Last updated on March 19th, 2024 at 09:05 am
A business organisation consists of various functions, with the supply chain being the most crucial. The supply chain guarantees the timely and cost-effective delivery of goods and services to customers, thereby elevating customer satisfaction and contributing to the overall profitability of the business.
Creating a supply chain extends beyond conventional logistics and procurement activities. The main objective of this entire process is to develop a supply chain that is optimised, responsive, and cost-effective, topped with the ability to adapt to the dynamic demands of the market.
Wondering how supply chains work?
Let's start from the basics and delve into the complexities of designing the supply chain and underscore its significance as a crucial component of any organisation.
What Is Supply Chain Designing?
Designing a supply chain entails strategically arranging and optimising its components to attain specific business goals. This process involves making decisions and implementing solutions to improve the overall efficiency, responsiveness, and cost-effectiveness of the supply chain network.
The ultimate goal of designing a supply chain includes,
- Reduced inventory
- Minimised transportation cost
- Increased transparency and
- Identifying opportunities for cost-savings.
Before we delve into further details of the importance of supply chain designing, let’s take a look at some of the many supply chain models that enterprises currently use for this purpose.
The Continuous Flow Model
The continuous flow model works well for businesses that consistently manufacture the same product year-round. Despite variations in product demand, this model enables companies to smoothly manage fluctuations and maintain a steady flow of both information and products.
The Agile Model
Contrary to the continuous flow model, the agile supply chain design is typically applicable for those businesses that experience highly fluctuating demand. The success of this model is directly influenced by how well a company can handle production when there is an increase in demand.
The Fast Chain Model
Last but not least, the fast chain model, as the name implies, is for those companies that produce trendy items with a very limited life cycle. They need to be fast enough to produce and deliver the required items to their target audience quickly before the trend dies. This allows for high flexibility in the fast chain model.
Apart from these three, there are also quite a few other models used widely for designing the supply chain. Such include the customer-configured model, the flexible model, and responsive models, among others.
Importance of Designing the Supply Chain
Listed below are a few of the many reasons why designing the supply chain is of utmost importance to a business organisation.
Enhanced Responsiveness
A well-designed supply chain enables organisations to respond swiftly to the changes in market demand. This agility is especially vital in industries where product lifestyles are short and customer expectations are dynamic.
Improved Customer Satisfaction
By aligning the supply chain with customer expectations, companies can enhance customer satisfaction. This includes timely delivery, accurate order fulfilment, and transparent communication.
Cost Efficiency
Effective supply chain design leads to cost savings through streamlined processes, optimised inventory levels, and efficient transportation. These cost efficiencies contribute directly to the company’s bottom line.
Competitive Advantage
Lastly, companies with a well-designed supply chain gain a competitive edge in the market. The ability to deliver products faster, at lower costs, and with higher quality positions a business ahead of its peers.
Conclusion
Overall, designing the supply chain, especially in today’s globalised and fast-paced world, is no longer a logistical consideration but instead a strategic imperative. From increased customer satisfaction to enhanced responsiveness, it carries a lot of advantages for an enterprise.
Companies that recognise the importance of supply chain design and invest in its continuous improvement are poised to thrive in an ever-evolving marketplace.
If you wish to know more about the same or pursue a successful career in this field, then check out this Supply Chain Analytics course brought to you by IIT-Roorkee in collaboration with Imarticus Learning.
In this 6-month duration program, you will get to explore some of the most crucial topics of supply chain management. Besides offering an immersive learning experience, this supply chain management training program promises an array of advantages. Some of these advantages are new-age curriculum, experiential learning, powerful specialisation, and much more.
Enrol today and kickstart your career in supply chain management!
