Supply Chain Models for CPG Brands

By Joshua Weatherwax

6 min read

June 30, 2022

As a small CPG company, you likely adopted the supply chain model that the suppliers or retailers you work with already use. But, that may not be the most efficient for your business.

For example, you may want a quicker supply chain for CPG vs FMCG products. Or, you may need to focus on flexibility or efficiency. The key is understanding your particular industry and market.

Read on to learn more about the different supply chain models, how they work, and how to choose the right one for your business.

What Is a Supply Chain Model?

A supply chain is the network of companies and suppliers that produce and distribute a product to the final consumer. A supply chain model is the structure in place to ensure the products move from one business to another efficiently. Different supply chain models emphasize different types of products and workflow efficiencies. The model you use will also determine the best methods for creating your supply chain readiness plan.

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Types of Supply Chain Models

Every business and industry has unique needs and goals when it comes to supply chain management. This also means that they can’t all succeed by using the same supply chain model. When picking your supply chain model, you’ll want to prioritize the following:

  • Keeping your costs down
  • Reducing risk
  • Streamlining productivity
  • Ensuring consumer satisfaction

With those in mind, here are the six most common supply chain models:

Continuous Flow Model

The continuous flow supply chain model is focused on routine shipping of the same quantities of products with little variation. It is a traditional model that is best suited to established businesses that see little variation in demand and supply. Unfortunately, many smaller brands adopt this model without realizing it can be limiting for growth and less stable when supply chain issues hit. Understanding the right amount of supplies to order is key.

Fast Model

The fast supply chain model is unsurprisingly focused on maximizing shipping speed and sales velocity. The less time it takes to get the products in the consumer’s hands, the better. It’s best used by businesses that sell trending products that have a short window for demand and sell through quickly. However, it can be prone to quality issues as the products move so quickly, that mistakes may go unnoticed.

Agile Model

Like the fast supply chain model, the agile model is focused on speed. However, it is not intended for trendy products, but products with varied demand that sell through quickly. This makes it a good choice for FMCG brands that may need to ramp production up or down with little notice.

Efficient Model

The efficient supply chain model is focused solely on streamlining the flow of goods from raw materials to the consumer. This model is most often utilized by companies that sell products with lower profit margins. The less money spent on waste and shipping, the better those margins become. However, it can also be one of the most challenging models to master.

Flexible Model

The flexible supply chain model is focused on shifting production levels to meet consumer demand. Most commonly, this model is used by businesses that sell products with seasonal demand. Since the production varies greatly, properly forecasting demand and the supplies needed are key.

Custom Model

If none of the above models work perfectly for your business, you may need a custom model. Unique products and high-tech goods often require this type of model since a balance of efficiency and sales velocity is key. However, this type of model requires a strong understanding of your supply chain and identifying the best areas for improvement. Using retail data analytics is vital for success.

How to Pick Your Supply Chain Model

When you’re just starting out, you’ll likely be driven to a particular model based on what your suppliers and retailers want. However, as you grow you’ll start to notice areas of weakness that you’ll want to fix. This gives you the perfect opportunity to evaluate your supply chain. If you’ve taken the time to create a supply chain management plan and establish KPIs, you’ll more easily be able to find these flaws.

Often, businesses find that they need to adapt a custom model that fits their unique needs. A custom model can offer the flexibility you need, but you’ll need to work with your suppliers and retailers to make it work. Build your relationships and speak openly and honestly about what is and isn’t working. Together, you may be able to design the perfect model that works for you all.

Optimize Your Supply Chain with Data

No matter which model you choose, using retail data will make it operate more efficiently. Whether that’s tracking inventory levels, forecasting demand, or picking out the best retailers to partner with.

Luckily, with Byzzer, powered by NielsenIQ, you can have all the data you need at your fingertips. Byzzer provides breakdowns of product and category attributes in easy-to-digest reports. Best of all, we’ll show you how to leverage this information for your action plan.

Sign up for a free account with Byzzer today!

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