An Insight to Supply Chain & Models

A basic supply chain is the flow of raw materials and services from receiving the raw materials to the manufacturing &processing of the same till the final products are obtained.Thisprocess involves the movement of raw material,work in progress inventory and finished products. A simple supply chain concept would be- The raw material is taken to the factory where it is stored in the warehouse, sent for manufacturing, again stored in the warehouse, transported to the distributors and the movement of these products continue till they reach the end user/customers.

Importance of Supply Chain:

Supply chain not only plays an important role in organizational activities, but also plays a vital role in delivering the goods to the end user through multiple points of processing. It helps the organization to cut inventory costs, provides multiple sources of information through various channel partners and helps in giving an effective and efficient customer service which results in customer satisfaction. The degree of customer satisfaction helps in measuring the success of any supply chain qualitatively

Different types of supply chain models:

1. Build to order model

2. Continuous replenishment model

3. Integrated make-to stock model

4. Channel assembly model

    1. Build to order model:

Buildto order model aka (BTO), which is user specific, which means customer gives his customized requirement for the product and the company immediately starts assembly for producing the goods. But the company needs to be accurate on design and quality of product. The advantage of this is the consumer gets the rapid delivery of the product with the good feeling of possessing the customized product & it is also efficient for the company too as they are producing the goods only when required by the consumer.

    2. Continuous replenishment model:

According to this model there is a continuous delivery of the raw material from the supplier so as to occupy the space of those ones which has been used, but for this a close watch on the quantity is needed so as not to increase the cost sharply which could result in the collapse of the supply chain.

    3. Integrated make-to stock model:

This type of model focuses on, to stock the products which are in trend or are in demand from the customers, so as not to run out of stock of those products or goods. For this it needs a good forecast so that it can meet the exact balance between the production and consumption.The disadvantage of this model is that it is depended heavily on the accuracy of forecast.

    4. Channel assembly model:

In the channel assembly model all the components of products are gathered and assembledas it moves through the production line. This is achieved through the collaboration of all the outsourced suppliers and involves the transportation of the products. An example for this can bethe assembling different computer parts to construct the computer.

Thus we can say supply chain is a vast field and has different models which can be adopted by the companies according to their need, so that it allows them to be more efficient in terms of its production, cost and quality.

About Author:

Rohan Bhardwaj is a consultant in Systems Plus Pvt. Ltd. Within Systems Plus, he actively contributes to the areas of Technology and Information Security. He can be contacted at: rohan.bhardwaj@spluspl.com