Supply Chain Management (SCM)
What is supply chain management?
The broad objectives of supply chain management are to create value, build a competitive infrastructure, leverage worldwide logistics, synchronise supply with demand and measure performance. The following points should also be considered:
- SCM is about the efficient and effective management of all activities from primary suppliers right through to the point of sale.
- In some sectors, SCM is a key activity, whilst in others it is less important. Procurement and supply professionals should become increasingly involved in SCM, ideally playing a leading role in its development wherever possible.
- For best results, SCM requires a senior sponsor appropriate to the sector.
- SCM has a pivotal role to play within the organisation, involving responsibility for predicting and satisfying end customers’ demand back through to the suppliers.
Why is supply chain management important?
Effective supply chain management improves the financial position of an organisation by delivering value, which is linked to the organisation’s corporate strategy. Supply chain management plays a significant role in customer satisfaction through the delivery of products and services. Good supply chain management is critical at reducing operating costs in procurement activities, operations, and logistics functions and throughout the whole supply chain. The scale of profitability for large organisations is relative to the management of the supply chain.
Supply chain management also has a lesser publicised societal role – ensuring that the basics necessities humans depend on like, food, energy, medicine, and modern infrastructure are flowing and available.
A concern is that unless we can describe what we do and demonstrate our success to our stakeholders we cannot win their recognition and support.
What are the six components of supply chain management?
The goal of supply chain management is to look holistically at the entire supply chain. From the supplier through to the consumer, supply chain management serves as a function to maximise value from all activities. Supply chain management can be broken down into six key components.
Who should be responsible for supply chain management?
All procurement and supply chain professionals should be involved in the supply chain management process. However, not all professionals have the necessary skills to manage the upstream part of an organisation’s supply chain as these are often complex networks.
For best results, supply chain management requires a senior sponsor appropriate to the sector. Supply chain management is at the heart of an organisation as it involves responsibility for the end customers’ demand, right through to the suppliers and beyond. Therefore, it requires objectivity, an open mind, and the ability to work with all stakeholders in the supply chain.
Types of supply chain management models
Organisations can use different models to manage supply chains, and it’s critical to select a model that helps control costs and reduce risks.
- Continuous flow - This model is ideal for organisations that product a stable set of goods and have a stable demand from customers.
- Fast chain - This model is for organisations that have product lines with short life cycles. The fashion industry is a good example of this, as often products are based on current trends.
- Efficient chain - This is for hyper-competitive industries, and for those who want to maximise efficiency. It involved creating proper production forecasts to prepare raw materials accordingly.
- Agile - This is usually for organisations dealing with speciality items, where products require extra care, and required expert transportation of goods.
- Flexible - This model relies on the right supply chain technology and the right people with the knowledge to operate flexibly.
- Custom-configured - This model is a mix of agile and continuous flow methods, where the product may require some customisation, but needs to operate on and end to end basis. It’s usually for small batches or prototype designs.
Evolution and future of supply chain management
Emerging technology is disrupting supply chains, with many tasks now becoming automated by robots and remote processes. Technology can also help with analysis and prediction too, making supply chains run more efficiently. There also comes lots more innovation, new markets and new opportunities that can help organisations to grow. Supply chains are constantly developing and changing, and technology can help organisations become more agile, flexible and improve the response to change in market conditions.
AI in supply chain management
Supply chains are becoming more and more complex, and AI can help organisations tackle the challenges organisations are facing today. AI can analyse huge volumes of data, provide visibility into operations and ultimately helps organisations to make better decisions. AI can help make accurate price and demand forecasts, enable full data integration with suppliers, optimise logistics and enable agile productions planning and scheduling. AI solutions can help organisations maximise performance and achieve an agile and resilient supply chain.
Supply chain optimisation
Every link in the supply chain costs money and takes time to improve it. When improved, you can reduce the amount of money that link costs. Take a look at the opportunities to consider for optimisation.
Find out more about Supply Chain Optimisation
Supply chain management key themes
- descriptionManaging the supply chain
- descriptionSCOR Model
- descriptionStrategic SCM
- descriptionFuture supply chains
- descriptionWhat is a supply chain?
- descriptionGlobal supply chains
- descriptionSteepled
- descriptionSupply Chain Security
- descriptionSupply Chain Resilience
- descriptionVertical integration
- descriptionKPIs
- descriptionManaging the supply chain
- descriptionSCOR Model
- descriptionStrategic SCM
- descriptionFuture supply chains
- descriptionWhat is a supply chain?
- descriptionGlobal supply chains
- descriptionSteepled
- descriptionSupply Chain Security
- descriptionSupply Chain Resilience
- descriptionVertical integration
- descriptionKPIs
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