To get your new product off to a successful start, it is a good idea to create a balanced supply chain. The supply chain that provides the most flexibility should be the best one to use when a new product is created.
as new products generally have lower demand and shorter lead time, they are much more unpredictable. a flexible supply chain is what’s needed to mitigate unpredictability in demand.
What is a supply chain?
A supply chain is a system of organizations, people, technology, activities, information, and resources that work together to design, create, and deliver products and services from supplier to consumer.
The supply chain includes activities such as sourcing raw materials, producing and manufacturing products, distributing them to customers, and managing returns. Supply chains are designed to be efficient, responsive, and agile in order to maximize profits.
The flexibility of the supply chain allows it to have more resistance to disruptions and changes in the environment. It also allows the supply chain to respond quickly to changes in customer demand.
With an efficient supply chain, companies can increase their profit margins while providing high-quality goods and services.
The three types of supply chains
1. Make-to-Stock Supply Chains: This type of supply chain is best for established products that have steady demand and predictable orders. With a make-to-stock supply chain, the manufacturer produces a large quantity of the product and then stores them in warehouses until they are needed.
2. Make-to-Order Supply Chains: This type of supply chain is used when customers order a specific version of the product that is not already in stock. The manufacturer will then produce the requested version to meet the customer’s needs.
3. Assemble-to-Order Supply Chains: This type of supply chain is best for businesses that offer products with numerous customizations and options. The manufacturer assembles each item to the customer’s exact specifications, usually by assembling parts from different suppliers.
When deciding which type of supply chain is best for your new product, it’s important to consider the level of customization, demand levels, and production costs. With careful consideration of these factors, you can determine the best type of supply chain for your business.
The benefits of each type of supply chain
1. Make-to-Stock Supply Chain – The primary benefit of this type of supply chain is that it allows companies to take advantage of economies of scale and reduce costs, resulting in increased profit margins.
This model is beneficial for businesses that produce a large number of the same products, such as food, clothing, and electronics. Examples of businesses using this type of supply chain are Walmart and Apple.
2. Make-to-Order Supply Chain – The benefit of a make-to-order supply chain is that it allows companies to produce custom orders, giving customers more options.
This type of supply chain allows companies to create unique products for their clients and create higher profits since customers are paying for their own customized products. An example of a business using a make-to-order supply chain is Tesla.
3. Assemble-to-Order Supply Chain – Assemble-to-order supply chains are beneficial for businesses that produce complex products with multiple components.
This type of supply chain gives businesses the flexibility to customize their product offering and meet customer demands. An example of a business using an assemble-to-order supply chain is Boeing.
Choosing the right type of supply chain for your new product will depend on the complexity of the product, the cost to produce it, and the expected demand. Taking the time to assess these factors will help you make the right decision for your business.
What kind of supply chain is best for new products?
New products take time to be accepted by the market and consumers, so at the beginning, the demand and production volume are low, so flexibility should be the top priority for the supply chain.
It is challenging to find willing suppliers to work with because the demand is low but unpredictable.
New products require suppliers that can produce low volumes with short lead times. It is recommended to work with old suppliers who have had mutual success with past products and are more willing to take on new ones.
What is the best type of supply chain?
It seems that the best type of supply chain is impossible, as there is not one that is everything – flexible, responsive, efficient, cost-effective, resilient, sustainable, etcetera – without flaws. the ideal supply chain should meet the needs and match the culture of your company.
A flexible and responsive supply chain is essential; having suppliers who can quickly adjust and respond to changing customer demands and orders will help you keep up with market trends and competition.
An efficient and cost-effective supply chain will also be essential; finding suppliers who can minimize costs and maximize efficiency will allow you to pass those savings on to customers and maintain a competitive edge in the marketplace.
Additionally, a reliable and secure supply chain should not be overlooked; having trustworthy suppliers who will guarantee quality control standards and reliable delivery times are essential components in achieving success with a new product.
All in all, a well-thought-out and optimized supply chain should ensure a smooth production process, satisfied customers, and ultimately, an increase in sales and profits.
Why do we need a supply chain?
A supply chain is an essential part of any business, no matter the size. It helps ensure that materials and services needed to produce a product or provide a service reach the customer in a timely manner.
The efficient management of a supply chain is critical for success in today’s market, as customers expect reliable, on-time delivery of quality products.
A supply chain can help businesses save time and money by streamlining the process of acquiring materials, increasing their purchasing power, and keeping inventory levels low. It can also improve customer service by allowing businesses to respond quickly and accurately to customer needs.
Supply chains are also essential for reducing risk. By having a well-organized, reliable, and efficient supply chain, businesses can reduce the amount of time spent on manual operations, and can make sure that their operations are running as smoothly as possible.
This helps to minimize the potential for costly mistakes and delays, which can affect a company’s reputation and bottom line.
Overall, a well-managed supply chain is a critical factor for success in today’s business world. By investing in reliable materials, services, and processes, businesses can ensure that they are providing their customers with quality products and services in a timely manner.
Which is better responsive or efficient supply chain?
The choice between an efficient and a responsive supply chain depends on the type of product you are selling and your business goals. An efficient supply chain focuses on minimizing costs, while a responsive supply chain aims to deliver the product quickly and reliably.
For most products, an efficient supply chain is ideal. This type of supply chain eliminates waste and increases efficiency, making it more cost-effective.
An efficient supply chain also reduces delivery times and provides better control over inventory. By reducing costs, businesses can increase their profits and overall efficiency.
For example, a clothing manufacturer would benefit from an efficient supply chain as they could save money on materials and production.
However, a responsive supply chain may be necessary for products with seasonality and a short time frame, This type of supply chain prioritizes quick delivery and reliability over cost savings.
Responsive supply chains require businesses to invest in high-quality equipment, staff, and technologies, which can add additional costs to their operations. However, the quick delivery and reliable service offered by a responsive supply chain can be worth the additional investment.
Ultimately, the best type of supply chain for your business depends on the nature of your product and your business goals.
If you’re looking for cost savings, an efficient supply chain is likely the best option. On the other hand, if you need fast delivery and reliable service, a responsive supply chain may be more appropriate.
Both types of supply chains can help you succeed, so it’s important to consider your business needs before making a decision.
