoin, is changing the way supply chains work. It keeps a secure and unchangeable digital record of every step a product takes on its journey. This makes tracking the supply chain easier.

With blockchain, every transaction is safely recorded in a chain of blocks. Each block has several transactions; when one block is finished, a new one starts and links to the previous one. This creates a clear record of the exact times for each transaction. This is especially helpful for businesses like those in the food and pharmaceutical industries, where ensuring products are genuine and following safety rules is very important.

2. Artificial Intelligence (AI) and Machine Learning

Artificial intelligence and machine learning are starting an evolution in supply chain management. These technologies are in charge of utilising data to determine the most efficient routes, estimate demand, and optimise inventory levels.

AI systems mine huge amounts of data for information and gradually learn from it. This enables firms to make more accurate estimates, resulting in better-informed decisions. They can predict which items will be in great demand during various seasons, allowing businesses to avoid having excessive or insufficient stock.

Machine learning algorithms may also predict future supply chain difficulties, such as delays or obstructions, and provide remedies. This real-time analysis dramatically improves inventory management and forecasting, which are critical components of supply chains.

3. Sustainable Practices

In supply chain management, sustainability is becoming a need rather than a trend. Businesses continually look for ways to use green supply chain practices to lessen their environmental impact. Green supply networks prioritise employing eco-friendly transportation, cutting energy use, and minimising waste. This approach benefits the environment and enhances a company’s reputation among environmentally conscious consumers. This shift towards ethical sourcing is critical in creating a more sustainable and socially responsible supply chain.

4. Integration of eCommerce 

Supply chains are still changing as a result of the rise of eCommerce. Companies incorporate many sales channels into their supply chain processes to fulfill client demands for prompt and easy delivery. With customers expecting a smooth experience regardless of the channel they use to make their purchases, multi-channel sales are quickly becoming the standard. When purchasing products in-person, online, or via a mobile app, consumers want alternatives for prompt and dependable delivery.

The process also involves enhancing the control of inventory to ensure products are available when and where needed. By effectively controlling inventory across different channels, businesses can minimise overstocking and understocking problems, ultimately reducing costs and boosting the client experience. 

Transforming eCommerce Logistics with Shiprocket

Shiprocket represents innovation and reliability in the ever-changing eCommerce industry. We aim to simplify and build trust in eCommerce by leveraging AI-driven technology. This is done by going beyond traditional shipping, increasing revenues, expediting order processing and delivery, ensuring secure and efficient shipment, improving customer relations, and expertly handling product returns. Shiprocket helps eCommerce companies to meet and exceed customer expectations, optimise operations, and achieve unsurpassed efficiency and customer happiness while adopting cutting-edge technical solutions in today’s fast-paced digital market.

Conclusion

Supply chain management is the foundation of modern business, elevating productivity, managing risks, and promoting international growth. The significance goes beyond just shipping goods; it provides a path to improve efficiency, manage risks, and gain a competitive advantage on a worldwide level. This empowers companies to simplify processes, reduce waste, and deliver exceptional customer service. By staying updated with current trends and implementing various types of supply chain management models, businesses can streamline operations, minimise waste, and satisfy customers worldwide.

In today’s ever-changing eCommerce landscape, Shiprocket stands for innovation and reliability in eCommerce logistics. It enables online companies to continually exceed customer expectations, streamline processes, and achieve remarkable efficiency in a constantly changing business environment by leveraging innovative technology.

How would you measure the performance of a supply chain?

Key performance indicators (KPIs) such as on-time delivery, order accuracy, inventory turnover, lead time, and cost of goods sold (COGS) are used to evaluate supply chain performance.

What can be the weakness of a supply chain, and how to overcome it?

Limited visibility is a significant challenge in supply chains, causing delays, inaccuracies, and inefficiencies. To tackle this issue, embrace IoT for real-time monitoring, blockchain for transparency, and data analytics for informed decisions, enhancing overall supply chain resilience and responsiveness.

What is the difference between logistics and supply chain management?

Logistics primarily deals with transporting and warehousing goods within the supply chain. In contrast, supply chain management (SCM) encompasses a broader scope, coordinating all network partners, including sourcing, production, transportation, storage, and distribution.

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