Flexible Supply Chain

Flexible supply chains :this type of supply chain is the one which has a great flexibility to adapt to changing customer demands and shorter lead times. It is usually used where there is a vast range of products which share some basic characteristics and can be manufactured from the same production line. This can be achieved through mass customization. An example of this type of supply chain is the one used by some specialized sports car manufacturers and personal computer companies, they can also be found to be used with an ABC Warehouse inventory system

This supply chain has the flexibility to handle large volumes of material but can also still operate cost effectively with lower volumes and close to full capacity utilization when demand is strong. The key to being able to achieve this is managing costs within the supply chain and optimize the split between fixed and variable costs of operation.

The pros of this type of supply chain :

-Ability to provide customers a wide range of products efficiently
-Can supply customers with built to order or customized products
-Ability to predict and respond to consumer demand patterns better
-Ability to handle peak load movement across the supply chain

The cons of this type of supply chain:

-May require some WIP, and larger inventory holding costs due to extra inventory, this must be controlled carefully
-May require outsourcing of certain activities such as some manufacturing and logistics to handle peak demand
-Business risk may difficult to quantify because of greater third party involvement