What is supply chain management?
Supply chain management analyzes the flow of goods and services along a supply chain with the aim of minimizing waste and maximizing customer value.
Some companies may have dedicated supply chain managers dealing with the process, while other (possibly smaller) companies need to consider the function alongside other roles.
Today’s supply chains are often driven by just-in-time (or lean) processes, where goods and services are only manufactured (and shipped) when there is a customer demand.
With this mindset, the needs of the customer come first, but it is important that all elements in the supply chain are managed efficiently.
Here is a definition of supply chain management…
Supply chain management is like The flow of goods and services is controlled within a company and between its suppliers, from purchasing raw materials to delivering products to customers. The aim is to reduce costs, increase sales and improve customer service.
It is distinct from the supply chain itself, which connects individuals, businesses, technology, and everything else involved in the manufacture (and delivery) of a product or service.
How does a supply chain management system work today?
While supply chains have historically involved easier movement through a network of suppliers, technology is changing the process of supply chain management.
This is partly due to the changing needs of customers. Consider how some customers are now prioritizing convenience—many online businesses are able to get goods into customers’ hands quickly.
In addition, some processes are becoming more connected and increasingly automated, helping companies create greater value for their customers.
Technology and increasing connectivity are also enabling the decentralization of supply chains. So, instead of a central headquarters and warehouse, a supply chain has many links along the network (e.g. smaller offices and warehouses that allow the company to operate effectively at a local level).
Why is supply chain management important?
Supply chain management helps companies gain a competitive advantage and provide customers with a better experience.
By actively examining the supply chain, companies can identify where costs can be reduced. It also helps them practice a culture of continuous improvement (where issues are raised, discussed, and resolved as they arise in regular meetings and retrospectives).
Finally, the world is waking up to unethical practices within supply chains. As these practices become more transparent, an effective supply chain management process means you can avoid working with suppliers who go against your principles.
The supply chain management process
Supply chain management isn’t just about the logistics of getting products and services into the hands of customers. A proper supply chain management process considers the steps from an overall strategy to how customers can return products.
The process consists of five key elements:
- Developing a plan or strategy (including aligning supply chain management with your company’s principles and philosophy)
- how products or services are made (e.g. where raw materials are sourced)
- Manufacturing (maximizing efficiency and customer value)
- Delivery and logistics (e.g. transport)
- how customers can return items (if they are faulty or not what they wanted)
The supply chain management process also includes opportunities for quality control, Minimize shipping delays, and Avoid oversupply.
Supply chain management courses
If you (or employees in your company) want to learn more about supply chain management, there are many courses to choose from.
Many of these courses are online and flexible, meaning you can adapt them to fit your busy work schedule.
this Course at the University of Derby is a 10-week online course in Global Supply Chain Management and Logistics that carries credits that can be used toward the institution’s online MBA.
the University of Cambridge is running an 8-week online short course in Sustainable Supply Chain Management.
Could you also take a look? Institute for Supply Chain Managementwith courses that you can take at different levels.
Would you like to learn more about supply chain management? Let us know in the comments below.