10 Must-Have Skills for Supply Chain Managers

10 Must-Have Skills for Supply Chain Managers

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In the world of business, where efficiency, cost optimization, and seamless operations are crucial for success, supply chain management plays a pivotal role. As organizations strive to stay competitive and drive growth, having skilled professionals who can effectively manage the end-to-end product or service delivery process is essential. To achieve this, organizations must upskill their employees in supply chain manager skills through comprehensive training programs.

Supply chain management involves coordinating the production, purchasing, warehousing, and distribution of products or services from one end of a supply chain to another. It requires technical expertise, analytical thinking, and strong interpersonal skills. The function of a supply chain manager is to ensure that all the moving parts of the supply chain work seamlessly together, resulting in improved efficiency, cost savings, and customer satisfaction.

To excel in supply chain management, professionals must develop key skills in high demand in today's competitive marketplace. These skills enable supply chain managers to navigate complex challenges, make data-driven decisions, and optimize the flow of goods and services. Organizations can enhance their operational capabilities and drive business growth by upskilling their employees in these critical areas.

10 Key Supply Chain Manager Skills in 2024

Supply Chain Manager skills will be invaluable in 2024 for optimizing operations, leveraging technology, and mitigating risks in complex global supply chains, ensuring efficiency, resilience, and competitive advantage.

10 Key Supply Chain Manager Skills in 2023

Via Edstellar

As organizations strive for growth and operational excellence, it is essential to upskill their employees in the key supply chain manager skills that drive success in the dynamic business landscape. Supply chain manager skills are applied at work to direct activities and operations, encompassing everything from sourcing products or services to making deliveries. 

By developing these skills, professionals can optimize supply chain strategies, enhance profitability, and improve overall business procedures. Let's delve into the key 10 supply chain manager skills instrumental in achieving success and delivering value to your organization.

1. Supply Chain Skills

As a supply chain manager, your expertise lies in orchestrating the end-to-end supply chain process. It includes procurement, sourcing and evaluating suppliers, negotiating contracts, and ensuring quality and timely delivery. As a supply chain manager, your demand forecasting skills enable you to anticipate customer needs and optimize inventory levels. 

Proficiency in inventory management ensures you can strike the right balance between availability and cost efficiency. Additionally, your mastery of supplier relationship management enables you to build strong partnerships, foster collaboration, and drive continuous improvement across the supply chain.

2. Logistics Skills

For supply chain managers, efficient logistics management is the principle of supply chain success. With your logistics skills, you oversee the movement of goods and services, from transportation to warehousing and distribution. You optimize transportation routes, modes, and costs while ensuring timely deliveries. By employing effective warehousing strategies, you minimize inventory holding costs, improve order fulfillment, and enhance overall customer satisfaction.

3. Cost Accounting Skills

Managing costs is crucial for maintaining a competitive edge. As a supply chain manager, you need cost accounting skills to analyze costs across the supply chain, identify areas for improvement, and implement cost-saving measures without compromising quality or service levels. By optimizing expenses, you enhance profitability and contribute to the financial health of your organization.

4. Risk Management Skills

Supply chain disruptions can profoundly impact your organization's operations and bottom line. Risk management skills help you identify and assess potential risks, such as supply disruptions, natural disasters, or geopolitical issues. By implementing proactive strategies, contingency plans, and robust risk mitigation measures, supply chain managers safeguard your organization against unforeseen circumstances and ensure business continuity.

5. Project Management Skills

Supply chain management often involves managing complex projects to drive process improvements and implement strategic initiatives. With your project management skills, supply chain managers can effectively plan, organize, and execute projects within the supply chain. From defining project scope and objectives to allocating resources and managing timelines, your project management expertise ensures successful project outcomes.

According to PMI’s most recent Talent Gap report , 2.3 million people will be needed each year to fill all of the project management oriented positions expected to open by 2030. To remain competitive, companies will need to focus on hiring problem solvers and relationship builders who can help them drive change and deliver strategic value.

6. 3C's: Communication, Collaboration, and Change

Effective communication, collaboration, and change management skills are vital for supply chain managers. Your excellent communication skills enable you to articulate goals, share information, and align stakeholders across the supply chain. With strong collaboration skills, you foster relationships with internal teams, suppliers, and customers, enabling smooth coordination and improved efficiency. Moreover, your ability to embrace and lead change facilitates innovation, adaptation to market dynamics, and continuous improvement within the supply chain.

7. Time Management Skills

Time is a critical resource in supply chain management. With time management skills, you prioritize tasks, set realistic deadlines, and allocate resources effectively. By optimizing time utilization, you enhance productivity, ensure timely decision-making, and drive operational efficiency.

8. Negotiation Skills

Effective negotiation skills for supply chain managers empower you to secure favorable terms, drive cost savings, and build mutually beneficial relationships with suppliers and partners. Your ability to negotiate contracts and pricing agreements and resolve conflicts contributes to optimized procurement processes and improved profitability.

9. Understanding of Market Dynamics Skills

The business landscape is ever-changing, and you need a deep understanding of market dynamics as a supply chain manager. It includes staying updated on customer demands, emerging trends, and competitive landscapes. By closely monitoring market developments, you can make informed decisions, adapt quickly to changing customer preferences, and gain a competitive edge.

10. Budget Management Skills

As a supply chain manager, you optimize costs while maintaining operational excellence. Your budget management skills enable you to allocate resources wisely, identify cost-saving opportunities, and optimize financial performance within the supply chain. By effectively managing budgets, you contribute to the financial success of your organization.

Upskilling employees in these ten essential supply chain manager skills is vital for organizations seeking business growth and operational excellence. By partnering with 

Edstellar, a globally managed instructor-led corporate training platform, organizations can provide their employees with comprehensive training programs focusing on developing these critical skills. 

Ways How Supply Chain Managers Improve Their Skills

As a supply chain manager, continuously improving your skills is essential to advance in the ever-evolving business landscape. By upskilling yourself, you can enhance your expertise, drive efficiency, and contribute to the growth of your organization.

Ways How Supply Chain Managers Improve Their Skills

Here are some effective ways to improve your supply chain manager skills:

1. Create Goals

Start by setting specific professional and career development goals. Identify areas where you want to improve and set milestones to track your progress. For example, if you aim to enhance your accounting skills, enroll in relevant courses or pursue certifications. Set SMART goals that are:

  • Time-conscious

2. Earn Certifications

Consider earning a degree or certification in supply chain management or related fields. Acquiring a bachelor's degree in supply chain management can provide you with a strong foundation and a competitive advantage during job searches. 

If you already have a degree, pursuing an advanced degree can further enhance your skills and qualifications, making you more desirable to hiring managers. Companies often consider a master's degree a valuable asset when hiring supply chain managers.

3. Gain Practical Experience

Gain practical experience to develop the necessary skills to excel in the supply chain industry. Collaborating with colleagues and professionals from different departments enhances your negotiation and leadership skills. 

While you may specialize in a specific supply chain sector, such as procurement, expanding your knowledge in other sectors can improve your overall skills and competencies.

4. Assess Current Skills

Start by assessing your current skills to identify areas where improvement is needed. Reflect on your strengths and weaknesses, seek feedback from colleagues and supervisors, and conduct self-assessments. This evaluation will provide insights into specific areas you should focus on during your skill development journey.

5. Attend Trainings

Embrace the power of technology and take advantage of training platforms. Expert-led training platforms, webinars and other free online course materials offer flexibility, allowing you to learn at your own pace and from anywhere. Look for trainer-led courses that are specifically tailored to supply chain management training .

Additionally, consider instructor-led training programs that provide a structured learning experience with expert guidance and interactive sessions. Edstellar's globally managed instructor-led corporate training platform offers a wide range of courses for supply chain managers, ensuring high-quality learning experiences.

6. Webinars Specific to Supply Chain Managers

Attend webinars and virtual conferences on supply chain management. These events often feature industry experts who share their knowledge, insights, and best practices. 

Webinars provide an opportunity to learn about the latest trends, technologies, and strategies in the field. Engage actively by asking questions and participating in discussions to gain valuable insights from experienced professionals.

By following these strategies, you can actively enhance your supply chain manager skills and contribute to the success of your organization.

Tips to Showcase Your Supply Chain Management Skills at Workplace

As a supply chain manager, it is crucial to showcase your skills and expertise to drive the success of your organization. Here are some effective tips to highlight and demonstrate your supply chain manager skills:

1. Ensure Consistency in Operations

Consistency is key to efficient supply chain management. Demonstrate your supply chain skills by ensuring the availability of products and maintaining a consistent flow of operations at all times. 

Regularly check inventory levels to ensure products meet customer demands within specific timeframes. By optimizing inventory management and minimizing stockouts, you showcase your ability to balance supply and demand effectively.

2. Be Time-Conscious

Excellent time management skills are essential for successful supply chain management. Showcase your time management skills by prioritizing tasks, meeting deadlines, and executing operations efficiently. Timeliness ensures the smooth flow of operations, minimizes delays, and fosters productive workflows.

3. Drive Continuous Improvement

Showcase your commitment to continuous improvement by proactively identifying opportunities for enhancement within the supply chain. Implement process improvements, identify cost-saving initiatives, drive innovation to streamline operations, and fosters productive workflows.

4. Negotiate Better Deals for the Company

Effective negotiation is a key skill for supply chain managers. Highlight your negotiation skills by securing cost-effective deals while maintaining quality, quantity, timeliness, and relevance to supply chain operations. You demonstrate your value as a skilled negotiator by driving savings, improving supplier relationships, and securing beneficial agreements.

Tips to Showcase Your Supply Chain Management Skills at Workplace

In conclusion, upskilling employees in key supply chain manager skills is a strategic investment for organizations seeking business growth. Edstellar's tailored supply chain management training courses empower employees to excel and unlocking their potential. With enhanced skills and expertise, organizations can streamline operations, improve customer satisfaction, and adapt to market changes. Invest in developing supply chain manager skills through Edstellar and witness the positive impact on your organization's success. Maximize your supply chain's efficiency, competitiveness, and growth potential with our comprehensive training programs.

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Kevin is an IT professional with over 20 years of experience. His expertise lies in IT infrastructure, software development, and IT project management. Kevin has a proven track record of managing complex IT projects and implementing effective IT solutions. His writings provide valuable insights into the world of IT, offering readers practical advice on how to leverage IT to drive business performance. His deep understanding of IT dynamics makes him a trusted voice in the field.

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What are the Four Elements of Supply Chain Management?

Rachael Dent, Manager, Electronics & Technology

In the relentless world of modern business, the backbone of success lies in a finely tuned supply chain, empowered by state-of-the-art technology. But what does this juggernaut look like in action? And what are the benefits of supply chain management?

Picture a labyrinth of interconnected processes, a symphony of coordinated efforts, all coming together to create and deliver products that fuel the engine of commerce. These products could be tangible goods or intangible services, but one thing remains constant—the need for a meticulously paved path from inception to delivery.

Manufacturing businesses have long referred to the process of getting goods to customers as the supply chain. Some have come to call it logistics management or inventory management. However, since so many businesses rely on manufacturers, the all-encompassing term has made its way into the corporate world as well. Each process relies on the others to provide a seamless path from plan to completion.

In this high-octane world, an advanced supply chain is crucial, and effective management is the key to unlocking its true potential. Whether your team operates from the comfort of their homes or the bustling office, Rachael Dent , the Manufacturing and Operations Maestro at Redline, unfolds the secrets of today's manufacturing sector's four pivotal pillars of supply chain management.

Element One: Integration

“Integration is at the heart of the supply chain and is considered as the brains and heart of the supply chain process.” says Rachael. “As with any project, planning is essential to long-term success. Integration is the process of technology which closely coordinates with supply chain functions and elements. This allows the supply chain to get the details of all the actions and interactions.

The key component of integration is data and its collection, storage and use. Overseeing supply chain integration means coordinating communications between the rest of the supply chain to produce effective and timely results in the manufacturing process. Often this means exploring new software or other technological means to foster communications among departments, which in turn reduces errors which cost time and money.”

Element Two: Operations

As important as strategy is to maintain a strong supply chain, day-to-day operations are the backbone of manufacturers' work. Supply Chain Managers monitor the processes being performed and ensure everything remains on track. Many of today’s manufacturers use lean manufacturing strategies and techniques, which means processes are constantly evaluated so as to operate at the efficiency frontier. Whether monitoring processes or equipment to achieve maximum performance or reducing work or shift patterns during production slows down, the operations team can bring major improvements to the supply chain.

Element Three: Purchasing

You can’t make something from nothing. Sourcing is the process of finding, evaluating, and engaging suppliers to provide goods and services to businesses. Procurement is the process of purchasing goods and services. In a B2B sale, the procurement function will usually manage both the sourcing and the purchasing functions ensuring an organisation has everything required to manufacture a product or deliver a service, including materials, supplies, tools and equipment. This means staying ahead of the process and making sure that everything is available prior to the process. Without the right purchasing personnel, an organisation could find the materials are not available on time, delaying manufacturing production, or that excess inventory is accumulated, straining the company’s cash flow.

In the earliest days of the automobile industry, Henry Ford made a decision to own and control the complete supply chain—from the mines which provided the ore, to the factories which made the glass. Raw materials—iron ore, coal, and rubber, all from Ford-owned mines and plantations—came in through one set of gates at the plant while finished cars rolled out the other. Today, it is exceptionally rare for a company to try to own all the raw materials for a physical product. Even software products use pre-existing software frameworks and code.

Businesses have shown success in managing external suppliers and have found that it is beneficial to source some materials and services in order to focus on particular areas of specialisation. 

Element Four: Distribution

The supply chain ends when the product or service is delivered to the customer. However, a value delivery network must consist of a well-planned and managed distribution and logistics organisation. Most companies today use logistics software to manage the shipment process, whether they handle it on their own or outsource to a third-party provider.

Such logistics service providers mainly deal with services such as transportation, warehousing, delivery, and other related operations. However, as these processes are handled, products are moved expeditiously from the warehouse to the customer, a balance between demand and supply is critical for business networks to grow especially globally.

How do the four elements work together?

“The four elements of supply chain management must work cohesively for everyone’s benefit.” says Rachael. “Not only do end-customers reap the benefits; employees themselves also reap the rewards. A well-oiled supply chain is key to a harmonious work environment because when processes work efficiently, it achieves better results.”

“Businesses which have a strong supply chain management system in place put great emphasis on all the four elements listed, and also ensure that management, as well as the teams at various levels, work efficiently... Profit is the bottom line and to make sure that the business achieves this, it is essential that the supply chain does not have any gaps. Any snag should be dealt with immediately and the weak links repaired or removed.”

“Demand and supply are two of the most important aspects of a business. For any business to be successful, trends - with respect to demand and supply - need to be studied carefully while implementing an effective plan of execution. A supply chain management system is required not just for the timely manufacture of goods; it is also a very critical system for ensuring that customers’ requirements are effectively met.”

Ready to take your next job in a high-tech company?

Redline’s Manufacturing Recruitment and Operations division specialises in the selection of both permanent, contract and interim professionals throughout the UK and Europe. Established in 1981, the manufacturing jobs division is comprised of expert Consultants and industry professionals. Their exposure and deep-rooted knowledge of the market gives them a unique perception of the full product manufacturing life cycle and makes them well-placed to offer advice to candidates.

Browse our latest Supply Chain Management jobs or Purchasing jobs or for more information on Redline Group's latest Manufacturing and Operations jobs, please contact Rachael Dent on [email protected].

Redline has undertaken research into the candidate offer-to-acceptance ratio for many years. View our most recent research into why candidates decline an offer for insight into reducing your “Offer declination”.

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An organization rushes into an inventory reduction project; then, it quickly moves on to capacity usage improvement, followed by customer service enhancement, then to supply chain cost reduction. Eventually, the company circles back to where it started—inventory.

Sadly, few professionals realize that the six key supply chain elements—cost, capacity, inventory, lead time, customer service level, and product portfolio complexity—are inextricably intertwined. (See Figure 1.) As such, they should be managed as pieces of a whole. Supply chain management is a balancing act that aims to achieve the best combination of elements to support the overall business strategy and meet customer expectations. Finding a balance is key to avoiding costly vicious cycles.

a supply chain managers key task is to balance the four

Of the six supply chain elements, three are considered critical operational resources: capacity, inventory, and lead time. These elements act as buffers against demand fluctuations and protect businesses from lost sales due to out-of-stock products. Maintaining these buffers is essential to managing uncertainty. Potential areas of concern include demand, raw materials supply, factory performance variations, and quality problems. Consider the critical operational resources as a company’s first line of defense against business uncertainty.

Industries take various approaches to critical operational resources. Consumer packaged goods companies often use inventory safety stock as protection against uncertainty in demand and, often, supply. Meanwhile, telecommunications businesses and utilities typically treat the capacity buffer as finished goods—intangibles such as data packets and kilowatt hours that cannot be kept in inventory as toothpaste or automobiles can. In industries such as aircraft and military equipment manufacturing, where customers are willing to wait a long time to receive delivery, lead time often becomes a natural buffer.

Supply chain and operations management professionals must understand and be able to quantify the linkages between the lead time promised to customers, the capacity usage required to enable that lead time, and the safety stock necessary to deliver at the specified lead time and capacity. Senior management, of course, wants it all: the highest capacity usage; the lowest inventory levels; and the shortest, most reliable customer lead times—all this coupled with the highest customer service levels; the broadest product portfolio; and, most importantly, the lowest cost.

Managing the six elements of supply chain is a bit like squeezing a balloon: Apply pressure in one place, and it pops out on the other side. Finding the optimal balance can be difficult to achieve, as the elements are disconnected organizationally. In the typical environment, production oversees manufacturing capacity, sales or supply chain handles inventory and service, marketing manages the product portfolio, and so forth. This frequently leads to one or more of the following scenarios:

  • Capacity usage is pushed too high, resulting in chronic stockouts.
  • Depleted inventory causes order-to-delivery lead times to deteriorate, and production enters a tailspin of nonstop expediting and rescheduling.
  • Lead times shorten, adversely affecting stockouts and capacity usage.
  • Overexpansion of the product portfolio taxes capacity and inventory levels.

The results are obvious, but potentially devastating: dissatisfied customers, empty shelves, lost sales, and plunging profits.

Trouble at GlobeCo

Consider the case of a large, global electronic components manufacturer we’ll call GlobeCo. This company operated on a rather manufacturing-dominant philosophy, where achieving the highest

possible production capacity was viewed as a prime success factor—and was well rewarded. Inventory was set at a “good-enough” level of 24 days of sales for finished goods and 15 days of consumption for raw materials and components.

GlobeCo suffered from long and unpredictable customer lead times, with average fill rates ranging from 45 to 70 percent. Customer demand was seasonal and highly volatile, requiring either a large capacity or finished goods inventory buffer. However, manufacturing capacity was planned with no regard for seasonality and short-term variability. The planning department emphasized high production capacity usage, but examined only the annual demand data—a straight-line value that does not reflect seasonality.

Thus, manufacturing was left with no capacity buffer to accommodate seasonal demand spikes and short-term volatility. Between January and July, factories fell hopelessly behind schedule. From August to December, when demand dipped, manufacturing would begin to catch up on back orders, only to start the expediting race anew in January.

The professionals at GlobeCo soon learned the importance of evaluating a variety of potential solutions for feasibility before immediately doubling capacity or tripling inventory levels. It became clear that the decision makers would benefit from considering

adding internal or external capacity to absorb short-term demand spikes

carrying higher levels of finished goods or raw-material inventory; for example, pre-building stocks during the off season

negotiating with customers to allow for longer lead times, which can have the same effect as boosting capacity

finding a balance of the three, optimizing through differentiation based on products, customers, types of capacity, and other business aspects.

Leaders at GlobeCo examined their options and analyzed the potential results of the various approaches.

Increasing capacity only.   One of GlobeCo’s functions with the worst service ratings—a stamping operation—was chosen for this proof of concept. It was determined that, with lead time set at 30 days, the stamping operation would have to add three stamping machines and one additional tool to achieve a 95 percent service level. This would increase the plant’s annual controllable costs by $320,000 in labor and depreciation.

Increasing inventory only.   Analysis of the required finished-goods inventory to achieve a 95 percent fill rate would cost GlobeCo an incremental $105,000 per year in storage and carrying costs, an increase of nearly 200 percent.

Combining the two.  Based solely on the preceding analyses, it would appear to be significantly more cost effective to add finished-goods inventory than to invest in additional stamping capacity to reach targeted lead time and service levels. However, combining the two approaches often yields better results. See Figure 2 for a five-step method of determining the optimal combination.

a supply chain managers key task is to balance the four

At GlobeCo, demand for high-volume, low-volatility electronic components could be met from finished-products inventory, ensuring sufficient buffer to achieve the desired 95 percent fill rate. Meanwhile, components characterized by low volume and high volatility could become pure make-to-order products. The plant still would need to ensure it had sufficient capacity headroom to meet the desired 30-day lead time, but it would not have to maintain finished goods inventory. Based on an optimization analysis, carrying finished-goods inventory of components with volatile and unpredictable demand would require substantial safety stock for a 95 percent service level. Considering the short life cycles of these components, as well as their hard-to-forecast demand, the result almost assuredly would be obsolescence and inventory write-offs. Thanks to the nature of low-volume parts, however, the additional capacity required for the operation to achieve a 95 percent service level is relatively small.

Looking at lead time

Lead time, as a key supply chain element that directly affects customers, often is treated as a given and seen as determined by competitive market forces. Thus, companies focus on optimizing internal elements (capacity, inventory, and costs) before attempting to modify customer-facing elements such as lead time, service level, or product portfolio. However, when changes to capacity and inventory lead to

exorbitant costs or excessive working capital, lead time becomes a potential area of consideration. Understandably, customers tend to dislike longer lead times, but sometimes they will accept the trade-off if it results in improved delivery reliability or even reduced unit price.

A global food manufacturer decided to go this route when it maxed out its capacity usage and could not afford additional inventory due to capital investment limitations during the economic downturn. With customer service levels in freefall, “FoodCo” had two options in front of it: Change its policy of promising customers an unrealistically short lead time or reduce its product portfolio.

FoodCo’s leaders chose a combination of the two. For each stockkeeping unit (SKU), the sales, marketing, supply chain, and manufacturing departments helped develop two alternatives for increased lead times. The first was the so-called “comfort” lead time, named this way because most stakeholders were comfortable with it and expected limited negative effects to customers. The second option stretched the limits of acceptability and was referred to as the “stretch”strategy, representing a point beyond which customers were expected to see significant material impact on their businesses. (See Figure 3.)

a supply chain managers key task is to balance the four

While reviewing its SKU lead times, FoodCo took a hard and honest look at its product portfolio and its level of true product differentiation in the market. The company pruned its portfolio substantially, which helped improve overall customer service levels for the remaining SKUs and required no additional investment in capacity and inventory.

The strategic value of the six elements

Sustainable, systemic optimization of the six elements of supply chain often requires that appropriate capabilities be built into enterprise resources planning systems. Unfortunately, these enhancements are years away at best. Therefore, ongoing optimization still is the unique privilege of only the most advanced companies.

The good news is that, as the elements are relatively stable at the majority of organizations, periodic optimization every two-to-three years is probably sufficient to ensure operations at or near the optimum balance point. A more valuable aspect of the “six elements” concept might not the optimization itself, but the cross-functional conversations it initiates. These dialogues can generate an understanding of the interconnectedness of supply chain elements throughout the organization. For example, the effectiveness of the sales and operations planning process will improve immeasurably if everyone clearly understands that no supply chain element can be changed without affecting the others. This also can boost the effectiveness of corporate improvement initiatives, as employees will stop squeezing the balloon and begin to examine all supply chain elements in tandem.

Vadim Kapustin develops global pricing strategy and improves customer insight capabilities at Walmart. He has professional experience in strategy, supply chain and operations, and entrepreneurship. Previously, Kapustin was a principal at A.T. Kearney, where he helped global Fortune 500 clients in the areas of supply chain strategy, manufacturing, warehousing and distribution, strategic sourcing, and business turnarounds. He may be contacted at  [email protected] .

Supply Chain Minded is a very active and fast growing online community in Supply Chain for Planning, Sourcing, Manufacturing, Delivery and Reverse Logistics professionals. The Supply Chain Minded community aims to inform and connect professionals active in Supply Chain, Purchasing, Manufacturing, Warehousing, Transport, Distribution; Reverse Logistics, Service Logistics, Lean & Six Sigma, 3PL.

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Your guide to all things supply chain management, including best practices, emerging trends, and more.

From raw materials to consumer goods,  supply chain management  (SCM) encompasses the entire process of assembling and delivering a sellable product. SCM includes the disciplines of supply planning, product planning, demand planning, sales and operations (S&OP) planning, and supply management.

Making SCM a key focus of your strategic activities can have a positive impact that resounds throughout your entire business — but to do that you must first ensure you understand some foundational principles.

What are the best practices of supply chain management?

To succeed in a growing global market, you need a supply chain that’s connected from start to finish, across your enterprise and beyond. Here are five steps to succeed in  connected supply chain planning :

1. Make the move to real-time supply chain planning When using enterprise resource planning (ERP) systems and spreadsheets for planning, companies typically rely only on historical data, resulting in little wiggle room for changes should any disruptions occur in demand or supply. For example, based on the previous year’s numbers, a company can estimate the number of products it will sell in the next quarter. But what if a massive hurricane destroys a key distribution center, leading to too little supply on the shelves?

Discover how you can create “what-if” scenarios and plan more effectively — so you’re ready when disruptions occur — with Anaplan’s real-time connected supply chain planning solution.

2. Unify supply chain planning with enterprise planning A vital second step is connecting traditionally siloed supply chain planning to sales and operations planning and financial planning. Companies can benefit from synchronizing their short-term operational planning with their wider business planning processes to make real-time updates to inventory forecasts and supply.

Deploying real-time S&OP solutions that enable enterprise-wide collaboration means that key stakeholders across the business can create new scenarios and quickly assess how to use their resources to optimize profitability.

3. Anticipate the demand of the end customer For  consumer packaged-goods  companies, anticipating what customers want and when they want it is an ongoing challenge. A solution like Anaplan allows end-to-end visibility across the supply chain and beyond an existing network of wholesalers and retailers to sense demand signals from customers.

When changing consumer sentiments can be rapidly identified and changes to demand for the product assessed, the company, partners, and customers benefit from improved profitability, margins, and lead time.

4. Leverage real-time data across all points of the supply chain Because supply chain planning typically involves myriad suppliers, channels, customers, and pricing schemes, models can become large and potentially unwieldy — especially when spreadsheets are the primary planning tools. Incorporating a solution that uses real-time data allows planning with greater accuracy and reduces the risk of stock-outs or surplus inventory.

5. Ensure the flexibility to cope with change When technology facilitates efficient planning and quick reactions, disruptions aren’t the end of the world because re-planning and re-forecasting is easy — resulting in time and money saved and increased profitability.

What is the supply chain management process?

The SCM process is composed of four main parts: demand management, supply management, S&OP, and product portfolio management.

1. Demand management Demand management consists of three elements:

  • Demand planning  is the process of forecasting demand to make sure products can be reliably delivered. Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with demand levels, and enhance profitability.
  • Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize ROI while making merchandise available at the places, times, prices, and quantities the market demands.
  • Trade promotion planning  is a marketing technique to increase short-term demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, etc.

2. Supply management Supply management is made up of five areas: 

  • Supply planning determines how best to fulfill the requirements created from the demand plan. The objective is to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise.
  • Production planning addresses the production and manufacturing modules within a company. It considers the resource allocation of employees, materials, and of production capacity.
  • Inventory planning determines the optimal quantity and timing of inventory to align it with sales and production needs.
  • Capacity planning determines the production staff and equipment needed to meet the demand for products.
  • Distribution planning  and network planning oversees the movement of goods from a supplier or manufacturer to the point of sale. Distribution management is an overarching term that refers to processes such as packaging, inventory, warehousing, supply chain, and logistics.

3. S&OP S&OP is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.

With an eye on financial and business impact, the goal of S&OP is to enable executives to make better-informed decisions through a dynamic connection of plans and strategies across the business. Often repeated monthly, S&OP enables effective SCM and focuses the resources of an organization on delivering what their customers need while remaining profitable.

4. Product portfolio management Product portfolio management  is the process involved in going from initial product idea to market introduction. A company must have an exit strategy for its product when it reaches the end of its profitable life — or in case the product doesn’t sell well.

Product portfolio management includes:

  • New product introduction
  • End-of-life planning
  • Cannibalization planning
  • Commercialization and ramp planning
  • Contribution margin analysis
  • Portfolio management
  • Brand, portfolio, and platform planning

What skills are needed for supply chain management?

Successful supply chain leaders combine technical and business knowledge with collaboration and communication skills. The ability to influence department leaders that partner with supply chain is key, as well as the skills to interact intelligently with leaders across the organization is essential. And strong business acumen is a must-have — you’ll be more effective working with your counterparts in finance, sales, and marketing if you can speak their lingo.

When speaking of the potential conflict between man and machine, some have said AI won’t replace managers, but managers who work with AI will replace managers who don’t. This highlights the transformation taking place in supply chain: humanity is essential, but so is technology. It’s not a paradox; it’s the new normal. This leader is digitally dexterous, but also skilled with people. And this leader is a storyteller — digging into the countless layers of the supply chain to find the issues and weaving the right story together to help solve them.

The many-faceted role of a supply chain leader is changing as we speak. To thrive in this new world, supply chain professionals should grow their capacities in collaboration, communication, and leadership, and pair those skills with in-depth technical knowledge to become a powerful force for the future of  SCM software .

What will supply chain management look like in the future?

Here are a few key emerging trends in SCM.

Artificial intelligence and machine learning

History-based forecasting is used to drive supply chain planning, but artificial intelligence (AI) and machine learning (ML) are primed to change that forever. AI- and ML-based predictive models will transform processes like demand sensing, shaping, and orchestration, as well as supply planning. AI will begin to drive dynamic pricing, and new product introductions will be based on predictive market intelligence. AI and ML will also drive new models for product promotions management, as well as responses to disruptions in the supply chain.

Regulatory challenges and security risks

With the continued risk of high-profile hacks that compromise the information of millions of consumers, companies will need to raise the standards of their privacy and protection protocols. Macroeconomic concerns, political instability, oil prices, and resource availability will all require action across the enterprise, including within the supply chain. As a result, supply chain planners will need sophisticated modeling capabilities to plan for all potential scenarios.

A dynamic, connected future

Supply chain managers are always looking for new ways to take advantage of opportunities and to overcome obstacles as the modern supply chain evolves. With a connected supply chain planning approach and the use of new technologies, data is brought together, and more people are integrated into decision-making processes. As the supply chain of the future comes into view, these trends will play a key role in supply chain transformation.

Check out our demo series to learn more about Anaplan for supply chain management

What is supply chain?

" "

A supply chain is made up of interconnected parts of a whole, all of which add up to finished products bought by customers. Take automobiles, for example. Before a consumer buys a car, iron ore is extracted from the earth. The ore is transported to a plant, where it’s turned into steel, which is made into the chassis of the automobile. To make the car, various components—from engines to batteries, electrical components, rubber tires, a metal body, and paint—are assembled. Once the car is made, it’s sold in a retail setting to the end consumer.

That’s a good illustration of several types of supply chain stakeholders :

  • producers, which make or grow the raw materials for goods
  • vendors, which buy and sell materials
  • manufacturers, which make materials into goods
  • transporters, or logistics providers, which move those goods around the world
  • supply chain managers, which ensure that operations run smoothly in everything from planning to sourcing raw materials, manufacturing, delivery, and returns
  • retailers, which sell goods either online or in physical stores
  • consumers, who buy and use those goods and services

What’s the difference between value chains and supply chains?

A supply chain includes all the raw materials and parts that are made into a product and distributed up the chain for manufacture and sale. In contrast, a value chain  encompasses all the individual steps that are taken to create a marketable product. That includes not only physical components but also various value-adding activities that might be classified as part of the “knowledge economy”—things such as innovation, design, marketing, and sales—and that lead to the development of a product ready for customers.

What is supply chain disruption?

When any link in a supply chain isn’t working optimally , you might say the supply chain has been disrupted. Different issues can emerge. For example, an increase in inbound material costs because one material costs more this year than it did last year can have major implications on a company’s cost structure. Or labor market mismatches can cause operational concerns —for instance, if transport companies can’t find enough people who want to drive trucks to deliver goods.

There are five areas where supply chain vulnerabilities most often show up :

  • planning and supplier networks
  • transportation and logistics systems
  • financial resiliency
  • product complexity
  • organizational maturity

McKinsey research suggests that supply chain disruptions lasting one month or longer  now occur every 3.7 years, on average. And these disruptions can have a steep price : they cost the average organization 45 percent of a year’s profits over the course of a decade.

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What are some supply chain risks?

Although the COVID-19 pandemic  has delivered the biggest supply chain or value chain shock in recent memory, other examples abound. The Russian invasion of Ukraine has led to the worst humanitarian crisis in Europe since World War II, as well as supply chain disruptions in critical sectors , including agriculture, automotive, energy, and food. Changes in the environment and global economy have increased the frequency and magnitude of these shocks. For instance, the 2011 earthquake and tsunami in Japan shut down electronics factories, and 2017’s Hurricane Harvey disrupted US oil refineries and petrochemical plants, ultimately leading to shortages of some plastics and resins critical to different industries.

McKinsey has classified supply chain shocks into four different types , based on their impact, lead time, and frequency of occurrence:

  • Unanticipated catastrophes. These are historically remarkable events that can’t be anticipated and lead to trillions of dollars in losses. Examples include extreme terrorism and a systemic cyberattack.
  • Foreseeable catastrophes. Shocks in this category are of a similar magnitude to an unanticipated catastrophe but differ in that larger patterns and probabilities can guide general preparedness. Examples include financial crises and global military conflicts.
  • Unanticipated disruptions. These are serious and costly events but are on a smaller scale than catastrophes. Examples include data breaches, product recalls, and industrial accidents.
  • Foreseeable disruptions. Some disruptions can be spotted in advance of their arrival. Examples include China–US trade disputes and the United Kingdom’s exit from the European Union.

Organizations often focus on managing the shocks that they see most often. The COVID-19 pandemic is a reminder that while outliers are rare, organizations still need to consider such possibilities when making decisions and strategic moves. For most organizations, that will mean expanding supply chain executives’ long-standing focus on cost (and capital usage), service, and quality to include three new priorities: resilience, agility, and sustainability .

How does inflation affect supply chains?

Inflation can play a role in supply chain challenges. When inflation occurs, costs for input materials ( such as energy ) can rise substantially, having negative effects on companies’ profits and losses. One way to adjust is to increase prices (fairly) for consumers. Organizations can make more informed decisions by using an exposure matrix  to assesses which categories of their products are exposed to market forces and whether the market is inflating or deflating. Also, organizations aren’t necessarily at the mercy of suppliers that say they have to increase prices in an inflationary market; McKinsey has identified several strategies for negotiating such demands .

Circular, white maze filled with white semicircles.

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What is supply chain resilience.

Resilience refers to the ability to withstand, adapt, and thrive in the face of internal and external shocks—both known and unknown. More specifically, operational resilience , which encompasses supply chains, is about businesses maintaining robust production capacity that can accommodate shifts in demand and remain stable amid disruption, without letting quality slide.

When it comes to supply chain management, there are three steps  that organizations can take to account for long-term uncertainty and possible upheaval:

  • Firefighting. This refers to short-term, day-to-day actions that can help identify previously overlooked supply chain gaps. These tactics don’t build resilience, however, so they should be used only in concert with more complex, long-term reforms.
  • Integrating and streamlining operations . Here, three actions can be critical to building resilient supply chains:
  • creating a nerve center to consolidate organizational responses
  • simulating and planning for extreme supply and demand disruptions
  • reevaluating just-in-time inventory strategies
  • Achieving structural resilience . Quick responses are easier to accomplish, but if long-term resilience is the goal, the following techniques can help:
  • constructing a digital twin  of the most critical parts of the supply chain, allowing for simulations and test cases
  • creating and testing “what if” scenarios
  • increasing data sharing with suppliers
  • considering ring-fencing a small part of the supply chain team

Other factors, such as building transparency for multiple tiers of suppliers, will be crucial vis-à-vis supply chain risk management. To take just one example, tapping into digital tools, building skills, and getting clear on processes helped an aerospace player that looked to increase its supply chain resilience .

How do great supply chain organizations work?

Supply chain management (and operations, more broadly) is now a CEO-level concern . Some of the strategic operational questions that CEOs have on their agenda include the following:

  • Can we meet customer demand both today and tomorrow?
  • Should we boost capacity to prepare for prolonged, rapid growth or reduce it to prepare for a slowdown?
  • Where will we find workers who are skilled and digitally savvy?
  • How do we decarbonize, minimize regulatory risk, and stay in business?

Incremental efforts aren’t enough to capture the full potential, and drilling down in the right supply chain structure and physical footprints is a critical starting point. While it will take time to adapt supply or value chains (given challenges related to finding and qualifying alternative suppliers and to building new plants), taking a fresh look at networks and supply chain structures  can help companies move forward.

Here’s an example from the automotive industry. McKinsey research uncovered that midsize supplier plants with 1,000 to 1,500 employees were nearly twice as likely as bigger or smaller counterparts to score in the top quartile on productivity. So having production divided among several plants rather than in a single megafactory could help a company move closer to customers and reduce location risks (for example, weather-induced closures).

Choices about supply chain design  won’t work miracles. There’s no correlation, in McKinsey research, between supply chain organizational archetypes and bottom-line performance. But a variety of organizational mechanisms can supplement structure and help lead to successful outcomes. A survey found six markers of great supply chain teams , all of which were correlated with improved EBITDA:

  • end-to-end coordination
  • decision rights
  • performance metrics
  • social cohesion
  • career mobility
  • capability growth

What about digital supply chains?

Few established companies have fully digitized their end-to-end operations. But digitization can be a feasible solution to operational challenges  seen across many companies and industries. Industry 4.0 , or the Fourth Industrial Revolution (4IR), describes the impact that increased connectivity, automation, and more have had on technology, industry, and society. In a survey of more than 400 global manufacturers , more than 90 percent of respondents said Industry 4.0 has helped them sustain their operations during the COVID-19 crisis; over half said their digital transformations have been crucial to their pandemic responses.

Digitization, including advanced analytics, automation, and machine learning, can help operations become more productive, flexible, and geared for speed. Such approaches have yielded real results for some leading organizations—for example, reducing inventory and cost of goods sold by 30 percent, lowering cost of quality by 50 percent, and improving cash and productivity by 30 percent. Surveys also suggest that digitization and an embrace of Industry 4.0 technologies can boost eco-efficiency  in supply chains.

While some leading organizations have already realized value from digitization, others are lagging behind. Modernizing supply chain IT —for instance, to improve demand forecasting and planning systems—can have a powerful effect. For organizations looking to step up on IT for supply chain planning, three steps can help:

  • Redesign processes.
  • Select vendors.
  • Create an implementation road map.

Cumulatively, these changes can have a significant impact, especially when they support a successful rollout of integrated business planning  (IBP). Compared with organizations that lack a well-functioning IBP process, the average mature IBP practitioner realizes one or two additional percentage points in EBIT. Service levels are five to 20 percentage points higher. Freight costs and capital intensity are 10 to 15 percent lower, and customer delivery penalties and missed sales are 40 to 50 percent lower. IBP technology and process discipline can also make planners 10 to 20 percent more productive.

An interview with Kimberly-Clark chief supply chain officer Shane Azzi underscores the importance of digital tools in supply chains. “Like many companies, we don’t always have the full picture,” Azzi said. “That’s why digital becomes such an important part of the solution—because you’ve got to have that end-to-end picture. We must be able to see emerging risks further upstream and downstream than ever before.” To get there, the company has explored demand sensing, looked at suppliers’ production schedules and logistics plans, and used digital platforms to monitor in-transit shipments.

How does a supply chain affect sustainability?

Managing an operation’s environmental impact holistically can help in addressing environmental, social, and governance issues more broadly. And the first step is often to understand the potential impact of driving eco-efficiency.

Manufacturers in the Global Lighthouse Network  (GLN), a collaborative initiative by McKinsey and World Economic Forum, that have embraced digital transformation have found that sustainability and competitive excellence  may well go hand in hand. GLN data collected since the beginning of the project indicate that upward of 60 percent of “lighthouse” factories saw sustainability impact as part of the effect enabled by Industry 4.0  transformations. And that research highlighted three sustainability-focused manufacturing leaders based on their commitment to environment sustainability: Ericsson, Henkel, and Schneider Electric.

Within supply or value chains, resource cleansheeting can help in designing cost-effective, carbon abated products . Designers, engineers, and purchasers could use this approach to identify factors that affect costs and emissions for a given product or service along the entire value stream and throughout its life cycle.

More broadly, a number of companies are thinking about how to decarbonize their supply chains , focusing on Scope 3 emissions—that is, emissions generated up- and downstream in the value chain. This category of emissions can account for 80 percent of many companies’ overall climate impact. Consider the results that Interface, a carpet manufacturer in Europe, has seen since setting its mission-zero target in the early 1990s: it has since reduced its operations’ greenhouse-gas footprint by 96 percent and cut the carbon intensity of its products by 69 percent.

Consumer goods companies in particular are making strides in preparing for a sustainable future by transforming company operations across the entire supply chain. Henkel, a consumer goods company based in Germany, provides one example of how a sustainability focus can flow through a supply chain. In an interview, the chief supply chain officer for Henkel’s laundry and home care business  describes how the division decreased its CO 2 footprint by 65 percent in the past 15 years, improving operational performance at the same time it lowered costs and CO 2  emissions.

For more in-depth exploration of these topics, see McKinsey’s Operations insights  collection. Learn more about manufacturing and supply chain consulting , and check out supply-chain-related job opportunities if you’re interested in working at McKinsey.

The articles referenced include the following:

  • “ Future-proofing the supply chain ,” June 14, 2022, Jan Henrich , Jason Li, Carolina Mazuera, and Fernando Perez
  • “ A better way to drive your business ,” May 25, 2022, Elena Dumitrescu, Matt Jochim , Ali Sankur, and Ketan Shah
  • “ Outsprinting the energy crisis ,” April 21, 2022, Peter Crispeels , Mikael Robertson , Ken Somers , and Eric Wiebes
  • “ How to deal with price increases in this inflationary market ,” January 13, 2022, Patricio Ibáñez, Ricardo González Rugamas, Sajal Kohli , and Eric Kuehl
  • “ The CEO: Architect of the new operations agenda ,” December 6, 2021, Andreas Behrendt , Axel Karlsson , Tarek Kasah, and Daniel Swan
  • “ Supply-chain resilience: Is there a holy grail? ,” December 8, 2021, Knut Alicke  and Daphne Luchtenberg
  • “ How COVID-19 is reshaping supply chains ,” November 23, 2021, Knut Alicke , Ed Barriball , and Vera Trautwein
  • “ Lighthouses unlock sustainability through 4IR technologies ,” September 27, 2021, Francisco Betti, Enno de Boer , and Yves Giraud
  • “ Risk, resilience, and rebalancing in global value chains ,” August 6, 2020, Susan Lund, James Manyika , Jonathan Woetzel , Ed Barriball , Mekala Krishnan , Knut Alicke , Michael Birshan , Katy George , Sven Smit , Daniel Swan , and Kyle Hutzler

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Supply Chain Management Process: Explained

Dive into the world of the Supply Chain Management Process. Begin with a clear understanding of what Supply Chain Management entails. Explore the intricacies of the supply chain management process, from planning and sourcing to manufacturing, logistics and distribution, retail, customer delivery, and the critical monitoring phase. Read more to learn!

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From the primary acquisition of raw materials to the ultimate bestowal of finished products into the hands of discerning consumers, the underpinning of a meticulously structured Supply Chain Process assumes an indispensable role. Discover What is Supply Chain Management Process and learn how it is vital in production, testing, packaging, and delivery. 

Table of Contents  

1) What is Supply Chain Management? 

2) Understanding the Supply Chain Management Process 

       a) Planning 

       b) Sourcing 

       c) Manufacturing 

       d) Logistic and distribution 

       e) Retail and customer delivery 

       f) Monitoring 

3) Conclusion 

What is Supply Chain Management?  

Supply Chain Management compresses the art and science of harmonising multi-dimension processes, resources, and stakeholders into a seamless continuum of creation, transformation, and delivery. It traverses the sprawling expanse of procurement, production, distribution, and retail, threading together a maze-like tapestry of interdependent activities that determine a product's passage from raw materials to finished goods. 

This discipline is not merely confined to the walls of a factory floor or the storerooms of warehouses; rather, it extends its tendrils across global landscapes, entwining diverse cultures, technologies, and geographies into a cohesive ecosystem. At its core, Supply Chain Management strives to minimise inefficiencies, optimise resources, mitigate risks, and elevate the end-user experience.  

Learn more about how to manage inventories and build a successful business. Join our SAP Supply Chain Management Training today!  

Understanding the Supply Chain Management Process  

As businesses navigate the puzzled corridors of the global marketplace, mastery of the Supply Chain Management Process guides them, like a compass, toward the shores of profitability and sustainability. 

Process of Supply Chain Management

Planning  

Supply Chain planning lays the foundation for the Supply Chain Process. It is a structured way of delivering goods, commencing the delicate art of demand forecasting. It is predictive magic that foretells market preferences and consumer desires. This knowledge becomes the cornerstone upon which decisions are crafted, from inventory planning that prevents stockouts to production scheduling that ensures seamless operations. It involves the following components: 

a) Demand forecasting: Accurate demand forecasting is the cornerstone of effective planning. By analysing historical data, market trends, and external factors, businesses can anticipate customer demand for their products. This enables them to adjust production levels, inventory levels, and resource allocation accordingly. Robust forecasting minimises the risk of overproduction, leading to cost savings and improved customer satisfaction. 

b) Production planning: Production planning involves determining how much to produce and when to produce it. This entails creating production schedules that align with demand forecasts while considering factors such as production capacity, lead times, and resource availability. Efficient production planning helps businesses optimise their manufacturing processes and reduce production costs. 

For example: In the world of Supply Chain Management, inventory is both an asset and a potential liability. Striking the right chord between scarcity and surplus is the goal of inventory planning. Effective inventory planning ensures that the Supply Chain flows smoothly, without bottlenecks or overstocked shelves. 

Sourcing  

Sourcing involves procuring the necessary raw materials, components, and goods required for production. Building strong relationships with suppliers is crucial, as it fosters reliability and consistency in the Supply Chain. 

Efficient sourcing involves evaluating suppliers based on factors such as cost, quality, lead times, and ethical practices. Implementing strategic sourcing strategies can lead to cost savings and improved product quality. It involves the following key elements: 

a) Supplier relationship management: Strong supplier relationships are essential for a seamless Supply Chain. Open lines of communication, trust, and collaboration create a foundation for successful sourcing. Regular communication helps businesses understand supplier capabilities, address potential issues, and identify opportunities for improvement. Developing a partnership mindset fosters mutual growth and innovation. 

b) Strategic sourcing: Strategic sourcing involves looking beyond immediate cost considerations and evaluating the long-term value that suppliers bring to the table. It's about considering factors such as quality, innovation, and the supplier's ability to adapt to changing business needs. Businesses aim to strike a balance between cost-effectiveness and maintaining the desired level of quality. 

For example: Businesses that maintain open lines of communication with suppliers can swiftly address potential issues, negotiate favourable terms, and align their sourcing strategies with the supplier's capabilities. A robust supplier relationship management system helps in ensuring the availability of high-quality materials while minimising disruptions. 

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Manufacturing  

This stage is where the raw materials and components sourced from suppliers undergo transformation, culminating in the creation of the final products that will eventually reach consumers. This critical phase involves intricate processes, quality control measures, and strategic decision-making to ensure efficient and high-quality production. 

a) Quality control and assurance: Quality control involves systematic inspections, testing, and validation to ensure that products meet predetermined specifications. Quality assurance, on the other hand, focuses on establishing processes and standards that prevent defects from occurring in the first place. Implementing robust quality control and assurance practices enhances customer satisfaction, reduces returns, and safeguards the brand's reputation. 

b) Capacity management: Underestimating capacity can lead to missed sales opportunities while overestimating can result in excess inventory costs. Advanced capacity planning tools and data analytics enable businesses to align production capacity with real-time demand fluctuations. This flexibility helps businesses adjust production levels efficiently and respond to changing market dynamics. 

Logistic and distribution  

This phase involves a complex network of transportation, warehousing, and order fulfilment activities that work in tandem to ensure the timely delivery of products. Let's delve into the intricacies and significance of the "logistics and distribution" stage within the Supply Chain: 

a) Transportation management: For goods to be moved via road, rail, air, sea, or a combination of these, the goal is to optimise efficiency and minimise transit times. Factors such as distance, volume, urgency, and cost considerations influence transportation decisions. Leveraging technology and route optimisation tools enhances the accuracy and reliability of transportation management. 

b) Warehousing and inventory control: Warehousing serves as a hub for storing products before they are dispatched to their final destinations. Efficient warehousing practices involve organising products for easy retrieval, employing proper inventory control systems, and reducing storage costs. Businesses often adopt just-in-time inventory strategies to minimise holding costs while ensuring products are available when needed. 

c) Order fulfilment and packaging: Order fulfilment involves processing incoming orders, picking products from inventory, packing them securely, and preparing them for shipment. Accuracy and speed are crucial in meeting customer expectations. Innovative packaging solutions that are both sustainable and protective are gaining traction. 

Retail and customer delivery  

Effective returns management includes processing returned items, assessing their condition, and deciding on appropriate actions, such as restocking, refurbishing, or disposal. Streamlining the returns process contributes to customer trust and operational efficiency. It can be performed through the following steps: 

a) Distribution network design: Designing an optimal distribution network involves strategically locating distribution centres and warehouses to minimise transportation costs and delivery times. Businesses need to consider factors such as geographic reach, proximity to customers, and the flow of goods within the network. Moreover, data analysis helps in making informed decisions about the number and location of distribution centres. 

Supply Chain Managemet

Monitoring  

This phase involves continuous tracking, analysis, and assessment of various Key Performance Indicators (KPIs) to ensure that the Supply Chain is operating optimally and meeting its objectives. 

a) KPI tracking and analysis: KPIs serve as the compass guiding Supply Chain performance. These metrics encompass demand forecasting accuracy, inventory turnover, on-time delivery, production cycle times, and supplier performance. By tracking and analysing KPIs, businesses gain insights into their Supply Chain's strengths, weaknesses, and areas for improvement. 

b) Real-time visibility: Advanced technology and digital solutions offer live data feeds that provide up-to-the-minute information about inventory levels, production progress, and transportation status. Real-time visibility empowers businesses to respond promptly to deviations from the plan and proactively manage potential disruptions. 

Conclusion  

The Supply Chain Management Process is an interconnected and complex journey that involves multiple stages, stakeholders, and considerations. From initial planning to final delivery, each phase contributes to the overall efficiency, resilience, and customer satisfaction of the Supply Chain. 

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a supply chain managers key task is to balance the four

The Supply Chain Triangle

Successfully navigating interdependencies in production companies

Supply chain management often faces substantial pressure, as it is called upon to achieve multiple goals simultaneously. It is seen as an auxiliary function to other departments: sales demand high service levels; finance requires supply chain to cut costs; and manufacturing likes to produce in large batch sizes to increase machine utilization, implying more storage costs. In such a setup, balancing requirements is challenging. To oil the supply chain wheels, explicit strategy and data-driven transparency are beneficial for finding a balance between initially contradictory requirements. A company can be a product leader, a service leader, or a cost leader, but it cannot shine in all three areas at the same time. Many manufacturers are plagued by a multipronged quandary: low service/delivery performance, coupled with high costs and/or high levels of tied-up working capital. Solving for the dilemma is a task that typically falls to the supply chain management function, which is often seen as an auxiliary function and is called upon to do the impossible: balance the opposing aims of the various departments, including sales, manufacturing, and finance. Those goals, in short, can be summarized as delivering higher service levels and lower costs while freeing up cash.

But maximizing service levels while simultaneously minimizing costs and capital employed is a difficult undertaking, given their diametrically opposed nature: Higher service levels are typically accompanied by higher costs, whereas reducing costs and capital employed places pressure on service levels. The effort puts undue pressures on supply chain managers, hindering them from focusing on the activities that matter most in their work: demand forecasting; inventory control; monitoring of risk; and scheduling of replenishments, to name just a few.

Supply chain management leaders face a challenge in seeking to satisfy these conflicting objectives. Too often, the supply chain function tries to focus on everything—cost leadership, working capital leadership, and service leadership—without prioritizing. And as a result, it fails to focus on anything. Adding to the problem is that companies themselves often do not fully understand where the pressures are coming from. Typically, these are companies that have been growing steadily and have been focused on their core competencies, which may be strong sales and customer service or highly efficient and low-cost manufacturing. Supply chain management has thus not been an area of focus: the function has grown organically but without much direction of its own, and management has typically viewed it as an auxiliary function, and not as one that has its own perspective. They recognize a problem exists somewhere in the supply chain but don’t really know what to do about it. Too often, they are basing their actions/reaction on the internal struggles between the functions. As a result, they view the frictions arising from the supply chain triangle as temporary, rather than the outcome of a fundamental conflict between competing goals.

Too often, the supply chain function tries to focus on everything—cost leadership, working capital leadership, and service leadership—without prioritizing

Overcoming the pressure on supply chain management, while succeeding in an ever more competitive market environment, requires solid groundwork, such as tying supply chain principles to company goals and budgets. In the short-term, it may be necessary for the supply chain function to compromise and follow targets not fully in line with the overall strategic direction. However, in the long term, it is key to focus on supply chain principles that are laid down in a general strategy. Understanding the triangle of critical supply chain interdependencies

The pressure on the supply chain function comes from the absence of clear and coherent supply chain principles. To understand how this stress comes about, it’s important to first look at the three areas that make up Oliver Wyman’s triangle of critical supply chain interdependencies:

  • Service levels: Delivering goods and services to the customer in keeping with the 7 R’s of logistics – right product, right customer, right quantity, right condition, right place, right time, right cost. This can be achieved by, for instance, enlarging the distribution network, storing goods at closer proximity to customer locations, or by increasing inventory to ensure that products are available during demand peaks.
  • Costs: Supply chains incur costs in various categories, such as the cost of raw materials (purchasing cost), manufacturing, logistics, and warehousing. Cutting costs means, for example, reducing warehouse infrastructure or slowing the frequency of shipments. Both measures can interfere with customer service levels requirements.
  • Cash: To function well, many supply chains have to tie up significant amounts of working capital. Typically, the locking up of cash takes the form of holding inventory (whether of raw materials, semi-finished, or finished goods). Maintaining inventory is necessary for several reasons, ranging from required minimum order quantities (MOQ) to lacking supply chain synchronization across companies. Also, the level of accounts payable and accounts receivable has significant impact on the cash situation.  

The Supply Chain Triangle — Interdependency between Service, Cost, and Cash

a supply chain managers key task is to balance the four

The pressure on supply chain managers is intensified as a result of the contradictory targets of major stakeholders—manufacturing, purchasing, finance, and sales functions—within the organization:

  • Manufacturing seeks to produce goods at the lowest possible cost. This can be achieved by increasing batch sizes to minimize setup times and, thus, optimize machine utilization. However, larger batch sizes imply more cycle stock, which in turn locks up capital.
  • Purchasing seeks to pay minimal prices to suppliers (total cost of ownership is not always fully accounted for). To reduce prices, suppliers can cut costs through larger manufacturing batch sizes and/or cutting inventory. But these large batch sizes are not only difficult for customers handling massive inbound goods, but they also reduce the supplier’s flexibility in managing fluctuating demand and fulfilling orders.
  • Finance seeks to minimize costs. This puts pressure on the objective of maximizing service levels, a goal that can be achieved by increasing shipment frequency plus investing into infrastructure and inventory levels, amongst other measures.
  • Sales aims at satisfying customer demand at the most optimal level, thus demanding high service levels and new product developments, as well as holding spare parts for aftersales business. This contradicts the goal to minimize cost.

Supply chain principles as basis for overcoming contradicting targets

To reduce the pressure on supply chain management, companies need to define a supply chain strategy, with targets for the entire organization. This strategy must not be set up independently, but instead needs to be a fully embedded aspect of the overall corporate strategy. Here are four steps firms ought to take:

  • Define the value proposition of the company: the value proposition specifies the overall supply chain targets, which can roughly be split into best product, best solution, and cost leadership.
  • Derive the corresponding supply chain strategy: Based on the company’s value proposition (whether it be making the best products, offering the best service, or being the lowest-cost producer), develop the supply chain strategy and create target KPIs.
  • Align the targets: To set up targets that are reflected in budgets and management bonuses, the company’s strengths and weaknesses need to be analyzed and the effects of targets on service, costs, and cash need to be understood; these targets not only need to be achievable, but must also allow for successful strategy implementation.
  • Differentiate between strategic, tactical, and operational measures: In the medium and short term, tactical and operational supply chain targets may deviate from the long-term strategy. For example, a cost leader that is generally lean on inventory may need to increase inventory for a product during a promotion to guarantee availability; strategic, tactical, and operational supply chain targets need to be differentiated.  

Steps to overcome the pressure

a supply chain managers key task is to balance the four

Supply chain management faces considerable pressures, caught as it is between achieving multiple goals concurrently. Given the auxiliary status of the function, it’s expected to meet the goals of many different masters: the sales department demands that the highest service levels be provided in order to satisfy customers; the finance department requires that the supply chain cut costs; and manufacturing function wants to produce in large quantities to increase utilization. Satisfying all three masters is a prescription for failure. To reduce those burdens on supply chain management, a company must define the areas in which it wants to excel and, on a strategic level, find a balance between seemingly contradictory demands. This balance and its trade-offs, of course, need to be reviewed regularly and be aligned with changing requirements, as well as communicated to the involved functions. A company can be a product leader, a service leader, or a cost leader, but it cannot be all three. The organization must make an educated decision and choose which area it wants to focus on—otherwise it won’t be a leader in any of these key areas.

Julian Pötzl Martin Zollneritsch

Blockchain In Supply Chains: A Blueprint For Success

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What Is a Supply Chain?

Understanding a supply chain.

  • Main Supply Chain Models
  • Best Practices
  • Supply Chain vs. and Logistics
  • Flow of Manufacturing Costs

Reliable Suppliers Are Key

  • Supply Chain and Deflation
  • COVID-19 and the Supply Chain
  • Supply Chain FAQs
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The Supply Chain: From Raw Materials to Order Fulfillment

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a supply chain managers key task is to balance the four

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a supply chain managers key task is to balance the four

A supply chain is a network of individuals and companies who are involved in creating a product and delivering it to the consumer. Links on the chain begin with the producers of the raw materials and end when the van delivers the finished product to the end user.

Supply chain management is a crucial process because an optimized supply chain results in lower costs and a more efficient production cycle. Companies seek to improve their supply chains so they can reduce their costs and remain competitive.

Key Takeaways

  • A supply chain is a network of companies and people that are involved in the production and delivery of a product or service.
  • The components of a supply chain include producers, vendors, warehouses, transportation companies, distribution centers, and retailers.
  • The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service.
  • Today, many supply chains are global in scale.
  • Effective supply chain management results in lower costs and a faster production cycle.

Investopedia / Michela Buttignol

A supply chain includes every step that is involved in getting a finished product or service to the customer. The steps may include sourcing raw materials, moving them to production, then transporting the finished products to a distribution center or retail store where they may be delivered to the consumer.

The entities involved in the supply chain include producers, vendors, warehouses, transportation companies, distribution centers, and retailers.

The supply chain begins operating when a business receives an order from a customer. Thus, its essential functions include product development, marketing, operations, distribution networks , finance, and customer service.

When supply chain management is effective, it can lower a company's overall costs and boost its profitability. If one link breaks, it can affect the rest of the chain and can be costly.

What Are the Main Supply Chain Models?

Many types of supply chain models are available. The model a company selects will depend on how the company is structured and what its specific needs are. Here are a few examples:

  • Continuous Flow Model: This traditional supply chain model works well for companies that produce the same products with little variation. The products should be in high demand and require little to no redesign. This lack of fluctuation means managers can streamline production times and keep tight control over inventory. In a continuous flow model, managers will need to regularly replenish raw materials in order to prevent production bottlenecks .
  • Fast Chain Model: This model works best for companies that sell products based on the latest trends. Businesses that use this model need to get their products to market quickly to take advantage of the prevailing trend. They need to rapidly move from idea to prototype to production to consumer. Fast fashion is an example of an industry that uses this supply chain model.
  • Flexible Model: Companies that manufacture seasonal or holiday merchandise often use the flexible model. These companies experience surges in demand for their products followed by long periods of little to no demand. The flexible model ensures they are able to gear up quickly to begin production and shut down efficiently as soon as demand tapers off. In order to be profitable, they must be accurate in forecasting their need for raw materials, inventory, and labor.

What Are Supply Chain Management Best Practices?

Here are some of the best practices that are seen in successful supply chain management systems:

  • They support continuous improvement.
  • They aim for increased velocity.
  • They encourage collaboration among the individual businesses in the supply chain.
  • They seek new technologies that improve their processes.
  • They have metrics in place that allow employees to measure the success or failure of each step in the supply chain.

What Is Supply Chain Management vs. Business Logistics Management?

The terms supply chain management (SCM) and business logistics management—or simply, logistics —are often used interchangeably. However, logistics is really one link in the supply chain.

Logistics deals with the planning and control of the movement and storage of goods and services from their point of origin to their final destination.

Successful logistics management ensures that there is no delay in delivery at any point in the chain and that products and services are delivered in good condition. This, in turn, helps keep the company's costs down.

What Is the Flow of Manufacturing Costs?

Efficient supply chain systems get each piece of the product where it is needed, when it is needed. This means controlling the flow of manufacturing costs.

The flow of manufacturing costs is most relevant to businesses that produce products that require many different parts from many vendors. For example, a clothing manufacturer may need deliveries of fabric, zippers, trim, and thread to arrive all at the same time. If some supplies arrive too early, they must be stored at the business' expense. If some arrive late, the machines stand idle while they wait.

An efficient supply chain management process requires reliable suppliers. This means they produce a product that meets the manufacturer’s specifications and deliver it on time.

Assume, for example, that XYZ Furniture manufactures high-end furniture, and that a supplier provides metal handles and other attachments. The metal components need to be durable so that they last for many years. They must meet the design and quality specified by the manufacturer, and they must work as intended.

A reliable supplier will fill the manufacturer’s order and ship the parts on time.

Does the Supply Chain Cause Deflation?

The increased efficiencies of supply chains have played a significant role in curbing inflation . As efficiencies in moving products from point A to point B increase, the costs in doing so decrease, which lowers the final cost to the consumer. While deflation is often regarded as a negative, supply chain efficiencies are one of the few examples in which it is a good thing.

As globalization increases, supply chain efficiencies become more optimized, which keeps the pressure on input prices.

How Did COVID-19 Affect the Supply Chain?

One of the most severe economic problems caused by the COVID-19 pandemic was damage to the supply chain. Its effects touched nearly every sector of the economy.

Supplies of products of all kinds were delayed due to ever-changing restrictions at national borders and long backups in ports.

At the same time, demand for products changed abruptly. Shortages developed as consumers hoarded essentials like toilet paper and baby formula. Masks, cleaning wipes, and hand sanitizers were suddenly in demand. Shortages of computer chips delayed the delivery of a wide range of products from electronics to toys and cars.

Shifting Priorities

A survey in late 2020 by Ernst & Young of 200 senior-level supply chain executives pointed to three essential findings:

The pandemic had a deep negative effect, cited by 72% of supply chain executives. Automotive and industrial supplies companies were worse-hit.

"Visibility" is the top priority, and the word is meant literally. The executives want to focus on adding technology such as sensors that give them a better view of their orders throughout the process.

The pandemic accelerated the transition to digitization, with most of those surveyed saying that digital transformation combined with increased automation will accelerate over the next few years.

What Is Supply Chain Management?

Supply chain management (SCM) is oversight and control of all the activities required for a company to convert raw materials into finished products that are then sold to end-users.

SCM provides centralized control for the planning, design, manufacturing, inventory, and distribution phases required to produce and sell a company's products.

A goal of supply chain management is to improve efficiency by coordinating the efforts of the various entities in the supply chain. This can result in a company achieving a competitive advantage over its rivals and enhancing the quality of the products it produces, both of which can lead to increased sales and revenue .

What Are the Steps in a Supply Chain?

The key steps in a supply chain include:

  • Planning the inventory and manufacturing processes to ensure supply and demand are adequately balanced.
  • Manufacturing or sourcing materials needed to create the final product.
  • Assembling parts and testing the product.
  • Packaging the product for shipment or holding in inventory until a later date.
  • Transporting and delivering the finished product to the distributor, retailer, or consumer.
  • Providing customer service support for returned items.

What Is an Example of a Supply Chain?

A supply chain begins with the sourcing of raw materials, whether that means mining diamonds, curing leather, or manufacturing sheet metal.

That is the first step in the process. From there, the raw materials are hauled to a wholesaler, who sells them in batches to manufacturers. Once delivered, the manufacturer uses the materials to create a product, which is then delivered to a retailer. Finally, it is sold to a consumer.

That's the big picture, but note that each step in the process is complicated by the need to prepare, package, ship, and unpack the product at each of its successive destinations.

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Wired. " The Chip Shortage Is Easing-but Only for Some ."

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  • September 21, 2022

5 Functions of Supply Chain Management

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When you need to buy something, you go to the nearest store or supermarket. You pick up the product, pay for it and return home. Have you ever wondered how products reach the store shelves? There is an entire process called supply chain management behind it! Supply chain management is not a single function. This process comprises various parts, people, and systems. Before looking at these different tasks, it is pertinent to understand this procedure correctly.

What Is Supply Chain Management?

What was earlier done by different sets of people without much interaction is now being performed as a single system. Procurement, storing, and delivery is the functions of supply chain management . All these are now done in a coordinated manner to improve efficiency, reduce costs and improve customer experience. All these functions together form the supply chain. The management of these functions is called supply chain management, and it is critical for every organization – whether small or big.

Also Read:   Steps Of Supply Chain Management Process

The procurement job will include planning raw materials, finding vendors, and purchasing these items at prices that will help improve profitability. Warehousing is a function that consists of both raw materials and finished goods storage. This task includes preparing warehouses and ensuring proper stocking to facilitate the easy movement of goods. It also includes sending materials as per orders received. Delivery is the part that provides for transporting and reaching goods to the end customer.

Importance Of Supply Chain Management

Courses from reputed institutions on this subject talk about the importance of  Supply Chain Management (SCM)  is for businesses. With many players fighting it out in a market that has become global, companies face many challenges. Pricing has become an essential factor in gaining an edge over competitors. This means that it is critical to control raw material and production costs. Purchasing raw materials is a supply chain function. This department must also handle the storage of these items in a suitable ambiance. Reducing purchase and storage costs can reduce product prices.

Also Read :   Executive Certificate Program In Logistics And Supply Chain Management

As there are too many companies selling similar products, customers are spoilt for choice. Customers are demanding better prices and faster deliveries because of this. Along with this, customers also need to have information on the status of their orders. Finding competitive rates for transportation helps reduce prices. Ensuring vehicles for delivery promptly will ensure faster deliveries of goods. Software systems that integrate all SC processes make it easy for information to pass to customers.

Warehousing is one of the critical supply chain functions that deal with the arrangement of suitable space for storing goods. Space is a precious commodity, and one must use it judiciously. Using more space for a longer duration can result in increased product costs. This is why inventory control is a critical part of the logistics function. Items must be purchased and produced so that they don’t stay in storage for a longer time. This requires a keen eye on available stocks and pending orders.

Supply Chain Management Centers Around Five Main Functions:

Resource management, information workflow.

Supply chain management maintains the balance between the demand and supply and involves activities right from procurement of materials and converting them into finished goods to ensuring delivery at the right time to reach the end-consumer. Hence, supply chain management is the lifeline of an organization. It needs to be efficient to keep the operations running like a well-oiled machine. A streamlined supply chain management can enhance customer relationships, lower down operational costs.

What are the Functions of Supply Chain Management?

The Role of global supply chain management primarily comprises five functions mentioned below:

Purchasing is one of the first functions of supply chain management. It pertains to procuring raw materials and other resources that are required to manufacture the goods. It involves coordination with suppliers to deliver the materials without any delay. It is not a simple act of buying things. There are various aspects one needs to consider when purchasing raw materials or other items needed to manufacture finished goods. All purchasing activities can have a significant impact on the sales and profitability of a company.

When sourcing raw materials, it is necessary to ensure that they are of a quality that is most suitable for that company. It is a function of Supply Chain Management (SCM) to ensure that only such materials are purchased. It is not enough to check this once. They must regularly test these items to ensure consistency. Raw materials of inconsistent quality could adversely affect finished goods production. This can result in the product losing its salient features. A small error in purchasing can damage an organization’s reputation.

Also Read:  Executive Program In Supply Chain Management During Uncertain Times

The timely arrival of materials is necessary to ensure that all order fulfillment occurs as required by customers. It is necessary to ensure no disruption in supply of materials to have continuous production without any interruption. Purchasing in excess can result in unnecessary blocking of money and usage of space. Hence, purchase managers must have up-to-date information about orders and what materials will be needed to execute them on time.

The operation team engages in demand planning and forecasting. Accordingly, it further sets the ball rolling for inventory management, production, and shipping. Before giving a raw material purchase order, the organization must anticipate the possible demand for a product and the number of units it needs to produce. If the demand is over anticipated, then it could result in excess inventory cost. If the demand is under anticipated, the establishment wouldn’t be able to meet customer demand, thereby leading to revenue loss. So, the operation is a critical function of supply chain department.

Operation managers are responsible for planning production in relation to demand. These officials will have to arrange for raw materials and ensure that manufacturing will be done on time to ensure prompt delivery of goods to customers. They must make sure that all machines function properly without failure to complete production of goods on time. They must also ensure that all other items like packaging materials, labels, and stickers are kept ready for those products that need to be delivered to customers.

The other important function of Supply Chain Management (SCM) that falls under operations is the organizing of space. Storage space is a costly commodity considering that real estate is very expensive in most Indian cities. Supply Chain Managers must manage available storage space very efficiently to ensure that they store only essential goods in company warehouses. This will require them to plan both raw material and finished goods availability very cleverly to ensure no excess or less stock.

This is a supply chain management function that requires immense coordination. The manufacturing of products has commenced. It needs space for storage until it is shipped for delivery. There is a need for making local warehouse arrangements. Let’s say; the products are to be delivered outside the city, state, or country limits. This brings transportation into the loop. There will also be a need for outstation warehouses. Logistics ensures that products reach the end-point delivery without any glitches.

Arranging for transport for goods is not an easy job. If this includes shipping to other countries, it is essential to ensure that staff members do all documentation properly. Incorrect sets of papers could cause problems at both exporting and importing ports. This can cause delays in goods reaching customers. The logistics manager must be familiar with formalities that establishments must follow when sending goods to different countries. Various countries also have testing requirements for different products.

Even in local transport of material, there can be unexpected problems. Vehicles can get delayed due to mechanical issues. Supply chain managers must be able to arrange for an alternative conveyance immediately. Weather and road conditions can delay materials. The person must know such information and make arrangements to ensure goods arrive on time. There must be a proper tracking mechanism in place to inform customers about their order status.

All firms need raw materials, technology, time, and labor. However, all the processes need to be efficient and effective. This phase is taken care of by the resource management function team. It decides the allocation of resources in the right activity at the right time to optimize the production at reduced costs. A major duty here is to properly allocate people for various jobs to ensure that all work is done on time. The workforce is essential in moving goods and ensuring the proper execution of orders.

Managing resources is challenging in factories where they use the same machines for making different products. Resource managers must know how many orders in each item are to be executed to allocate machines for each of them. Various other pieces of machinery are needed to complete finished goods manufacturing. Arrangement of devices for packing and labeling of goods are also part of supply chain department functions.

Also Read:  Ace the field of Logistics & Supply Chain with this course from XLRI

Time is another constraint when there are large volumes of orders to be executed. These professionals must see whether a single shift is enough to complete a job or more shifts will need to be included. Hence, they must make sure people are available to work more hours. These managers must also calculate the cost involved in using more resources for increasing production and ensure it doesn’t affect profitability.

Information sharing and distribution is what keeps all other functions of supply chain management on track. If the information workflow and communication are lacking, it could break apart the entire chain and lead to mismanagement. Data must flow in both directions as far as logistics are concerned. Regular exchange of information must also happen between external and internal entities in this process.

Information from downstream will include details of orders in hand and market trends. These details are crucial for ensuring that enough quantities of raw materials are made available. Knowing market trends from retailers and distributors will help to formulate sales forecasts. Without such predictions, companies cannot plan for production. Organizations must also arrange for finance if there is a need to increase production because of a sudden demand increase.

Arranging for raw materials is among the essential roles of supply chain management . To perform this perfectly, the official in charge must have accurate information about the availability of various materials. Advance information of any shortage will help them purchase excess and ensure production continues smoothly. News about price increases is also essential to correct finished goods prices or look for other economic sources for such items.

We have understood how important it is for all companies to have good supply chain management in place. It is necessary to see in detail what goals this function achieves .

Goals Of Supply Chain Management  

Order fulfillment.

Without selling goods, a company cannot earn revenue. For this, it is essential for orders from customers to be fulfilled efficiently and as per customer requirements. All entities of the supply chain work together to ensure that goods are available as required. This will result in the execution of all orders. Streamlining order processing and avoiding duplicate work by using efficient software will increase order processing speeds. This is a vital role of supply chain management that has multiple benefits.

Supply Demand Matching

Order fulfillment is possible only if there are goods. It is the job of Supply Chain managers to ensure that raw materials are available for producing items. There must be good coordination between the sales team and purchase team to ensure that there is never a shortage of products that have a high market demand at a particular time. A free flow of information provides this. Predicting market trends using analytics is an excellent way of making sure that enough materials are available to meet customer needs.

Reducing Waste

Waste reduction is an essential function of supply chain management through various methods. Avoiding excess stocking of raw materials is a way to prevent wastage. Many products cannot be used after a period, and this means they must be discarded. Having a clear idea about customer demand helps to maintain an optimum quantity of raw and finished goods. SC managers are constantly in touch with marketing teams to know demand trends and alter product stocks accordingly. Having a proper inventory management system is vital for achieving optimum stock levels.

Also Read:  What are the Career Opportunities in Operations and Supply Chain Management?

Improving Delivery Speeds

With the proliferation of e-commerce sites, delivery speed is becoming a significant criterion for customers. Companies are vying with each other to offer a faster supply of goods than competitors. This has put immense pressure on supply chain managers. They must find ways to speed up the movement of goods. Finding warehouses closer to customers is a way to do it. Ensuring the timely availability of delivery vehicles can also help in reaching goods to consumers on time. Collaboration with transporters ensures an uninterrupted supply of vehicles.

Ensuring Real-Time Information

Information is crucial for any operation. This is especially true with this department, where various persons are overseeing different but connected operations. Any delay in one could affect everything down the line. This is why up-to-date status is made available for everyone. Customers today demand to know the status of their orders. Information about raw material needs must also reach purchasing teams on time. It is a crucial Supply Chain Management (SCM) function to ensure that an adequate tracking mechanism is in place for real-time information for everyone.

Cost Reduction

When markets are highly competitive, and margins are thin, companies must constantly try to reduce costs. Various costs come under supply chain management. Raw material prices, storage costs, transport rates, etc., must be kept at the lowest possible levels. For this purpose, SC managers must regularly lookout for new partners who can offer better rates. Good interaction with existing suppliers, transporters, and warehouse owners will also help to bring down costs. Managers in charge of various functions must always look for ways to bring more economy in this process.

Facing Disruptions

Various disruptions can occur in a company’s operations. A machine failure can stop production temporarily. The non-availability of raw materials can affect finished goods stocks. A sudden surge in prices of raw materials can affect profitability. Weather conditions can affect goods movement resulting in delayed deliveries. All these are related to supply chain management functions, and they must be ready to deal with these and ensure that neither the company nor its customers suffer due to these factors. Risk management methods are used to assess and mitigate these threats.

Improving Customer Experience

Severe competition has made all companies look at customer experience more seriously. No firm can afford to lose even one customer because the cost of acquiring new customers is very high. Supply Chain Management (SCM) plays a vital role in giving customers a better purchase experience. Exploring various ways to reach goods to a buyer within a short time has become a priority for this department. These professionals also try to reduce delivery expenses as much as possible to sell products at competitive prices. Another way to please customers is to give them real-time information on order execution.

Increasing Revenue & Profitability  

The supply chain is a function that has a broader scope for cost reduction as they are involved in purchasing, storage, and delivery of goods. Maintaining a good relationship with vendors can help reduce raw materials costs. Having multiple suppliers ensures to get the best prices. Optimizing storage space helps to reduce warehousing costs. It is possible to reduce delivery expenses by choosing suitable transporting and distributing partners. Reduced costs and increased sales help improve revenue and profitability.

Also Read:  Best High-Paying Jobs In Supply Chain Management

Though it is a function that provides many benefits to establishments, it is not a job that can be done easily. Modern supply chain managers face a lot of challenges in their jobs that they must cope up with to ensure successful company operations.

Challenges Faced In Supply Chain Management

Increasing costs.

Throughout an organizations’ activities, there is an increase in cost for almost everything. High fuel prices are driving transportation costs through the roof. Subsequently there is a hike in all raw material prices. Labor costs are increasing as there is a shortage of skilled people to fill positions in supply chain departments. Expenses for storing materials are also going up as space becomes a rare commodity, especially in cities. SC managers must look at all possible ways to reduce costs.

Multiple Supply Channels

With e-commerce companies becoming a more common method of purchase for many people, there is high complexity in delivery channels. Working for such organizations will require a good understanding of their system and meet delivery promises. These firms must deliver goods directly to customers. There are also retailers and wholesalers who need to be supplied from nearby storage locations to ensure low inventory for them. In addition to this, there are those who want drop shipments that will need fast international services. The role of supply chain department has become highly complex.

Rising Consumer Demands

As competition prompts e-commerce companies to offer close to impossible delivery times at very low prices, it is the supply chain department that suffers. Because of a number of choices, customers are demanding better service. They want fast delivery, low price, and excellent quality. As the logistics department is in charge of purchase and delivery, all these responsibilities fall on their shoulders. Performing their duties successfully is highly challenging for these professionals.

With pressure increasing on supply chain managers, there is a likelihood of mistakes happening that can lead to highly adverse situations. With suppliers and customers spread across various countries, there are a lot of things that must be considered and enough measures taken to avoid loss of goods. The non-availability of real-time information can be worrisome. Logistics managers are unable to input accurate data because of this. Compliance and regulation issues add to these problems. SC managers must ensure that all risks are accounted for, and steps are taken to avoid them.

Delays And Backlogs

Various other factors are creating delays and backlogs in supplies. New regulations in certain countries mean additional tariffs and more time to process documents at ports. Suppliers from other nations with lesser rules will make use of this situation. An increase in international sourcing is creating congestion at most ports resulting in delays. There are problems with local supplies due to the non-availability of transport. Managers in this department must be on their toes always to ensure that they can overcome these problems and ensure prompt deliveries.

Also Read:  What are the Stages of Supply Chain Management?

It is quite evident that the role of supply chain management in an organization is very important, and companies are preferring to have experts in this science to manage this department. It is not enough that one has a qualification in Supply Chain Management (SCM). There are certain skills that supply chain managers must possess to do their work successfully.

Skills Needed For A Supply Chain Manager

1. data analysis skills.

SC managers must possess data analysis skills to gain valuable insights. It helps them make smarter decisions on various matters. This process includes a lot of factors that cannot be predicted correctly. Looking through past data can help to make better forecasts. This will allow these professionals to perform better and avoid unpleasant surprises. They can be better prepared to face any situation and ensure that the process goes on without any disruptions.

2. Inventory Maintenance Skills

This is a very critical skill that is necessary for every logistics manager. Too much inventory can cost a company a lot of money by way of slow-moving stocks and storage space. An inadequate level of stocks can lead to the non-fulfillment of orders. This can lead to losing customers. One needs to balance between the two. Looking at past data can help a lot in predicting the requirement of goods at different times of the year.

3. Flexibility

As we can see, a lot of people both within and outside the company are involved in completing the functions of Supply Chain Management (SCM). This requires a manager to be flexible because there can be people from different backgrounds and cultures. Being amicable will help to get things done in a smoother way. In times of crisis, such an attitude will enable one to get support from every person involved in this process.

4. Understand Regulations

The supply of materials can be across borders inside a country or even outside it. It is essential that a logistics manager knows what documents must be prepared to ensure that there are no legal issues when transporting goods. The person must also be aware of rules with regard to stocking goods. They must follow the rules with regard to the safety of goods and personnel inside a warehouse. Such familiarity with rules will ensure that work gets done smoothly.

5. Planning

Good planning is key to completing a job well. This is true for any profession. But it is a critical activity in supply chain management. Market trends decide what must be produced and how much quantity will be required. This means that once there is a sales forecast, these professionals must plan everything from raw material procurement to delivery of goods to a customer. This will include production planning, arranging space, and organizing transport for delivery. All these items must be planned well if the job must be completed successfully.

6. Leadership

The function of Supply Chain Management (SCM) spans various departments. This means that the supply chain manager has to get work done by a diverse group of people. This will need excellent leadership qualities because only by inspiring others can work be completed successfully. Exhibiting such characteristics will help earn the loyalty of staff members. They will willingly go beyond their call of duty to ensure that work doesn’t suffer in any way. Showing leadership qualities also helps to inspire others to acquire such skills.

Also Read:  What are the Different Stages Associated with Supply Chain Management?

7. Business Acumen

Though they are not directly involved in selling or earning revenues, these managers’ actions can have a direct bearing on the sales and profits of an organization. This makes it necessary for them to know about the business that their company is involved in. These professionals must know what impact their work has on their firm’s profits. This will help them make changes that can improve efficiency and reduce costs. It is also necessary that they know what is happening in the industry that their establishment operates in.

8. Decision Making

This is a skill needed for all leaders. But it is especially crucial for those in charge of the activities of supply chain management. This is because there are various tough situations that will require immediate decision-making. Their decision can affect organizational profitability, reputation, and customer satisfaction. This means they must know what decision will be most beneficial for their company. These decisions must also be taken quickly before any adverse results occur.

9. Accountability

This is very difficult to maintain when an SC manager must depend on many people inside and outside the firm for successful functioning. It is easy to blame any of these entities. But what one must cultivate is to be accountable for every outcome, whether it is good or bad. This will improve their team members’ trust in them. Companies will also have confidence in such managers who will take responsibility for their department’s actions.

10. Adapt To Changes

Changes are most often seen in logistics departments. There are various external factors that can affect their functioning. A machine failure at a supplier’s factory could badly disrupt production. The supply chain function includes ensuring a regular supply of raw materials as purchases come under their purview. The person must be able to arrange for an alternate supply of goods. They also have to make other arrangements if some factors are affecting the movement of goods to customers. They must quickly be able to adapt to changes.

11. Interpersonal Skills

An SC manager must deal with people from different backgrounds. They have to get work done by workers at lower levels. These professionals will also have to interact with top bosses and get their needs fulfilled for smooth operations. It is also in their line of work to regularly keep in touch with outside agencies like suppliers, distributors, transporters, and shipping agents. Good interpersonal skills help them get their work done efficiently from all these people while maintaining cordial relationships.

12. Communication

A logistics manager has to convey various instructions, requests, suggestions, and information to different sets of people. These must be done orally and in writing. As they are done to people with different educational and social backgrounds, it is necessary to convey messages in different styles and standards. This is why these persons must be highly skilled in communication. Others must understand them clearly so that precise action is taken and the desired outcome achieved.

In addition to these skills, it will be advantageous for logistics managers to use tools and techniques that will make their lives a lot easier. Let us see some of these tools that assist these busy professionals.

Also Read:   The Future of Supply Chain Management

Modern Tools For Efficient Supply Chain Management (SCM)

Shipping status alerts.

These tools are increasingly being used by companies that have several consignments in transit to various customers. One can find it difficult to answer buyers about the status of their goods. These tools give regular alerts about where these goods are. This will help have real-time information about different shipments.

Order Management Tools

This software is highly essential to perform the role of  Supply Chain Management (SCM) efficiently, especially for those companies that are supplying materials to various e-commerce platforms. These tools help in managing orders and ensuring that they are not ignored by mistake. There are also various reports that one can generate from these programs. This will help in analyzing order processing time and optimizing the process.

Warehouse Management Software

This is great support for SC managers who struggle to manage space in their warehouses while ensuring enough availability of goods. This software program helps in planning space based on various inputs like sales forecasting, production plan, etc. For those who must manage multiple warehouses in different locations, such a tool is a must-have. This helps to reduce space costs to a great extent.

Vendor Management Tools

Companies having many supplies for various products find it difficult to manage them. It is not easy knowing which supplier is more beneficial. This tool helps in analyzing transactions with suppliers to know how they have impacted the main functions of supply chain management. It is possible to know which supplier has provided maximum benefits to a company. It allows managers to think about changing vendors or doing more negotiations.

Analytics And Reporting Tools

It is essential for department heads to ensure that their functions are effective. Knowing the efficiency of different supply chain activities will help to improve wherever required. Analytics tools use various parameters to assess performance. These reports will not only show where delays or unwanted expenses are happening but also will provide valuable insights that can help in making better decisions. Such a tool is very useful in improving supply chain functions.

Over the years, supply chain management has evolved from a relatively simple concept to engineering and managing extraordinary complex global networks. Did you know in the 1940s and 1950s, the process of racking & stacking was introduced in order to take better advantage of storage space that resulted in better warehouse design and layout? Since then, supply chain practices have transformed with the evolving technology and knowledge.

Five Supply Chain Practices that Revolutionized Supply Chain Management:

Setting up supply chain council.

Earlier, there used to be a single person who was held responsible for the entire supply chain network. But now, without an internal council of leaders in place, the supply chain tends to lack planning, organizing, and strategizing for efficiency as well as better functionality. The supply chain is likely to fail if your organization doesn’t have a governing body to synchronize your existing supply chain strategy with that of the company’s overall strategy.

Achieving Agility with AI

Back in the day, no one even heard of what Artificial Intelligence is, but now, this is all everyone talking about. Artificial intelligence has the ability to collect huge amounts of data and harness insight from this data, creating an opportunity to reconsider supply chains tactically and strategically. This provides agility in the process since products are procured and moved from one end of the globe to the other.

Introducing Sustainable Practices

Innovation has become the key to unlocking the potential of businesses, and the supply chain process is no different. Therefore, organizations need to keep a close eye on the supply chain operations and their internal practices in order to establish a sustainable platform to operate on. This brings in the need for adopting several sustainable practices like blockchain, the adoption of web-based supplier relationship management, etc. Deep hands-on knowledge of these tools and practices can be learned from a supply chain management online course , guaranteeing the credibility of your organization.

Optimizing Inventory for Reduced Cost

Every business desires to reduce costs and improve its bottom line. This is where optimizing inventory comes into play. There is a huge cost involved in inventory holding and storing, approximated to around 20-25%. So, this cost can be saved by optimizing the storage of inventory.

Identifying Areas Where Technology Can Lend a Hand

Technology has been helping humankind for over decades, and the supply chain is no exception. But, in order to improve and streamline your supply chain processes, you need to identify areas where newer technology can be integrated to help smooth functionality.

If you are planning to pursue a career as a retailer, you must invest in a supply chain management course to gain more knowledge.

Also Read:   How to Successfully Manage Supply Chains?

Summing Up!

With the advent of technology and competition, applying these best practices has become imperative for businesses seeking growth and success. To expand your knowledge base, a credible supply chain management online course is recommended. One such course is supply chain management IIM , from one of the top B-schools in the country. By equipping you with the latest themes and trends along with the best practices, this course in supply chain management IIM can help you build an effective and fully functional supply chain for your organization.

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  • Press release: Achieving the promise of Industry 4.0 Lack of core technical skills is stifling procurement and supply chain teams in the race to Industry 4.0. While nearly all supply chain and procurement leaders are making major investments in digital technologies to drive efficiency, one in four are yet to see any improvements

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Seven key competencies every Supply Chain professional should master

The supply chain function is constantly evolving and managing it effectively is not a simple task. It takes some key supply chain manager competencies to stay agile for facing all the challenges. The new era demands supply chain professionals to constantly develop new skills and enhance the existing ones. This is mainly due to the exciting advances in technology these days – the proliferation of the Internet of Things (IoT) , Artificial Intelligence (AI), Machine Learning and Robotics, Big Data and Analytics, and Digitalization are all phrases that are emblematic of revolutionary changes both today and in the future.

Core competencies supply chain manager

Various companies are now investing in supply chain manager skills for their teams in terms of corporate training. Employing younger workers, who have different sets of skills, methods of communicating and ways of collaborating, is a top priority for many companies, which value these differences to tap innovation and maintain a competitive edge.

Some of the key competencies for supply chain professionals are:

Business skills

Being a good Supply chain manager means to be able to converse and be understood by senior executives. It is essential to know all the basics that is professional terms such as economic profit, ROIC, and EBITDA should be part of their vocabulary. Good communication is key. From knowledge of demand forecasting to the ability to discuss cash flow at the treasurer’s office, a supply chain professional must be able to do it all. The latter need to possess all the necessary skills supply chain manager . Having a good written and oral communication skill coupled with interpersonal skill leads to smooth transactions in the supply chain industry.

Effective decision making

There is no doubt that the supply chain is always moving and facing new challenges. Skills for supply chain professionals are always evolving as well. It is up to the supply chain managers to be quick thinkers and be able to take decisions under pressure. They are expected to be pro-active and take actions under conditions of uncertainties. To make the best decision, supply chain managers need to use whatever information they have on hand at the moment in favour of their organization.

Economics and market dynamics

Market dynamics have changed continuously, and this has led to rapid shifts in customer and consumer buying-behaviour. Hence it is important to focus on agility and make sure that employees have the right supply chain competencies. Skills for supply chain leader needs to focus on what lies ahead and to some extent, be able to predict it. In order to make this happen, a thorough understanding of the market dynamics is required relating to the industry. However, each industry and the niches within them are subject to their own specific market dynamics. Providing ongoing training to employees can greatly help in such cases.

Use of data and data analytics

Networking is not the only way to achieve market intelligence. A good amount of insight comes from data analysis as well. However, the challenge lies in understanding how to analyze data and apply the analysis to supply chain strategy to drive positive results. Therefore, it is important for supply chain professionals to have knowledge on data and data analytics. They need to have a grasp of what data is available to them, and how to apply the data and analytics to solve a supply chain problem.

Nowadays, more organizations are focused on making supply chains more responsive and being able show value to stakeholders in other ways than simply cutting costs. To achieve these goals, data analytics is essential. Therefore, supply chain training to be able to understand data analytics and apply the insights to problem solving. Currently, younger generations seem to be the ones most comfortable with accessing and using data in different ways.

More skills supply chain manager

Communication & networking skills.

Today, supply chain managers need to know not only what is happening within their own organization but also what is happening in the broader market. Maintaining a certain level of market intelligence and remaining aware of new trends in the supply chain are strong qualities in a potential employee. Besides, networking also plays a major role here. Supply chain managers must be able to network with peers, and good communication skills are necessary to do so.

Planning skills

A competencies supply chain manager has the responsibility of coordinating all supply chain activities which occurs on a daily basis. In order to manage this largely important task, strong planning and scheduling skills must be in place. Effectively managing and systematically planning supply chain activities is essential to ensure the smooth flow of organizational success.

Negotiating and problem-solving skills

Good negotiation skill is the most important quality needed while working with retailers and suppliers to obtain the best possible outcome when it comes to pricing. Supply chain management can be very complicated – wrong deliveries, misunderstood product specifications and late shipments are some of the problems that require a manager with strong problem solving skills. Besides, managing basic functions such as inventory management, transportation and warehousing, successful supply chain managers must be able to handle end-to-end processes within and outside the firm including smooth relationships with customers and suppliers internationally.

To ensure continuous success of the organization and the survival and growth of the supply chain profession, a well-rounded education on supply chain management is essential. Various modern training solutions are now available to improve skills supply chain professionals and help them stay up to date with supply chain competencies. The key is to always stay agile and find the right talents to handle the responsibilities.

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  • 17.5 The Supply Chain and Its Functions
  • 1 Unit Introduction
  • In the Spotlight
  • 1.1 Marketing and the Marketing Process
  • 1.2 The Marketing Mix and the 4Ps of Marketing
  • 1.3 Factors Comprising and Affecting the Marketing Environment
  • 1.4 Evolution of the Marketing Concept
  • 1.5 Determining Consumer Needs and Wants
  • 1.6 Customer Relationship Management (CRM)
  • 1.7 Ethical Marketing
  • Chapter Summary
  • Applied Marketing Knowledge: Discussion Questions
  • Critical Thinking Exercises
  • Building Your Personal Brand
  • What Do Marketers Do?
  • Marketing Plan Exercise
  • Closing Company Case
  • 2.1 Developing a Strategic Plan
  • 2.2 The Role of Marketing in the Strategic Planning Process
  • 2.3 Purpose and Structure of the Marketing Plan
  • 2.4 Marketing Plan Progress Using Metrics
  • 2.5 Ethical Issues in Developing a Marketing Strategy
  • 2 Unit Introduction
  • 3.1 Understanding Consumer Markets and Buying Behavior
  • 3.2 Factors That Influence Consumer Buying Behavior
  • 3.3 The Consumer Purchasing Decision Process
  • 3.4 Ethical Issues in Consumer Buying Behavior
  • 4.1 The Business-to-Business (B2B) Market
  • 4.2 Buyers and Buying Situations in a B2B Market
  • 4.3 Major Influences on B2B Buyer Behavior
  • 4.4 Stages in the B2B Buying Process
  • 4.5 Ethical Issues in B2B Marketing
  • 5.1 Market Segmentation and Consumer Markets
  • 5.2 Segmentation of B2B Markets
  • 5.3 Segmentation of International Markets
  • 5.4 Essential Factors in Effective Market Segmentation
  • 5.5 Selecting Target Markets
  • 5.6 Product Positioning
  • 5.7 Ethical Concerns and Target Marketing
  • 6.1 Marketing Research and Big Data
  • 6.2 Sources of Marketing Information
  • 6.3 Steps in a Successful Marketing Research Plan
  • 6.4 Ethical Issues in Marketing Research
  • 7.1 The Global Market and Advantages of International Trade
  • 7.2 Assessment of Global Markets for Opportunities
  • 7.3 Entering the Global Arena
  • 7.4 Marketing in a Global Environment
  • 7.5 Ethical Issues in the Global Marketplace
  • 8.1 Strategic Marketing: Standardization versus Adaptation
  • 8.2 Diversity and Inclusion Marketing
  • 8.3 Multicultural Marketing
  • 8.4 Marketing to Hispanic, Black, and Asian Consumers
  • 8.5 Marketing to Sociodemographic Groups
  • 8.6 Ethical Issues in Diversity Marketing
  • 3 Unit Introduction
  • 9.1 Products, Services, and Experiences
  • 9.2 Product Items, Product Lines, and Product Mixes
  • 9.3 The Product Life Cycle
  • 9.4 Marketing Strategies at Each Stage of the Product Life Cycle
  • 9.5 Branding and Brand Development
  • 9.6 Forms of Brand Development, Brand Loyalty, and Brand Metrics
  • 9.7 Creating Value through Packaging and Labeling
  • 9.8 Environmental Concerns Regarding Packaging
  • 9.9 Ethical Issues in Packaging
  • 10.1 New Products from a Customer’s Perspective
  • 10.2 Stages of the New Product Development Process
  • 10.3 The Use of Metrics in Evaluating New Products
  • 10.4 Factors Contributing to the Success or Failure of New Products
  • 10.5 Stages in the Consumer Adoption Process for New Products
  • 10.6 Ethical Considerations in New Product Development
  • 11.1 Classification of Services
  • 11.2 The Service-Profit Chain Model and the Service Marketing Triangle
  • 11.3 The Gap Model of Service Quality
  • 11.4 Ethical Considerations in Providing Services
  • 12.1 Pricing and Its Role in the Marketing Mix
  • 12.2 The Five Critical Cs of Pricing
  • 12.3 The Five-Step Procedure for Establishing Pricing Policy
  • 12.4 Pricing Strategies for New Products
  • 12.5 Pricing Strategies and Tactics for Existing Products
  • 12.6 Ethical Considerations in Pricing
  • 13.1 The Promotion Mix and Its Elements
  • 13.2 The Communication Process
  • 13.3 Integrated Marketing Communications
  • 13.4 Steps in the IMC Planning Process
  • 13.5 Ethical Issues in Marketing Communication
  • 14.1 Advertising in the Promotion Mix
  • 14.2 Major Decisions in Developing an Advertising Plan
  • 14.3 The Use of Metrics to Measure Advertising Campaign Effectiveness
  • 14.4 Public Relations and Its Role in the Promotion Mix
  • 14.5 The Advantages and Disadvantages of Public Relations
  • 14.6 Ethical Concerns in Advertising and Public Relations
  • 15.1 Personal Selling and Its Role in the Promotion Mix
  • 15.2 Classifications of Salespeople Involved in Personal Selling
  • 15.3 Steps in the Personal Selling Process
  • 15.4 Management of the Sales Force
  • 15.5 Sales Promotion and Its Role in the Promotion Mix
  • 15.6 Main Types of Sales Promotion
  • 15.7 Ethical Issues in Personal Selling and Sales Promotion
  • 16.1 Traditional Direct Marketing
  • 16.2 Social Media and Mobile Marketing
  • 16.3 Metrics Used to Evaluate the Success of Online Marketing
  • 16.4 Ethical Issues in Digital Marketing and Social Media
  • 17.1 The Use and Value of Marketing Channels
  • 17.2 Types of Marketing Channels
  • 17.3 Factors Influencing Channel Choice
  • 17.4 Managing the Distribution Channel
  • 17.6 Logistics and Its Functions
  • 17.7 Ethical Issues in Supply Chain Management
  • 18.1 Retailing and the Role of Retailers in the Distribution Channel
  • 18.2 Major Types of Retailers
  • 18.3 Retailing Strategy Decisions
  • 18.4 Recent Trends in Retailing
  • 18.5 Wholesaling
  • 18.6 Recent Trends in Wholesaling
  • 18.7 Ethical Issues in Retailing and Wholesaling
  • 19.1 Sustainable Marketing
  • 19.2 Traditional Marketing versus Sustainable Marketing
  • 19.3 The Benefits of Sustainable Marketing
  • 19.4 Sustainable Marketing Principles
  • 19.5 Purpose-Driven Marketing

Learning Outcomes

By the end of this section, you will be able to:

  • 1 Define supply chain management (SCM).
  • 2 Explain the role of marketing in supply chain management.
  • 3 Describe the various functions of supply chain management.

Supply Chain Management (SCM) Defined

A supply chain is the entire process of distribution from acquiring the raw materials needed to make products to delivering final goods to consumers. Companies with high-performing supply chains recognize that it starts with a customer-centered mindset. All activities must be managed with the end goal of creating and delivering value to the target consumer.

Supply chain management (SCM) is the process of managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.

The Role of Marketing in Supply Chain Management

Marketing plays an integral role in the management of the supply chain. Marketing entails creating and delivering products that meet the needs of customers all while building relationships through customer engagement. Companies ensure that they deliver on their value proposition to consumers through the features and benefits of the product itself. Ensuring fulfillment of a company’s value proposition starts with working with the right suppliers who provide the materials and ingredients to help companies fulfill their promise.

For example, Dave’s Killer Bread (DKB) has positioned itself as the maker of “the best bread you’ve ever tasted, power-packed with organic whole grain nutrition.” The promise to consumers starts with selecting suppliers who are certified organic and who can consistently deliver high-quality ingredients. DKB’s promise to consumers starts as far back as the grains selected by DKB’s suppliers.

Functions of Supply Chain Management

Supply chain management has five major functions. These include purchasing, operations, logistics, resource management, and information workflow (see Figure 17.13 ). Good supply chains perform these functions in a way that meets the wants and needs of final consumers efficiently.

Purchasing is the process of buying materials needed to manufacture products. These materials are purchased from suppliers, who must be able to deliver them in accordance with the manufacturer’s timeline. Therefore, the manufacturer’s companies and suppliers must communicate and coordinate to ensure timely delivery of materials.

For example, Ben & Jerry’s ice cream flavor Mint Chocolate Chance has cream, skim milk, sugar, egg yolks, white flour, cocoa powder, soybean oil, and vanilla extract, among other ingredients. Ben and Jerry’s must forecast the number of ingredients it needs to purchase so that these amounts match the demand for this particular flavor. The company, in turn, assesses things like total number of orders and inventory turnover for its Mint Chocolate Chance product to help forecast the quantity of ingredients it will need from suppliers.

Operations is everything a company does on a day-to-day basis to run a company. Before a company purchases the needed materials and begins production, it must forecast demand for its products. Forecasting involves anticipating or projecting how many units of a product will be sold during a given period. Accurate forecasting must align with inventory management and production schedules to ensure that the company is operationally positioned to manufacture the right amount of product to meet the needs of consumers.

Logistics is a function that involves the coordination of all supply chain activities, such as warehousing, inventory management, and transportation. Companies along the supply chain must communicate effectively to ensure that products reach consumers in a timely and efficient way in the precise form that the consumer expects. For example, when consumers eat McDonald’s French fries, they expect the fries to taste a certain way. Suppliers and intermediaries along the channel work together to ensure that those expectations are met. Good logistical management helps ensure this.

Resource Management

Resource management is the planning, organizing, and controlling of resources. Resources include the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption. Effective supply chain management requires the right allocation of these resources to the right supply chain activities to optimize the entire system.

Information Workflow

Information workflow is a supply chain management function that relates to what and how information moves between members of the supply chain. If information doesn’t flow effectively or communication is poor, the entire process can suffer as a result of disruptions, delays, and mistakes. Employing a systematic approach to sharing information across the supply chain ensures that the right companies have the right data to make the right decisions at the right time.

Link to Learning

Supply chain management.

To learn more about how supply chain management works, review the following article and video: IBM and Supply Chain Management .

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

  • Integrated logistics management
  • Supply chain management
  • Warehousing
  • In order for companies to deliver on their value proposition to consumers, they must ensure that the activities and members in the supply chain share the common goal of delivering value to consumers.
  • Companies need to raise the price of their products with the supply chain in mind so that they earn a profit.
  • Companies must market their products to supply chain members in order to win partnership with them.
  • Companies should only work with supply chain members who can save time and money in the distribution of products. Savings are most important to customers.
  • inventory management
  • supply chain management
  • transportation
  • Forecasting
  • Information workflow
  • Resource management

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  • Authors: Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman
  • Publisher/website: OpenStax
  • Book title: Principles of Marketing
  • Publication date: Jan 25, 2023
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/principles-marketing/pages/1-unit-introduction
  • Section URL: https://openstax.org/books/principles-marketing/pages/17-5-the-supply-chain-and-its-functions

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Inbound Logistics

GOOD QUESTION: True or False? Managing Supply Chains Is More Challenging Than Ever

GOOD QUESTION: True or False? Managing Supply Chains Is More Challenging Than Ever

Is supply chain management the toughest it has ever been? Or are tech tools so advanced they’re alleviating the uncertainty and guarding against disruptions? Industry insiders have a lot to say.

a supply chain managers key task is to balance the four

–Mark McCullough CEO Gebrüder Weiss North America

a supply chain managers key task is to balance the four

–Grigoris Lamprou CEO Procureship

–Mike Rindy President Nelson-Jameson

a supply chain managers key task is to balance the four

–Geoff Coltman Vice President, Client Engagement Catena Solutions

–Anthony Jordan EVP & Chief Operating Officer GEODIS in Americas

–Chris Jamroz Executive Chairman and CEO Roadrunner

–Bill Wappler CEO Surgere

–Bryn Heimbeck Co-Founder and President Trade Tech Inc.

–Chris Jones EVP of Industry Descartes

–Al Sambar General Partner XRC Ventures

–Felix Vicknair Vice President, Supply Chain Solutions Kenco

–Shashank Mane Go-to-Market Leader, Manufacturing Capgemini Americas

–Gaurika Gurugamage Operations Manager GAC North America – Logistics

–Colm McElroy VP, Global Accounts PSA BDP

–Dave Snider Vice President, Marketing Advantive

–Mike Wilson CEO Consolidated Chassis Management

–Ryan Lynch SVP Strategy & Marketing Concentric

That said, it’s also a transformative era. Advanced data and technology have ushered in unprecedented maturity levels for supply chain management. The pandemic, for all its challenges, spotlighted the supply chain, reframing it from being just a cost center to a strategic differentiator. The pre-COVID status quo is behind us, making adaptability and leveraging best-fit tech solutions non-negotiable for supply chain success.

–Marc Koehler Director of Product Strategy RELEX Solutions

–Spencer Steliga founder and CEO shuddl

–Stephen Dombroski Director Consumer Markets QAD, Inc.

–Dakonya Freis VP of Commercial Development Nelson-Jameson

–Nilay Parikh CEO Arvist

–Martyn Verhaegen Chief Technology Officer Magaya

–Dr. Darren Prokop Professor Emeritus of Logistics College of Business & Public Policy University of Alaska Anchorage

–Joe Adamski Senior Director ProcureAbility

–Ryan McMartin Product Marketing Manager Parsec Automation

–Ann Marie Jonkman PMP, Senior Director Global Industry Strategies Blue Yonder

–Diron Bell National Accounts Manager iGPS Logistics

–Tony Harris SVP & Chief Marketing and Solutions Officer SAP

Even through rapid inflation, lingering effects from COVID-19, and global labor shortages, we’re now able to uncover granular insight and build smarter systems that weren’t fathomable a decade ago.

–Jason Hehman Client Partner and Industry 4.0 Vertical Lead TXI

–George Maksimenko Chief Executive Officer Adexin

–Jim Heide COO & Co Founder Loadsure

–Lilian Bories Chief Marketing Officer TradeBeyond

–Joe Schloesser Vice President ISN

–Eric Lien Executive Vice President, Strategic Accounts Arrive Logistics

–Heather Stuart Vice President of Retail Supply Chain Solutions CHEP U.S.

–Brandon Black SVP and General Manager Ivanti Wavelink

–Dave Menzel President and COO Echo Global Logistics

–Gurhan Kok Founder & CEO Invent Analytics

–Tav Tepfer Chief Revenue Officer Invent Analytics

–Omer Abdullah Co-Founder The Smart Cube

–Rohail S Qadri President, Professional Services Trigent Software

–Tom Nightingale CEO AFS Logistics

–Melissa Somsen Chief Commercial Officer AFS Logistics

–Andre Luecht Global Strategy Lead, Transportation, Logistics and Warehouse Zebra Technologies

–Adam Gurga Sales Manager Cimcorp

–Jim Wetekamp CEO Riskonnect

–Eric Allais President & CEO PathGuide Technologies

–Mike Trudeau Executive Vice President of Business Development Montway Auto Transport

–Mauricio Lozano Director, Marketing & Business Development SeaCube Containers

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IMAGES

  1. Supply Chain Strategy- 4 Key Pillars To Strengthen [Infographic]

    a supply chain managers key task is to balance the four

  2. 5 Pillars of Effective Supply Chain Management

    a supply chain managers key task is to balance the four

  3. Supply Chain Management: Principles, Examples & Templates

    a supply chain managers key task is to balance the four

  4. Supply Chain Management: Principles, Examples & Templates

    a supply chain managers key task is to balance the four

  5. 5 Pillars of Effective Supply Chain Management

    a supply chain managers key task is to balance the four

  6. How to Create a Supply Chain Strategic Plan that Will Work

    a supply chain managers key task is to balance the four

VIDEO

  1. Dual Task Balance Exercise

  2. TASK 1 (SUPPLY CHAIN MANAGEMENT)

  3. Finance for Supply Chain Managers

  4. Meet Thomas Hing, MSF Supply Chain Coordinator

  5. Effective Supply Chain Management is key to success in International Trade

  6. Health Care Supply Chain Week: The Power of Partnerships Part 3

COMMENTS

  1. Supply Chain Management: Definition, Jobs, Salary, and More

    Written by Coursera • Updated on Jun 15, 2023 Learn what supply chain management is, why it is important, what the job duties are, and the key elements that make an effective supply chain manager. Supply change management aligns product supply with customer demand.

  2. Supply Chain Manager Role and Responsibilities: Fully Explained

    The key Supply Chain Manager responsibilities include risk management and mitigation, reducing costs, and staying updated with the latest industry practices. They collaborate with cross-functional teams, including procurement, logistics, and sales, to ensure seamless coordination and synchronisation throughout the Supply Chain.

  3. What are the Tasks Performed by Supply Chain Managers?

    Let's talk about these tasks in detail. 1. A Supply Chain Manager Communicates. A supply chain manager has to work with a range of suppliers for raw materials and components. It's also essential that they maintain good relationships with vendors to ensure supply chain continuity and uninterrupted deliveries of goods.

  4. 10 Key Skills for Supply Chain Managers

    Content 10 Key Supply Chain Manager Skills in 2024 Ways How Supply Chain Managers Improve Their Skills Tips to Showcase Your Supply Chain Management Skills at Workplace In the world of business, where efficiency, cost optimization, and seamless operations are crucial for success, supply chain management plays a pivotal role.

  5. What are the Four Elements of Supply Chain Management?

    The key component of integration is data and its collection, storage and use. Overseeing supply chain integration means coordinating communications between the rest of the supply chain to produce effective and timely results in the manufacturing process. Often this means exploring new software or other technological means to foster ...

  6. Supply Chain Management (SCM): How It Works & Why It's Important

    Supply Chain Management - SCM: Supply chain management (SCM) is the active streamlining of a business' supply-side activities to maximize customer value and gain a competitive advantage in the ...

  7. 4 Fundamentals of Effective Supply Chain Management

    Here are four key areas with tools to help you develop structured processes, measurements and accountability for a resilient supply chain. Inventory management and planning Even a small company can have silos within its business operations. Gaining visibility into your supply chain, including your own operations, is critical.

  8. Striking the right balance of supply chain management elements

    Sadly, few professionals realize that the six key supply chain elements—cost, capacity, inventory, lead time, customer service level, and product portfolio complexity—are inextricably intertwined. (See Figure 1.) As such, they should be managed as pieces of a whole. Supply chain management is a balancing act that aims to achieve the best ...

  9. What Does a Supply Chain Manager Do? (And How to Become One)

    Written by Coursera Staff • Updated on Feb 6, 2024 Supply chain managers work to ensure efficient, cost-effective production and shipping timelines. This career guide provides insights into this high-growth job. Have you ever wondered how your laptop gets from overseas manufacturers to your local electronics shop?

  10. What is supply chain management?

    S&OP is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction. With an eye on financial and business impact, the goal of S&OP is to enable executives to make better-informed ...

  11. What is supply chain and how does it function?

    August 17, 2022 | Article. (6 pages) A supply chain is made up of interconnected parts of a whole, all of which add up to finished products bought by customers. Take automobiles, for example. Before a consumer buys a car, iron ore is extracted from the earth. The ore is transported to a plant, where it's turned into steel, which is made into ...

  12. Solved 1. A supply chain manager's key task is to balance

    1. A supply chain manager's key task is to balance the four _____ factors against the six total logistics cost factors. A.stockout. B. distribution management. C. order processing. D. customer service. E. total logistics managemtn. 2. Sherwin-Williams, the paint manufacturer, now also operates retail stores in a strategy known as. A. dual ...

  13. Supply Chain Management Process: A Detailed Explanation

    The Supply Chain Management Process is an interconnected and complex journey that involves multiple stages, stakeholders, and considerations. From initial planning to final delivery, each phase contributes to the overall efficiency, resilience, and customer satisfaction of the Supply Chain. Register for our Supply Chain Management Training and ...

  14. How to Use the Balanced Scorecard for Supply Chain Performance

    The balanced scorecard is a tool that helps managers communicate, implement, and monitor their strategy by linking it to a set of key performance indicators (KPIs).

  15. The Supply Chain Triangle

    The effort puts undue pressures on supply chain managers, hindering them from focusing on the activities that matter most in their work: demand forecasting; inventory control; monitoring of risk; and scheduling of replenishments, to name just a few. Supply chain management leaders face a challenge in seeking to satisfy these conflicting objectives.

  16. The Supply Chain: From Raw Materials to Order Fulfillment

    Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product, and the supply chain represents the steps it takes to get the product or ...

  17. 5 Functions of Supply Chain Management (SCM)

    Procurement, storing, and delivery is the functions of supply chain management. All these are now done in a coordinated manner to improve efficiency, reduce costs and improve customer experience. All these functions together form the supply chain.

  18. Core Competencies and Skills for Supply Chain Manager

    Being a good Supply chain manager means to be able to converse and be understood by senior executives. It is essential to know all the basics that is professional terms such as economic profit, ROIC, and EBITDA should be part of their vocabulary. Good communication is key. From knowledge of demand forecasting to the ability to discuss cash flow ...

  19. 12.4 Using Supply Chain Management to Increase Efficiency ...

    Supply-chain managers are also responsible for the management of information that flows through the supply chain. Coordinating the relationships between the company and its external partners, such as vendors, carriers, and third-party companies, is also a critical function of supply-chain management.

  20. Retail Supply Chain Management: Strategy, Guide & Best Practices

    The retail supply chain management strategy must balance cost control with improved customer experience. This includes fulfilling customer preferences like personalized, purpose-driven products and services delivered anywhere, at any time and in any supply condition. Rearchitecting network design to enable a more profitable operating model that ...

  21. 17.5 The Supply Chain and Its Functions

    Learning Outcomes. By the end of this section, you will be able to: 1 Define supply chain management (SCM).; 2 Explain the role of marketing in supply chain management.; 3 Describe the various functions of supply chain management.; Supply Chain Management (SCM) Defined. A supply chain is the entire process of distribution from acquiring the raw materials needed to make products to delivering ...

  22. Learn About Supply Chain Management

    The supply chain management field offers many jobs, high demand and high job satisfaction. According to the MIT Lab for Innovation Science and Policy, the supply chain economy accounted for 37% of ...

  23. GOOD QUESTION: True or False? Managing Supply Chains Is More

    Retailers and their supply chain partners are balancing market uncertainty and labor shortages with higher consumer expectations. ... Same-day deliveries require inventory visibility and accurate counts, making supply chain management mission-critical. The key task today is delivering accurate, real-time decision-making with a reduced margin of ...

  24. MGT 375 Chapter 3 Flashcards

    Study with Quizlet and memorize flashcards containing terms like In most cases, __________ goods and services represent the most significant cost encountered by an organization, Departments like __________ and _____________ must work together for strategic sourcing and media campaigns or special promotions, True or false: Strategic supply decisions only involve tactical efforts and more.