2. WHAT IS SUPPLY CHAIN MANAGEMENT
(SCM)?
• Supply chain management (SCM) is the process of managing
the flow of goods and services to and from a business,
including every step involved in turning raw materials and
components into final products and getting them to the
ultimate customer. Effective SCM can help streamline a
company's activities to eliminate waste, maximize customer
value, and gain a competitive advantage in the marketplace.
3. SUPPLY CHAIN VS. LOGISTICS
• Supply chain management is the broad view encompassing the entire flow of goods
and services - from the initial sourcing of raw materials and components to the
manufacturing and production of finished goods, all the way through warehousing,
distribution, and delivery to the final customer. In essence, it's the orchestration of
every touch point involved in getting a product or service from its origin to the point
of consumption.
• Logistics, on the other hand, is a subset of SCM with a specific focus on the physical
movement, storage, and transportation of goods. It's the engine that keeps the
supply chain moving, ensuring products get from point A to point B efficiently and
cost-effectively. Logistics professionals handle tasks such as warehousing and
inventory management, transportation planning, and freight forwarding. They are
responsible for selecting the most appropriate transportation modes (e.g., truck,
rail, air, or sea) based on factors like cost, speed, and reliability. They also work
closely with customs brokers to ensure smooth cross-border movement of goods.
4. KEY ASPECTS OF SUPPLY CHAIN
MANAGEMENT
Effective supply chain management is all about coordination and optimization. Each
aspect plays a critical role in ensuring a smooth flow of goods. Demand planning helps
ensure you have enough product to meet customer needs, while sourcing and
procurement focus on getting the right materials at the right price. Production planning
and inventory management keep things running smoothly within your own operations, and
warehousing and distribution ensure your products get to the customer quickly and
efficiently. Finally, customer service is the key to building trust and loyalty. A gear train
with five interlocking gears of different sizes, representing the different aspects of supply
chain management]
**Demand Planning & Forecasting:** Predicting customer demand to ensure enough
inventory is on hand.
**Sourcing & Procurement:** Finding and acquiring raw materials and components at the
best price and quality.
**Production Planning & Inventory Management:** Optimizing production schedules and
inventory levels to meet demand without waste.
5. THE OUTSOURCING DECISION: BENEFITS & RISKS
A split image with a factory on the left and a handshake in the middle and a warehouse on
the right]
**Benefits:**
**Cost Reduction:** Outsourcing can save money on labor, facilities, and equipment.
**Increased Efficiency:** Focus on core competencies and leverage expertise of external
providers.
**Improved Access to Resources:** Gain access to specialized skills or technology you
may not have in-house.
**Scalability:** Easily scale your supply chain up or down to meet changing demands.
**Risks:**
**Loss of Control:** Less control over quality, production processes, and delivery
schedules.
**Hidden Costs:** Unexpected fees, communication breakdowns, and potential quality
6. SUPPLY CHAIN MANAGEMENT RESPONSIBILITIES
**Strategic**
**Network Design:** Determining the optimal locations for production, warehousing, and
distribution facilities.
**Supplier Relationship Management:** Building strong relationships with key suppliers to ensure
reliable and cost-effective materials.
**Technology Integration:** Implementing systems to improve visibility, collaboration, and decision-
making across the supply chain.
**Tactical**
**Demand Forecasting:** Developing accurate forecasts of customer demand to optimize inventory
levels.
**Inventory Management:** Balancing the need to have enough inventory to meet demand with the
cost of holding too much inventory.
**Transportation Management:** Selecting the most efficient and cost-effective transportation
modes for moving goods.
**Operational**
**Order Processing:** Ensuring orders are received, processed
7. CURRENT TREND OF SUPPLY CHAIN
MANAGEMENT
• Digitalization: Adoption of technologies like AI, IoT, and blockchain for
enhanced visibility and efficiency.
• Sustainability: Increasing focus on environmentally friendly practices and ethical
sourcing.
• Resilience: Building more robust supply chains to withstand disruptions (e.g.,
pandemics, natural disasters).
• E-commerce Integration: Adapting supply chains to meet the demands of
online retail and direct-to-consumer sales.
• Collaboration: Greater collaboration among supply chain partners for shared
success.
These elements constitute the foundation of effective supply chain management,
and staying informed about current trends is crucial for businesses to remain
competitive in today's dynamic marketplace.
