The fluid model of product flow

The “supply chain” is the sequence of processes through which a product moves from its origin toward the customer. In our metaphor of fluid flow, we may say that warehouses represent storage tanks along the pipeline. The analogy with fluid flows can also convey more substantial insight.

For example, consider a set of pipe segments of different diameters that have been joined in one long run. We know from elementary fluid dynamics that an incompressible fluid will flow faster in the narrower segments of pipe than in the wider segments. This has meaning for the flow of product: The wider segments of the pipe may be imagined to be parts of the supply chain with large amounts of inventory. On average then, an item will move more slowly through the region with large inventory than it will through a region with little inventory. The fluid model immediately suggests other general guidelines to warehouse design and operation, such as:-

? Keep the product moving; avoid starts and stops, which mean extra handling and additional space requirements.

? Avoid layouts that impede smooth flow.

? Identify and resolve bottlenecks to flow.

Later we shall rely on the fluid model to reveal more profound insights.

It is worth remarking that the movement to “just-in-time” logistics is roughly equivalent to reducing the diameter of the pipe, which means the product flows more quickly and so flow time and in-transit inventory are reduced.

If two pipes have the same rates of flow, the narrower pipe holds less fluid. In the same way, a faster flow of inventory means less inventory in the pipeline and so reduced inventory costs.