Because functional products have a long life cycle and stable and predictable demand, the prediction error is small, such as daily consumer goods. In contrast, innovative products, such as fashion and consumer electronics products, have a very short life cycle, and it is difficult to predict the customer's demand for such products.

The purpose of an effective supply chain is to coordinate logistics and service flows, minimize inventory and ultimately maximize the efficiency of manufacturers and service providers in the supply chain. This supply chain model is more suitable for situations with high demand predictability, low forecasting error rate, long product cycle, infrequent introduction of new products and weak product diversity. The production output is generally put into storage to meet the demand, and the order delivery time is short. Effective supply chain design accords with the competitive priority of attaching importance to low-cost operation and on-time delivery. Effective supply chain design features include assembly line, low inventory buffer and low inventory investment.

The purpose of reactive supply chain is to respond to market demand quickly. This supply chain model is suitable for situations with poor demand predictability, high forecasting error rate, short product cycle, frequent introduction of new products and strong product diversity. The design of reactive supply chain conforms to the competitive priority principle of attaching importance to quick response, development speed, quick delivery, customization and output flexibility. The design characteristics of reactive supply chain include: flexibility and intermediate process, setting inventory according to demand to deliver goods quickly and greatly shortening lead time.