Managing the supply chain

With many elements making up the whole supply chain, it’s important to manage them all effectively.

Why do we need to manage a supply chain?

There are many elements of a supply chain. The area of the business in which you operate will feed into your organisations supply chain and contribute to the overall value to the organisation.

For example, if you look after HR procurement, you add value to the supply chain by recruiting the right calibre of staff to operate at various points within the supply chain. From this you’ll be adding value, through upskilling staff or investment in the right talent who can help deliver your organisations product or service offering.

You may work as a category manager for raw materials within your organisation, again the interface that you have with the suppliers, building trust into the working relationship, auditing and checking supply will again, all add value to your supply chain. Your aim would be to achieve quality improvement, effective pricing structures or innovative new products that could contribute to your sustainability goals.

You can work in various areas of the supply chain, but the main goal when managing a supply chain is to add value. The value should always reflect your organisations corporate strategy and align to consumer demand.

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.

What are the key objectives of SCM?

SCM seeks to improve the total performance of an enterprise by enhancing its responsiveness to the marketplace, adding value, reducing waste activities and by reducing the overall cost of supply. Fundamental to its success are effective performance measures. Without agreed measures, it’s difficult to focus effort on those actions which are likely to bring the greatest improvements and the most cost benefits.

A list of the potential goals of SCM are below:

Reduce waste/non-value-added activities
Reduce amount of handling
Reduce excess inventory, both materials and finished goods
Maximise levels of customer service/responsiveness
Improve supply-chain communication

Increase speed-timeliness of information flows
Increase accuracy of information flows
Increase level of information sharing
Reduce cycle time
Improve co-ordination of effort

What are the key requirements of a supply chain?

Look below at some of the key requirements of a supply chain:

What are the 5 basic components of a supply chain management SCM system?

SCM comprises of five key elements: strategy; process; organisation; information; and performance.

1. Strategy: This drives a supply chain design based on business goals and objectives and on market needs and expectations. It includes the development and management of business processes, performance targets, organisation structures, and information systems.

2. Process: This describes the activities required to operate and manage the supply chain, including links between processes and relevant best practices.

3. Model: An appropriate model defines management structures, department missions, and roles and responsibilities.

4. Information: IT systems are tools that support supply chain planning, execution, infrastructure maintenance, and the decision-making process.

5. Performance: A balanced set of process-level performance indicators that can be used to evaluate and manage supply chain performance against targets.

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

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