More Supply Chains have Moved Away from Traditional Linear Models in 2021
The COVID-19 pandemic served as a wake-up call for supply chains of all types and sizes. In 2020, it became abundantly clear that any disruption within a linear supply chain could create catastrophic effects down the line.
As a result, many supply chains are seeing great value in ditching the traditional methods and moving toward a more interconnected, transparent system.
Is There a Better Way?
Changing from “the way it’s always been done” is hard for any industry or system to cope with. After all, when you are deeply entrenched in a system that has been used for generations, switching to a new method is often nerve-wracking and uncomfortable for all involved.
But while changing the supply chain model is a difficult prospect, it is well worth the effort. The days are numbered for the linear model which only allows for parts of the chain surrounding an issue to be aware of any disruptions while those further down the line don’t find out until much later, sometimes when it is already too late.
The better model, and the one that supply chains need to adopt, is one where all members of the supply chain are aware of issues at any step in the process, enabling these companies to make adjustments and preparations so that the entire system does not collapse.
Additionally, the new model needs to incorporate methods that reduce wasted materials and give consideration to environmental implications.
Two primary models have been suggested and implemented in order to improve supply chain efficiency, sustainability, and transparency: the network model and the circular model. Both of these models emphasize thinking of supply chains less as a “chain” and more as an interconnected system.
The Network Model
The network model creates a more resilient, efficient, and environmentally-friendly system than was possible with a linear supply chain model:
- Resilient. When something goes wrong in the linear model, generally the only ones who know about the problem are on either side of where the issue took place in the chain. Those at the far ends will likely have no idea that there was a disruption at all. The network model allows for all parts of the supply chain to recognize and triage these issues, turning a potentially disastrous problem into a more manageable one.
- Efficient. If all parts of the supply chain are effectively communicating with one another, inefficiencies can be spotted and corrected. This leads to decreased time commitments and improved profit in the long run. One way for supply chains to begin to implement more efficient methods is the use of cloud technology. Having accessible information stored in the cloud and available to all interested parties is the way of the future, and many businesses within supply chains have already seen the value in leveraging this technology.
- Environmentally friendly. With a network model, all entities involved in the supply chain can communicate more effectively about issues like how much packaging material is necessary and other items that impact environmental sustainability. The network model also enables businesses to reduce their overall transportation cost and environmental impact as fewer shipments are delayed and fewer transported materials are wasted due to the improved visibility across the supply chain.
In looking at the supply chain in this unique manner, we can see that everyone has a vested interest in the end product, and gone are the days of solely focusing solely on one business’s part in the “assembly line”. This model can also enable businesses to use a JIT inventory storage method more effectively, as they will be better able to predict potential issues in production or supply through the increased supply chain transparency afforded by the network model.
The Circular Model
The circular model is another way of looking at the future of supply chains. In the linear model, the process can be easily visualized as a one-way street: materials are introduced at one end of the chain, made into the product in the middle of the chain, and then end with delivery to the consumer at the other end of the chain. From there, these products are used until they are no longer viable and then thrown away.
In keeping with our roadway analogy, the circular model is closer to a roundabout: Traffic comes into the center circle and everyone can see as cars exit, enter, and re-enter the roundabout to get to where they need to go. The circular model aims to improve sustainability by reusing whatever parts of the discarded product can be put back into the system. In this way, we keep environmental considerations in mind as we improve our supply chain operations. Additionally, parts of this model can be implemented regardless of whether you use a lean or agile supply chain.
The long-standing linear supply chain structure is not going to be able to last much longer. As many supply chains have started to see the value in moving toward network and circular supply chain models, the supply chains of the future will no longer be seen as a chain, but rather as an interconnected web. As this happens more and more, individual businesses within a supply chain will see profits soar and while doing their part to decrease our collective carbon footprint.