If you work in a supply and distribution management business, you are aware of the immense emphasis put on the framework of the supply chain from production or packaging to delivery of the end product to the market or consumer. Even the slightest glitch or delay in supply can cause a loss in product demand or other financial loss including product damage.
Nowadays, data-driven analytics is used to design fortified and efficient supply chain strategies to predict and eliminate possibilities of deficiencies in supply. Supply chain network modelling is a lucrative profession for those wishing to pursue a career in supply chain management and this article might be able to provide some insights.
Aim of Supply Chain Network Modelling
Supply chain network models are primarily used as prototypes to help decision-making at multiple stages of a supply chain. Transportation and transshipment are the two most frequent obstacles that supply chain networks try to address, especially the costs per unit in both cases. The end goal, as mentioned already, is to deliver the product to the receiver in minimum time with minimum expenditure, without compromising on the quality. It helps in the best possible usage of transportation resources within a set distribution and logistics network.
Types of Supply Chain Network Models
It is imperative that you choose the correct supply chain model for your business to prevent any financial risks interruptions and logistical problems. We have listed some of the most reliable supply chain network models for your reference before you customise one for your business.
- Continuous Flow Network: This supply chain network model is for delivering goods in a pre-determined set-up. In zones where there is a high demand for the products, it ensures stable supply and fulfilment of requirements. If your business delivers only a particular kind of commodity without many modifications, then this is the most reliable set-up for you.
- Custom-Configured Network: As the name suggests, in this supply chain network model, this method requires substantial modification of the supply chain with varying scenarios. In this model, both continuous flow and agile network models are employed and steps are taken to ensure that the product functions after delivery.
- Fast Chain Network: A relatively new model, this supply chain network is ideal for those commodities that have an early expiry date. To ensure maximum utilisation of the product, enterprises adopt a supply chain network that is fast and requires little processing, primarily to keep up with changing market trends.
- Agile Network: The agile model is best suited for those businesses that handle delicate products. In this network, more personalised intervention is required and less automation to ensure safe delivery of the product from one point to another. Joint management of inventory and collaboration in product design is highly required in this setup.
Advantages of Supply Chain Network Modelling
Designing supply chain network models leads to the optimisation of the supply chains by the enterprises, which can then get a clear roadmap of how the supply chain gets executed. It is a valuable method that can help supply chain companies achieve the benchmark of the key performance indicators in the industry in a short time. Here are some major benefits one can reap from supply chain network modelling:
- Data-driven realisations that empower better administration of supply chains: With highly efficient network designing tools, companies can now identify multiple ways of streamlining the supply chain, and saving costs by minimising redundancy.
- Helps get an in-depth awareness of business expenses: Often, supply chain enterprises can incur various expenses for the purchase of items and maintenance of warehouse inventory. Apart from these major expenses, there might be many intangible costs that often go unnoticed in the process of running a business. Supply chain network models ensure that you gain a grasp on the interconnected parts of your business, and how each segment is impacting the working capital.
- Optimisation of service process and delivery: The emerging high-end supply chain network designing models can help the operators visualise multiple scenarios for efficient service providing and suggest alternative ways to minimise transit time for speeding up delivery.
Guidelines for Designing Supply Chain Network Models
When designing a supply chain network model, try to adhere to the following guidelines or consider these factors to get the best results out of your network:
- Outline your objectives and targets clearly: This is the first step to designing supply chain network models as your aims will become the foundation of the model. It is not practically plausible to attempt to optimise all aspects of logistics and distribution simultaneously, hence, identify your primary targets, especially the ones which need immediate resolution. The best way to do this is to ask questions about the kind of customer service you aim to provide, and how the storage capacity, location of warehouses, and lead time of replenishing stocks can factor in the service.
- Gather supplementary information: To make feasible decisions about supply chain networks and to implement them, you need to have all the required data at your disposal. Although this step might seem prolonged, it is the most important factor, and you can easily access the data from enterprise resource planning databases or legacy systems. Typical examples of supply chain network modelling information include demand for products, transit rates, warehouse availability and rates.
- Use supply chain network modelling tools: The advancement of technology has facilitated the development of numerous network optimisation software for supply chains. You can subscribe to one such model, or design your tool for aiding your decisions regarding supply chain networks. Whichever software you use should be able to address your major concerns through parameters such as cost benefits, operational time management, storage capacities and lead times for modes of transportation.
- Verify and validate your supply chain network model: Designing a supply chain network model can be complete only when it has been tested against potential scenarios for use. Before finalising your supply chain network model, analyse your network by implementing it against some potential what-if situations and discern its feasibility.
Without an effective data-driven strategy to back up your supply chain network, you can make it susceptible to numerous drawbacks. Hence, the use of big data analytics in designing supply chain network models is a must in this fast-evolving consumerist market. To that end, pursuing a logistics management course, such as Imarticus Learning’s Advanced Certification Program In Digital Supply Chain Management offered in partnership with IIT Guwahati will help you get a more nuanced grasp on the critical roles of supply chain management and network modelling.