business plan in supply chain management

Supply Chain Planning: Strategy, Processes and Practices

Supply chain planning helps your business meet customer demand in the most efficient way possible. But to increase profitability and keep demand from outstripping supply, every step in the supply chain planning process—from ordering raw materials to product delivery—has to be reliable.

The process also has to be adaptable, efficient and accurate to address changing market forces. It sounds like a tall order, but there are best practices that can help.

Video: What is Supply Chain Planning (SCP)?

What is Supply Chain Planning?

Supply chain planning helps you match product supply with customer demand using forecasting, pricing strategy and inventory management techniques. Before delving into the details of supply chain planning, here are two key concepts you need to know.

Supply chain planning vs. supply chain execution

Supply chain planners are long-term prognosticators, asked to peer months or even years into the future. But their predictions aren’t based on what they see in crystal balls. Instead, they analyze manufacturing, logistics and inventory data to make their plans.

Supply chain execution, on the other hand, is the day-to-day implementation of that plan—order fulfillment, transporting goods, warehousing. Think of them as two sides of the same coin.

What is supply chain management software?

Supply chain management software supports planning and execution. It forecasts demand and manages inventory so you can keep costs down and deliver products faster. It provides real-time updates about the status of your supply chain, lets you inspect your operations and helps balance supply with demand.

Supply Chain Benefits

Supply chain planning is a way to improve your operations by standardizing procedures, reducing waste and planning for variability.

It also plays a pivotal role in price and delivery—two of the most important aspects of customer satisfaction. A well-run supply chain lowers manufacturing costs, improves the reliability of deliveries and helps you respond to unplanned demand.

Importance of Supply Chain Planning

Supply chain planning affects your top and bottom lines. Stock shortages can result in lost sales or rush shipping charges. Too much inventory ties up cash. And over-forecasting and canceling orders can damage important relationships with suppliers and disrupt your own business.

It’s difficult to argue with the why , but there’s often less agreement on how the process should be structured.

Supply Chain Planning Process

Achieving desired business benefits requires strategic, long-range supply chain planning. However, in a flexible supply chain, managers are empowered to respond tactically to changing conditions and alter those plans on the fly.

Strategic planning:

This phase focuses on the long term and establishes a framework for your supply chain. In this phase, you’ll factor in elements like the location of your business and suppliers. You’ll map transportation routes and determine the size and location of warehouse space for materials and finished products. If you already have a location, this is when you determine how to leverage it.

Tactical planning:

The next phase delves deeper into individual aspects of this framework. For example, you might place standing purchase orders with certain suppliers for just-in-time delivery. You may decide to store safety stock of key materials to avoid shortages. And even the best-laid plans can require tactical adjustment, such as changing sourcing strategy or rebalancing inventory among overseas warehouses if new tariffs raise your costs, for example.

Supply Chain Strategies and Methods

Many planners use a combination of just-in-time delivery and safety stock to cut costs while hedging against shortages. The just-in-time approach delivers materials right before they are needed for manufacturing or other processes. With less inventory, less cash and space are tied up.

But companies risk pauses in production if there are delays in shipping or problems with materials. Alternatively, with the safety stock approach, companies store more inventory to provide an extra buffer against supply chain disruptions; the downside is an increase in inventory costs.

Supply Chain Planning Elements

A product requires supply chain planning at every phase of its life cycle. Steps include:

Demand planning and management: Accurately forecasting demand for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without having to store surpluses. Supply chain planners look at historical customer behavior, projected versus actual sales, market conditions and other factors. Increasingly, they use predictive analytics to better understand the demand for a particular product—how much, where and when it should arrive. Then, supply chain planners estimate the internal demands on each link in their supply chains.

Supply management: Supply management involves sourcing and procuring trusted sources of raw materials, components, software and other goods that go into making your product or service.

Production management: In parallel, capacity planning addresses your own company’s production lines in terms of machinery, staff and efficiency. The key question: How much can we realistically produce during the planning period? Keep in mind that this could be less than your demand forecast.

Inventory management: How a company orders, handles and stores goods can significantly impact costs, operational efficiency and customer satisfaction. Companies aim to manage inventory levels with supply chain partners to keep stock on hand at an optimal level while ensuring reliable customer service.

Inventory management can also provide other financial advantages, such as the ability to capitalize on volume prices from suppliers and accurately include the value of inventory in assets listed in company balance sheets and tax filings. More sophisticated inventory management systems can identify high- and low-performing products and trigger reorders when stock dwindles.

Pricing strategy: Setting an optimal price is part art, part science. Honing an effective strategy is critical, however, to manage the balance between supply and demand . For example, price cuts can stimulate sales during periods of low demand, helping you cover the fixed costs of production lines and your workforce.

Event management: This involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain and developing contingency plans, such as workarounds, buffers and backups.

Integrated business planning (IBP): This is an approach that links your supply chain planning with the rest of your business, from sales and operations through finance. Because IBP gathers information from across the enterprise, it also can help companies perform better predictive analysis to grow the business and manage risk.

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7 Steps to Supply Chain Planning Success

Here are seven basic principles that leading supply chain planners adopt:

• Synchronize supply chain planning and execution, how often you update your data and planning horizons—or how far into the future your company will project.
• Systematically manage data so that you can use consistent information throughout your supply chain planning and management processes. This includes data about items, customers, manufacturing resources and suppliers.
• Build cooperative relationships with suppliers and primary customers so you can more easily adjust forecasts, orders and increase sales.
• Examine the data used in your demand planning for flaws, such as forecast errors or bias.
• Focus on actual point-of-sale data more than your company’s sales orders.
• Continuously analyze the product lifecycle, looking for ways to improve the links between product development and the supply chain.
• Create a culture of steady improvement to better understand customer behavior.

Supply Chain Planning Trends

Despite the fact that companies increasingly use technology to improve supply chain planning and management, demand forecasting remains a formidable challenge for many organizations.

Companies are turning to predictive analytics to better understand buyer behavior and other factors that influence demand. Predictive analytics is also becoming an important tool for planning the production, distribution and other supply chain functions needed to fulfill that demand.

Supply Chain Defined

A supply chain is a coordinated network that includes all the companies, facilities and business activities involved in sourcing, developing, manufacturing and delivering products. Each business relies on its supply…

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Supply Chain Strategic Planning: A 5-Step Process + Template

If you're a supply chain manager, you're probably feeling the pressure of staying ahead of the competition, juggling multiple initiatives, and navigating through constant supply chain disruptions. 

Don't worry, you're not alone! A recent survey of 1,000 supply chain leaders by Gartner found that 42% of them are struggling to find the right balance between profitability and other important factors like sustainability, speed, and innovation.

But don't lose hope just yet! It's time to shake things up and take a new approach to supply chain strategic planning that will drive successful on-the-ground execution. The next decade will be make-or-break for supply chains. 

It's up to you to determine whether your supply chain will be a winner or a loser. So, let's dive in and find out what it takes to achieve supply chain strategic planning excellence and come out on top!

Here’s what we’re going to cover in this article:

The Supply Chain Strategic Planning Process: Unpacking The Right Approach

The 5 steps of highly effective supply chain strategic planning, 5 pitfalls to avoid during your supply chain planning process (and how to avoid them), upgrade your strategic supply chain management with cascade 🚀.

Supply chain strategic planning can be a challenging task, especially when it requires a focus on the overarching strategy rather than just day-to-day execution. 

But the times are changing, and so is the approach to strategic planning. Gone are the days of a yearly, set-it-and-forget-it exercise.

The shift from linear strategic planning to shorter strategy execution cycles. Source: Cascade

Supply chain managers must now be ready for the unexpected and be able to pivot quickly as things change. 

In order to build a resilient and operationally excellent supply chain, companies must focus on strategic alignment between the overarching supply chain strategy and operational planning . In other words, strategic plans need to be connected with execution. This means providing teams with the context and tools they need to act quickly when necessary. 

As a result, your organization can be more prepared for the unexpected and adapt faster to changes, improving its supply chain strategy and operations , and securing a competitive advantage.  

So how do you achieve this? An effective supply chain strategic planning process can act as a missing puzzle piece if approached wisely.

In this section, we will cover the five essential steps to creating a successful supply chain strategy . From setting goals to keeping an eye on how things are going, these steps will make sure that your strategy works and is efficient. So, sit back, grab a cup of coffee, and let’s dive into each step.

Step 1: Lay the groundwork for a winning supply chain strategy

• Align with the Big Picture: Time to get on the same page as the rest of the biz! Start by aligning your supply chain strategy with the overarching business strategy and objectives. For example, if the business goal is to reduce costs, supply chain strategies should focus on optimization and cost-cutting initiatives.
• Identify your supply chain drivers: What's driving your supply chain? Think about factors like technology, regulations, customer demands, and global supply chain events. Understanding the key drivers will help you make informed decisions and steer your supply chain in the right direction. These drivers include:  1. Sourcing : The procurement of raw materials and other inputs is crucial to the success of the supply chain. 2. Inventory : Efficient inventory management is key to meeting customer demand while avoiding excessive stock levels. 3. Logistics and warehousing : Effective warehouse management processes and logistics management can reduce lead times, improve service levels, and increase efficiency. 4. Information and data : By forecasting demand, demand planning helps to align the supply chain with customer needs and minimize the risk of shortages.  For example, do you have enough inventory or safety stock to meet customer needs? Is your production concentrated in one country, or should you consider diversifying or changing your logistics and transport methods? 
• Include your rockstar suppliers and stakeholders : Who's who in your supply chain? Make a list of your MVPs (most valuable players) and prioritize them. Don't forget about customers, logistics providers, regulators, and even your competitors—they all play a role in your supply chain success. Different perspectives will help you understand operational constraints, gaps to fill , and the importance of potential improvements or investments. 
• ‍ Assess the current state of your supply chain: Give your supply chain a check-up! Assess your logistics, supplier reliability, and ability to bounce back from disruptions. Analyze your organizational structure and operating systems. Get input from different perspectives to identify opportunities for improvement and get buy-in from key stakeholders. For example, does your manufacturing plant in the United States outsource some of its work to China? What contingencies have you put in place to ensure consistent quality and supply?
• Conduct a SWOT analysis of your supply chain: The strengths and weaknesses of your supply chain and the resulting opportunities and threats will be critical for planning, forecasts, and strategic risk management .

Step  2: Design your supply chain strategy

With a solid foundation in place, it's time to start designing your supply chain strategy. This is where you'll put the pieces together. 

Make sure to set some strategic priorities to help guide your strategic planning and decision-making process. 

Strategic focus areas are the key pillars to focus on. These may include optimizing production planning, increasing profit margins, or diversifying supply and production.  

Some examples of supply chain strategies include:

• Invest in technology : Use cutting-edge technology and digital tools to improve your supply chain operations and gain a competitive edge.
• Foster collaboration and build strategic relationships : Work closely with your suppliers and stakeholders to develop a supply chain that's built on trust, communication, and collaboration. For example, let’s take a look at IKEA . They have strategically placed distribution centers worldwide and trading offices near suppliers to minimize transportation costs. On top of that, the close proximity of IKEA's trading service offices to its suppliers' facilities allows the company to monitor production, negotiate prices, and check the quality of the goods and materials it purchases. 
• Enhance resilience : Prepare your supply chain for unexpected disruptions by investing in end-to-end visibility, supply chain risk management, and contingency planning.

With this in mind, a strategic plan needs to be clear-cut and concise so your teams won't need a week to go through it. Remember, simple is always better. 

📚 Recommended reading: Strategy study: How IKEA became a household name

Step 3: Develop the strategic plan for your supply chain

Now it's time to get into the nitty-gritty and put together a detailed plan that outlines all the specific steps needed to execute your supply chain strategy. 

This plan should cover focus areas, clear goals, timelines, budgets, resources, owners, and potential risks. And let's not forget about the all-important KPIs (Key Performance Indicators). KPIs are critical to measure the success of your supply chain strategy, so it's important to set them early on.

👉 Here’s how Cascade can help you: 

In Cascade , you can easily build your strategic plan, including all the key elements mentioned above. With our structured approach to strategic planning and user-friendly UI, building your plan and setting KPIs has never been easier. You can also monitor performance and make adjustments as needed.

👉 With Cascade’s Supply Chain Strategy Template , you can get started right away and execute your plan with confidence.

Step 4: Time to execute your plan! 

It's go time, folks! You've laid the foundation, designed your strategy, and developed a solid plan—now it's time to execute and bring it all to life. Here's what you need to do:

• Get the Word Out : Communication is key when it comes to executing your supply chain strategy. Make sure everyone who needs to know is in the loop, from employees to suppliers to customers. Ensure everyone understands their role in the process and the end goal.
• Align with Operations: Your supply chain strategy is only as good as the day-to-day execution that supports it. That's why it's important to create alignment with your operations teams to ensure they have the tools and resources they need to bring the strategy to life. Integrated business planning is a good way to approach this. 
• Support Cross-Collaboration: To promote cross-collaboration and ensure everyone is working towards the same goal, create joined KPIs, and track progress in real-time. And that's where Cascade comes in - our platform offers integrations and live dashboards so everyone has access to the same information and can work together towards a common goal.

Now that you know the steps, it's time to put your plan into action! 

👉 Get started by using Cascade's Supply Chain Strategy Template to build your plan and start executing right away.

Step 5: Monitor and review progress - keep an eye on the prize!

As the old saying goes, "what gets measured gets done." And that's why step 5 is all about keeping your eye on the prize and making sure you're on track to hit your goals. 

Set up regular progress reviews: Regularly monitor and review progress against the plan, and make adjustments as needed. According to Cascade’s Strategy Report , only 18% of team members review progress on a weekly basis. This is crucial for employee engagement, accountability, and fast adaptability.

Rethink Your Tools: Remember the days of manual reporting? Let's ditch that and move into the modern age of automation and data-driven decision-making. 

With the right tools in place, you'll be able to make faster, more informed decisions, and track your progress in real-time. And that's where Cascade can help you—with its powerful reporting capabilities , you'll have all the data you need at your fingertips.

👉If you’re a Cascade user : Use the Report feature to get real-time insights from multiple data sources across various departments in your organization. With it, you'll be able to make and update progress reports quickly, so your team and management board will always have the most up-to-date information. 

Here’s an example of the supply chain management report in Cascade that will help you demonstrate the ROI of your initiatives and progress against set targets.

🔥 Want to see how Cascade helps team leaders save hours on making useful reports for meetings in real life? Learn how Kreg Tools uses Cascade to execute its strategy. Click here to watch the video.

There are several challenges that organizations may face when it comes to effective supply chain management and supply chain strategic planning:

Navigating complexity

⛔ Problem: Supply chains are multi-faceted, with several stages and stakeholders. In a McKinsey survey of senior supply chain managers, more than half of them stated they didn’t understand where their Tier 1 suppliers were located or what their key risks were. Because of this, it can be hard to come up with a strategy that takes into account all the important factors and can adapt to changes. 

💡 Solution: Maintain regular communication with suppliers and other stakeholders to have a clear understanding of the supply chain and all the different elements involved.

Managing uncertainty and disruptions

⛔ Problem: The business environment is continually evolving, making it hard to predict future consumer demand, price fluctuations, and other uncertainties like material shortages that may impact the supply chain. 

💡 Solution: To mitigate the impact of uncertainty, it's important to have a flexible and adaptable supply chain strategy that can quickly respond to changes. Focus on execution over planning, and adapt the plan as you go. With Cascade, you can easily update the supply chain strategic plan and notify your teams with just one click.

Breaking down silos

⛔ Problem: Organizations that work in silos are more likely to be disrupted, waste resources, and change too slowly. Supply chain, manufacturing operations, and sales teams need to share information in real-time to work effectively and create a coordinated response to changes. 

💡 Solution: With Cascade, you can create a single source of truth with shared KPIs. This makes it easy to track progress and ensure alignment across cross-functional teams.

Managing limited resources

⛔ Problem: Organizations often have limited resources, such as time, money, and personnel. This can make planning and executing a supply chain strategy challenging. 

💡 Solution: Support cost optimization by allocating resources in alignment with strategic priorities and avoid initiatives that increase supply chain costs. With Cascade, you can quickly identify underperforming areas and kill misaligned initiatives. It’s like having a personal advisor; you can see where your resources are being spent, analyze what’s working and what’s not, and make adjustments to maximize efficiency.

Improving visibility

⛔Problem: Outdated operating processes and tools can make it hard and time-consuming to track strategy progress and supply chain KPIs. This problem can compound if your teams rely on multiple disconnected tools, including your company’s ERP, spreadsheets, and other planning tools. 

💡 Solution: You should have one place where you can connect all the necessary data, track the progress of your strategy, and assess its impact on business and supply chain KPIs. With features like Dashboards and Reports , Cascade makes monitoring and reporting simple.

It's important to remember that supply chain strategic planning is a continuous process, not a one-time event. Regular monitoring and reviewing progress against the plan can help you make necessary adjustments and fine-tune your strategy for optimal results. 

Whether you're starting from scratch or revamping an existing plan, Cascade offers a comprehensive solution to help you every step of the way. With our structured approach to strategic planning and powerful features like integrations, live dashboards, and reports, you'll be well on your way to a successful and thriving supply chain in no time. 

Don't wait, sign up today for free and start executing your plan with confidence!

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The Complete Guide to Supply Chain Planning in 2024

Effective supply chain planning is more vital than ever in today’s fast-paced business world. It plays a crucial role in streamlining the production and delivery of products, all while ensuring supply and demand are in equilibrium. 

With this comprehensive article, we’ll dive deep into the complexities of supply chain planning. We’ll also cover indispensable factors that supply chain experts must weigh carefully when helping companies prepare to compete globally.

Finally, we’ll show how you can understand supply chain planning holistically with a tool that helps global companies save money daily.

What is Supply Chain Planning?

Supply chain planning is a forward-looking process aiming to optimize the delivery of goods, services, and information from suppliers to customers while balancing supply and demand.

The planning involves anticipating customer demand and planning materials, components, production, marketing, distribution, and sales accordingly. 

The overall goal of supply chain planning is to ensure that sales revenue opportunities are fully utilized on time and at the lowest possible cost.

The process is essential for businesses to optimize operations, enhance efficiency, reduce costs, and create happy customers.

What is the First Step in Planning Supply Chain Operations?

The first step in planning supply chain operations is demand planning and forecasting.

Demand planning is a supply chain management process organizations use to accurately project future demand and customize their output based on the plans. 

When matching demand planning with supply planning, organizations have more control over the output, meaning customer needs are better met. 

Demand planning typically involves forecasting demand based on historical data, market trends, and other factors that help make informed decisions about production levels, inventory management, and resource allocation.

What are the Benefits of Supply Chain Planning?

The benefits of supply chain planning are reduced costs, increased customer satisfaction, optimized supply chain operations, simplified inventory management, and increased revenue.

To be honest, there are numerous benefits of supply chain planning. Here’s the full list:

• Increased customer satisfaction ensures that products are delivered at the right time and place. Having satisfied customers builds brand loyalty and gives businesses a competitive edge.
• Simplified inventory management by aligning supply with demand to prevent stockouts or excess inventory.
• Improved quality control that ensures high-quality products and services by implementing quality control measures, monitoring supplier performance, and improving processes to meet customer expectations.
• Streamlined operations, enhanced efficiency, and reduced delays, all of which translate into lower operating costs.
• Optimized supply chain operations mean businesses can reduce costs, improve efficiency, and increase profits.
• Helping organizations identify and mitigate risks, developing contingency plans, and monitoring potential threats to business.
• Adaptability and responsiveness are another result of supply chain planning – it enables organizations to adapt to changing market conditions and customer demands and respond to disruptions.
• Fostering collaboration and integration among supply chain partners – suppliers, manufacturers, distributors, and customers. The results are more streamlined operations, improved communication, and enhanced overall supply chain performance.

What are the Key Elements of Effective Supply Chain Planning?

The key elements of demand planning are production planning, demand and supply planning, inventory management, logistics management, supplier management, risk management, and sales and operations planning.

The planning process needs to optimize the delivery of goods, services, and information from suppliers to customers. It involves coordinating the mentioned elements of the supply chain.

Production Planning

Production planning aligns production capacities with customer demand to ensure optimal efficiency and customer satisfaction.

There are several important points when it comes to production planning:

Aligning production capacities with customer demand

To ensure that the production capacities are in sync with the forecasted customer demand, companies must analyze historical data, observe market trends, and include customer feedback to predict future demand and accurately adjust production.

When this alignment of production and customer data is in place, companies avoid issues such as stockouts or excess inventory that often lead to financial losses and dissatisfaction in the market value chain.

Strategies for efficient production planning and scheduling

To optimize production planning, companies employ various strategies, such as implementing lean manufacturing principles, utilizing advanced scheduling tools, and adopting just-in-time (JIT) production techniques.

The correct strategies result in minimizing waste, reducing lead times, and improving operational efficiency. 

Resource management and optimization in production planning

Resource management and optimization involve effectively allocating resources such as labour, machines, and materials to ensure smooth production processes.

With the correct resource utilization, operational efficiency meets customer demand within the desired time frame. As a result, companies minimize idle time, reduce production bottlenecks, and increase productivity. 

Demand and Supply Planning

Demand and supply planning are two essential processes in supply chain management. Including them in planning improves decision-making and enhances overall supply chain performance.

Demand planning

Demand planning is a supply chain management process organizations use to project future demand and customize their output accurately. 

Demand planning involves supply chain forecasting based on historical data, market trends, and other factors that help make informed decisions about production levels, inventory management, and resource allocation.

Supply planning

Supply planning works with demand planning – organizations must manufacture and supply enough products to meet the forecasted demand. 

Supply planning involves coordinating various aspects of the supply chain – procurement, production, distribution, and resource management and considering factors like the availability of raw materials and employee responsibilities. 

Coordination of demand and supply planning

Coordinating demand and supply planning involves integrating demand forecasts with supply planning processes to ensure that all parts of the organization work together. 

Once a well-executed sales and operations planning (S&OP) process comes into play, organizations balance supply and demand, improve decision-making, and enhance overall supply chain performance.

Inventory Management

Supply chain professionals always aim to maintain optimal inventory levels to meet demand while minimizing costs and risks associated with over or understocking.

Effective inventory management means meeting demand while reducing expenses and improving cash flow. Demand planning determines how much inventory is needed and when to order it. 

How does inventory management impact supply chain planning?

Your supply chain is optimized when the right products are available at the right time, in the right quantities, and at the suitable locations.

Proper inventory management means the companies can:

• Reduce stockouts and ensure high customer satisfaction.
• Minimize holding costs and optimize working capital.
• Enhance operational efficiency and reduce lead times.
• Improve forecasting accuracy and demand planning.

Inventory optimization strategies and techniques

Inventory optimization needs to balance inventory levels and customer service levels. Analyzing demand patterns, lead times, and other factors to determine the optimal inventory levels.

Some common inventory optimization strategies and techniques include:

• ABC analysis to classify items based on their value and prioritize inventory management efforts
• Just-in-Time (JIT) inventory management to minimize holding costs and reduce inventory levels
• Economic Order Quantity (EOQ) model to calculate the optimal order quantity to minimize ordering and carrying costs
• Vendor-managed inventory (VMI) to allow suppliers to monitor and replenish inventory levels directly

Inventory control methods and best practices

Inventory control methods help maintain optimal inventory levels through proper monitoring, tracking, and replenishment. Some of the best practices include:

• Regular inventory audits to identify discrepancies and prevent stockouts or excess inventory
• Implementing safety stock to buffer against demand fluctuations or supplier delays
• Using serialization and barcoding to track and trace inventory accurately
• Applying advanced inventory management software to automate processes and enable real-time visibility

Logistics Management

Logistics management is a crucial link that ensures the smooth flow of products from suppliers to customers.

Coordinating the movement of goods, materials, and information in the supply chain

One of the primary responsibilities of logistics management is to ensure the timely and cost-effective movement of goods, materials, and information throughout the supply chain. It involves coordinating various activities, such as transportation, warehousing, inventory management, and order processing.

Transportation:

• Choosing the most suitable mode of transportation
• Optimizing routes for efficient delivery
• Tracking and monitoring shipments

Warehousing:

• Strategically locating warehouses for optimal inventory positioning
• Implementing efficient storage and retrieval systems
• Ensuring proper handling and security of goods

Inventory Management:

• Optimizing inventory levels to meet demand while minimizing holding costs
• Implementing effective replenishment strategies
• Utilizing technologies like RFID and barcode scanning for accurate tracking

Order Processing:

• Efficiently managing the order fulfillment process.
• Ensuring accuracy and timeliness in the process
• Streamlining communication between suppliers, manufacturers, and customers

Key concepts and principles of logistics management

• Supply Chain Integration: Collaboration and coordination among all supply chain partners to facilitate seamless information flow and decision-making.
• Lean Logistics: Eliminating waste and non-value-added activities to optimize efficiency and reduce costs.
• Reverse Logistics: Managing the return, disposal, and recycling of products to minimize environmental impact and maximize value recovery.
• Third-Party Logistics (3PL): Outsourcing logistics operations to specialized service providers to leverage their expertise and resources.

Optimizing transportation, warehousing, and distribution activities

Logistics management aims to optimize various activities involved in the movement of goods, including transportation, warehousing, and distribution:

• Transportation optimization with efficient route planning, load consolidation, and carrier selection strategies to minimize transportation costs and improve delivery speed.
• Optimizing warehouse layout, storage systems, and picking processes to increase throughput, reduce handling time, and improve inventory accuracy.
• Distribution Optimization by designing an effective distribution network that ensures the right products are delivered to the suitable locations at the right time while minimizing costs.

Supplier Management

Without proper supplier management, businesses can face various challenges that may hinder their success in meeting customer demands. Establish strong relationships with suppliers and develop strategies for collaboration.

What’s the importance of supplier management in supply chain planning?

Proper supplier management helps businesses to strategically align their supply chain operations with their overall business goals. Supplier management directly impacts the availability and quality of materials and services required for production and distribution.

When suppliers are reliable and capable of meeting the organization’s demands, businesses can minimize disruptions and maintain a seamless flow of goods and services.

What’s the supplier selection criteria in supply chains?

Organizations must consider factors like reliability, quality, capacity, cost, and responsiveness when selecting suppliers.

Best practices in supplier selection involve conducting thorough research and due diligence. Suppliers’ financial stability, reputation, and previous performance must be included in the study. 

Collaborative strategies for building strong supplier relationships

Collaboration and cooperation between businesses and suppliers can improve efficiency, flexibility, and innovation. To build strong supplier relationships, organizations can implement collaborative strategies such as:

• Maintaining open and transparent communication channels with suppliers to share information, address issues, and align goals.
• Involving suppliers in decision-making and jointly developing plans to optimize supply chain performance.
• Investing in supplier development programs enhances suppliers’ capabilities and ensures continuous improvement.
• Establishing clear performance metrics to evaluate supplier performance and provide feedback for improvement.
•  Collaborating with suppliers to assess and mitigate potential risks in the supply chain to minimize disruptions.

Risk Management

Businesses must identify and mitigate potential risks to ensure a smooth supply chain. Companies can minimize disruptions and enhance their supply chain resilience by implementing effective risk management strategies.

Identifying and mitigating risks in supply chain planning

In supply chain planning, it is essential to identify the various risks that may impact the flow of goods and services. These risks include natural disasters, political instability, supplier bankruptcies, and transportation delays.

Once these risks are identified, businesses can develop strategies to mitigate them.

• Diversify the supplier base to mitigate the risk of supplier bankruptcies or disruptions. Thus, avoid the complete halt of the supply chain by having multiple suppliers in case one supplier cannot deliver.
• Companies can also purchase insurance policies that cover supply chain disruptions. Additionally, developing contingency plans for potential risks can help companies react swiftly and minimize the impact of disorders.
• Data analytics helps enterprises identify potential risks and make informed decisions. Companies can proactively mitigate risks and optimize their supply chain planning by analyzing historical data and market trends.

Strategies for enhancing supply chain resilience

An effective risk management plan also involves strategies to enhance supply chain resilience . These strategies include:

• Building solid relationships with suppliers and key partners improves supply chain resilience while enabling businesses to address risks promptly.
• Maintaining buffer stocks, implementing agile production processes, and having alternate transportation routes ensure supply chain flexibility.
• Monitoring the supply chain performance and identifying potential risks is crucial for enhancing resilience. Monitor the performance by leveraging real-time tracking systems, performing regular audits, and communicating with all stakeholders.

Tools and frameworks for effective risk management

These tools and frameworks facilitate effective risk management in supply chain planning:

• Performing risk assessments to understand and prioritize potential risks. Analyze the impact and likelihood of risks and develop mitigation plans accordingly.
• Conducting scenario planning exercises to simulate risk scenarios and evaluate their preparedness. Companies can identify gaps and improve before an actual risk event occurs by testing various scenarios.
• Implementing supply chain visibility technologies enables tracking goods’ movement and identifying bottlenecks or disruptions. This real-time visibility helps in proactive risk management.

Sales and Operations Planning (S&OP)

Sales and Operations Planning (S&OP) allows businesses to effectively manage their demand and supply to ensure smooth operations and customer satisfaction.

Integrating of sales and operations data enables companies to make informed decisions and align their resources to meet customer demands. This integrated approach helps optimize production, inventory levels, and distribution, resulting in improved customer service, reduced costs, and increased profitability.

The key elements and steps involved in the S&OP process are:

• Collaborative forecasting between sales and marketing teams collaborate with other functional areas to develop a demand forecast. This forecast serves as a basis for the supply planning process.
• Supply review assesses the company’s capacity and capability to meet the forecasted demand. It considers factors like production capacity, inventory levels, and supplier capabilities.
• Consensus planning of the production and inventory plans by the sales and operations teams to reconcile discrepancies between the demand forecast and supply capabilities. 
• The executive review by senior management to review and approve the production and inventory plans to ensure alignment with the company’s strategic objectives.
• Performance Measurement of the results against the planned objectives to identify deviations and take corrective actions.

What is an Example of Supply Chain Planning?

Prime examples of supply chain planning are Amazon and Orkla Food. Here’s additional context behind their demand planning success:

Orkla Food is a leading branded consumer products company in the Nordics and one of Norway’s largest companies. The organization has more than 25,000 direct suppliers globally and many sub-suppliers, such as farmers.

Orkla Food faced challenges in coordinating its planning activities due to the large number of SKUs in its portfolio and the complexities of its supply chain.

Orkla Food implemented supply chain planning to optimize its operations and enhance efficiency.

The effective management of demand planning, supply planning, and inventory management, along with other aspects of the supply chain enabled Orkla Food to streamline operations, enhance efficiency, avoid delays, and reduce operating costs.

This approach also help the company adapt to changing market conditions, manage disruptions, and improve customer satisfaction.

Amazon’s supply chain strategy is a prime example of how a company can optimize its operations and enhance efficiency. 

Some key components of Amazon’s supply chain planning include:

• Warehousing: Amazon has a vast network of fulfillment centers and warehouses strategically located near metropolitan areas to ensure efficient storage and management of inventory.
• Inventory Management: The company uses advanced technologies and algorithms to manage and replenish inventory, aligning supply with demand and preventing stock outs or excess inventory.
• Delivery: Amazon has developed a robust delivery network, including partnerships with USPS and UPS, its fleet of trucks, vans, bikes, and even robots in some cases, to optimize delivery times and costs.
• Technology: Amazon embraces technology in its supply chain management, utilizing automation, robotics, and data-driven solutions to streamline operations and improve efficiency.

By effectively managing these aspects of its supply chain, Amazon can streamline operations, enhance efficiency, avoid delays, and reduce operating costs. 

What are Supply Chain Technologies?

Supply chain technologies are software, tools and systems that streamline supply chain processes, increase efficiency, and reduce costs. Some of the most popular supply chain technologies include:

• Supply Chain Planning Software for managing and replenishing inventory through sales and demand forecasting. It enables companies to balance supply and demand, improve decision-making, and enhance overall supply chain performance.
• Warehouse Management Software (WMS) for managing warehouse operations, including inventory tracking, order processing, and shipping. These systems improve warehouse efficiency, reduce errors, and lower operational costs.
• Transportation Management Systems (TMS) for transportation and logistics operations, including carrier selection, route optimization, and shipment tracking. These systems reduce transportation costs, improve delivery times, and enhance customer service.
• Artificial Intelligence (AI) and Machine Learning are revolutionizing supply chain management by automating tasks, analyzing large amounts of data, and providing guidance on forecasting supply and demand.
• Internet of Things (IoT) devices enable real-time tracking and authentication of products and shipments using GPS and other technologies. They monitor storage conditions, ensure quality management throughout the supply chain, and provide real-time visibility and tracking of goods and products from production to distribution to end consumers.
• Blockchain technology can improve supply chains by enabling faster and more cost-efficient delivery of products, enhancing traceability, improving coordination between partners, and aiding access to financing. Blockchain can track inventory levels, optimize inventory management processes, and facilitate supply chain finance by providing secure and transparent records of transactions between suppliers, manufacturers, and distributors.

What is a Supply Distribution Network Design?

The supply distribution network design is a framework that determines the flow of goods, the locations of warehouses and distribution centers, and transportation routes.  

An effective distribution network design ensures that goods are transported from the point of production to the end of consumption most efficiently and cost-effectively.

What to Consider in Designing an Efficient Supply Distribution Network?

• Geographical coverage of the distribution network should reach a wide geographical area to ensure products can get customers efficiently.
• Customer demand patterns must be understood to determine the number and location of distribution centers to optimize product availability.
• Transportation costs must be considered in the distribution network design, including shipping, fuel, and maintenance, to minimize overall supply chain expenses.
• Lead time requirements of different products
• Inventory positioning within the distribution network must ensure that products are available when and where needed, reducing stockouts and excess inventory.

Techniques for Optimizing Warehouse Locations and Transportation Routes

There are several techniques used for optimizing warehouse locations and transportation routes:

• Network optimization modeling uses mathematical models to evaluate scenarios and identify the optimal locations for warehouses and distribution centers.
• Transportation route optimization uses algorithms that analyze transportation routes, considering factors such as distance, cost, and delivery time to identify the most efficient ways.
• Simulation models test different distribution network designs in a virtual environment, allowing businesses to assess their performance and make data-driven decisions.

The Power of AI-driven Supply Chain Planning

With IoT and artificial intelligence (AI) led technologies rapidly gaining momentum especially in the global logistics and supply chain management industries, supply and demand planners stand to benefit from these in several ways.

The powerful evolution in artificial intelligence, machine learning, and data science has the potential to bring in massive disruption and meaningful innovation across these industries.

With specific reference to supply chain planning, AI can help to a great extent in reducing supply chain costs , managing inventory, and eliminating potential bottlenecks. AI in supply chain can help obtain new insights into several areas to boost productivity and optimize resources as well.

As a result, floor operators and planners are able to create more agile, flexible, and profitable supply chain plans to deliver goods and services as per customer expectations.

One such important application of AI in supply chain planning is the process of eliminating bottlenecks across the supply value chain to ensure supply chain planners and managers can meet their revenue targets easily.

Safer, Smarter and Better Supply Chain Planning with ThroughPut

ThroughPut’s Demand-driven supply chain planning software is a fully automated, scalable, enterprise-ready Kaizen Artificial Intelligence product based on digitalizing the world’s leading continuous improvement operations principles.

It enables your operations managers in effective supply chain planning to achieve unprecedented productivity and operational excellence.

ThroughPut analyzes existing industrial data in real-time to detect, identify, prescribe and prevent potential bottlenecks saving millions in delays and lost revenue.

It helps meet your supply chain goals by nailing down bottlenecks and eliminating inventory waste to achieve end-to-end efficiencies. You ultimately benefit from an efficient and optimal smart supply chain plan along with time, money, and resource savings.

Supply Chain Management 101: Principles, Examples, and Templates

By Andy Marker | June 25, 2017 (updated February 22, 2022)

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Globalization has become an undeniable part of commerce over the last few decades, as large companies have grown first to source labor and parts from developing regions, and then to start selling in those same areas as they grew in wealth and buying power. Supply chains have had to keep in step, passing through numerous countries to obtain goods most efficiently and cost effectively, and growing more complex as a result. And on the other end, the supply chain grows more frayed in order to deliver to countless countries for consumption. For the largest companies, managing a supply chain can require dedicated teams in every area the chain touches. It’s safe to say that supply chain management is both an art and a science.   This article will cover what a supply chain is, with examples; discuss how supply chain management works and its principles; and vital concepts in the field. Then we’ll move on to current issues and where the field is going. Finally, you’ll find useful resources, templates, and education programs. Ready? Let’s get started.

What Is a Supply Chain?

A supply chain is a collection of suppliers required to create one specific product for a company. The chain is made up of nodes or “links,” which can include multiple manufacturers for parts, then the completed product, then the warehouse where it is stored, then its distribution centers, and finally, the store where a consumer can purchase it. The concept of the chain is important, because each link is connected in a specific direction and order, and the next link cannot be reached without going through the previous one. Each link adds time and costs, and can involve labor, parts, and transportation. Every product a company carries may have its own supply chain, though they may use certain suppliers for multiple products. You can see why this gets so complicated, especially for international supply chains.

The process described above was that of a typical retail supply chain. However, there are many different types in practice. Here are three examples from well-known masters of supply chains:    Example: Walmart and “Big Box” Retailers The “Big Box” store, which represents one of the major disruptions of the retail model from the last century, thrives on size, ubiquity, and well-planned supply chains to drive out the competition. How else would a company like Walmart make a profit on a t-shirt made overseas that retails for $5.00?   Walmart succeeds by having fewer links in its supply chain, and buying more generic goods directly from manufacturers, rather than from suppliers with brand names and markup. It uses “Vendor Managed Inventory” to mandate that manufacturers are responsible for managing products in warehouses owned by Walmart. The company is also is particularly choosy with suppliers, partnering only with those who can meet the quantity and frequency it demands with low prices, and with locations that limit transportation needs. They manage their supply chain like one firm, with all partners operating on the same communication network.    By buying at large enough quantities to take advantage of economies of scale, moving products directly from manufacturers to warehouses, and then delivering to stores which are large enough to be distribution centers, it reduces links in the supply chain and cost per item, translating to low prices for consumers. 

Example: Amazon and “Ecommerce Platforms” Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s “online big box” concept is a perfect example of unique supply chains. As an e-commerce shop, obviously they cut the retail store out and ship from distribution center to consumer’s homes directly. Where Amazon innovates is both in its supplier-side and its final supply chain link - delivery.    Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As a result, Amazon has more things than any other online store, so when people shop online, they think of Amazon. Then, it produces everyday goods cheaply, and underbids suppliers. Next, their warehouses make serious use of automation to store items going to like destinations together, ready for immediate transport. Finally, its investments in delivery staff and technology make 2-day shipping a basic expectation, and even same-day delivery a possibility. Amazon ditches third-party logistics (3PL) and fulfills orders itself.

Example: Tesla and Specialized, Owned Chains Automotive manufacturing has come a long way since Henry Ford used assembly line manufacturing to speed up the production of a single car model in a single color. Now, in a time when even American carmakers are opening factories abroad, Tesla is making innovative, incredibly popular, and luxurious cars right in California, a location with incredibly costly real estate.   Rather than having a long supply chain of cheap part makers, they have a vertically integrated supply chain, with a full-service auto plant near its corporate headquarters and plans for a supplier park and a massive battery factory, and Tesla owns it all. Even more interesting is the digital supply chain the company promotes - new firmware and algorithm updates are pushed out to existing car owners over the cloud.

What Is Supply Chain Management?

As the name implies, supply chain management (SCM) is handling and optimizing all the many complicated facets of a supply chain, involving goods and services. Even ensuring timely handoff from manufacturer to shipper to supplier to shipper to buyer is a massive task, but to do it cost effectively and build net value is truly a challenge.    Supply chain management is so important because modern commerce exists in a networked global economy. Most businesses are specialized - even department and big box stores are only really equipped to sell to customers, despite their wide variety of products. The value of vertical integration is hard to justify when communication costs and SCM tools are so inexpensive - it almost always makes more sense to outsource for price efficiency.

The concept of supply chain management was in effect long before the term was created in 1982. In the colonial era, international trade by ship was already making for complicated transportation issues and the need for efficiency. During the Industrial Revolution, the ability to quickly produce goods with machine assistance led to the need to manage significant inventory and constant consumption. By the time history arrives at Henry Ford’s famous assembly line for the world’s first car production in 1913, supply chain management had become an art.    As the century wore on, more companies were producing more goods and looking for ways to reduce costs. They vertically integrated into owned supply chains to try reducing costs at each stage. In the 1980s and on, globalization became a realistic dream for many companies, because of computer systems, easier communication, and commerce-friendly trade laws. Around the 1990s, it became a common practice for firms to specialize, and focus on core competencies and outsourcing the rest, abandoning the vertical integration of the previous era. At this point, supply chains became truly complex, in order to coordinate hundreds of otherwise unrelated and geographically-distant manufacturers, suppliers, shippers, warehousers, and retailers.    Now, in the “SCM 2.0” era, the Internet and new methodologies have led to collaborative platforms and democratized processes. This is allowing smaller competitors to use some of the same manufacturers as major players, and reducing inefficiencies for those manufacturers as a  result. Better communication and planning tools are providing a way for small and large companies alike to manage even more complex supply chains.

Variants of SCM

Global SCM: The combination of global manufacturing with supply chain management, which must account for tariffs and local taxes as goods and services travel internationally to ultimately provide greater value at the end of the chain.   SAP SCM: Systems, Applications, and Products (SAP) is a software company that revolutionized logistics and enterprise resource planning. It provides an automated way to manage supply chain networking, supply chain planning, and supply chain execution, along with production planning, business forecasting, and demand planning.   Logistics and SCM: The art of coordinating efforts between every member of the supply chain to get products from their source to the consumer.    Purchasing and SCM: The focus on the monetary aspect of SCM, from costs to value added at each link in the supply chain.

Principles of Good Supply Chain Strategy

‌ Download Supply Chain Management Checklist

The Basics of Supply Chain Management Processes

There are key supply chain processes that you must take into consideration to effectively understand and manage them. These processes are all at play regardless of the type of supply chain you’re using.   Customer relationship management (CRM) comes first, because as the principles of SCM state, you must adapt everything in the supply chain to the customer. If no one is buying, there’s no need to produce anything. At the front of your supply chain, where a store’s staff interacts with its consumers, they must have plans in place for ongoing relationships. They need CRM tools to gather customer information for marketing and market research, all to determine the products and services to offer in the future.   Customer service management is another process that ties in, as it is where you gather negative and positive feedback to determine future needs.   Demand management is closely linked with the previous two, as it takes customer interactions and orders into account to determine the workload all the way up the supply chain. At its core, customers buying more means make more, and customers buying less means make less. Customer forecasting is an important task that analysts must perform well to determine the current demand and what it will be in the future, to prevent waste in the supply chain.   Product development is an important part of the supply chain that is informed by consumer demand. You must work with CRM and customer service data to determine what they want, which influences new products, product line extensions, and also what to stop making. You must integrate suppliers in this process because it affects cost, quality, and delivery time.   Supplier relationship management goes without saying - if you want to produce your products on time and on budget, you need a solid rapport with everyone you’re outsourcing to in the chain. This impacts manufacturing flow management , which ensures everything gets where it needs to go without delay, and at the correct spec.    Order fulfilment involves coordinating with distribution centers and either retail locations or 3PL to get the product direct to consumers. You’ve now made it all the way back to the beginning of the cycle, and need to pay attention to new CRM and customer service data.   Returns management , also known as the “reverse supply chain,” is a vital part of the flow of products that doesn’t fit perfectly into the clean supply chain cycle. It involves picking up online orders from 3PL locations or from consumers’ addresses and accepting returns at retail locations. Once these items are put back into inventory, they must be ready to get to a different customer while the product run is still live. 

What Supply Chain Managers Look for When Managing Supplier Relationships

One of the most complex parts of SCM is handling all the other people in the supply chain. They have their own needs and motivations, and to keep them all happy and working together with partners they are only loosely affiliated with is a challenge - especially when trying to meet deadlines and turn a profit. The following are what managers should focus on most in such relationships:   Org Chart and Leadership Style: How is the supplier’s organization set up? Is it a vertical or horizontal structure? Is the leadership strong and long lasting, or fickle and prone to change? You need to know who you’ll be interfacing with, and who will be the next one in line should some shakeup occur. Business relationships are always between people, and don’t always survive a reorg.    Management Style: How do the leaders at this supplier run their shop? Make sure it works with your crew. A micromanager at a relatively replaceable link in your supply chain will waste inordinate time, just as a hands-off manager at a vital link could result in sloppy delivery or substandard product quality.   Company Culture: Always important for working with suppliers, determine what kinds of people rise to the top, and how everyone acts when nobody's watching. If, for example, middle managers are constantly in fear for their jobs because of ruthless quarterly performance reviews, they may over-promise, make excuses, or otherwise be unstable work partners.    Product Flows: Once you know that you can work with the people, make sure their facilities are in order. Are they equipped for orders of the size and frequency you plan to make? How do they handle emergency, fast-turn around orders? What about other customers - are they only able to use their facilities for your product flows at certain portions of the month due to full inventory? Leave no stone unturned.   Information Flows: Just as vital is the ability to control information about the day-to-day flow of materials, and to communicate and coordinate long-term plans. Is the supplier up on their product details, inventory, and SKU organization? Is their security and encryption up to the standards of your company, and your industry? Big data is useless if the right people don’t see it in time.   Rewards and Risks: Take into account opportunities and threats of working with this supplier. Maybe they’re well-equipped to handle your exact product because they also work with your competitors. Perhaps they are new and establishing themselves, so offer a substantial discount, but may not be able to deliver on time? Do what’s best for the company, and use risk assessment to keep your whole supply chain operable.

Vital Supply Chain Management Concepts to Know

Having a passing familiarity with the following terms will help you see just what kind of skillset and abilities will be required when working in supply chain management:   Border Adjustment Tax: Also known as a destination-based cash flow tax (DBCFT), it is a tax levied on imported goods which is important to know in global supply chains.   Customer Relationship Management: Also known as CRM, this concept refers to providing ongoing service to customers and collecting data about their likes and purchases. There are also CRM tools that help automate and record interactions with customers.   Cumulative Mean: A figure for knowing how much or how little to produce in advance, involving mean orders with all previous data treated as equally useful.   Demand Management: Understanding customer behavior and patterns to control how much is ordered and produced at each link in the supply chain, with the goal of eliminating wasted production.   Financial Flows: Credit terms, payment schedules, accounts payable and receivable, and other factors that you must monitor to determine if a supply chain is profitable or not.   Information Flows: Transmission of orders, delivery status, and other data that influence the supply chain’s responsiveness to demand.   Integrated SCM: This is a method of SCM wherein all of the links are tightly integrated, operating almost as one company rather than a loose association of buyers and sellers.   Inventory Management: Monitoring and controlling orders, storage, and use of owned components to create the products your company sells.   Lean Six Sigma: A data-backed philosophy of continuous improvement that focuses on preventing defects and mistakes rather than discovering them later, which reduces waste and production time via standardization. Read Everything You Need to Know About Lean Six Sigma to learn more about this methodology.    Logistics: The physical movement of products from one link in the supply chain to the next, and the practice of improving their efficiency.   Make vs. Buy: A simple evaluation of whether it is more cost-effective and time-efficient to produce a required product with your company’s existing resources, or to outsource the need.   New Product Development: The creation of new products both in response to and in anticipation of customer demand, using data gleaned from CRM and the whole supply chain. Read Innovation for Everyone: Everything You Need to Know About New Product Development to learn more about this process.   Operational Accounting: Accounting for a company that focuses on planning, directing, and controlling of daily activities by their costs and eliminating waste.   Physical Flows: The actual movement of parts and products throughout the supply chain, which the Logistics team must manage and analyze to keep going without pause.   Project Management: The process and tools involved in ensuring that a codified piece of work (project or product) gets done on time while keeping all contributors aware of their next step.   Reverse Supply Chain: Aftermarket customer service, which may involve accepting returns, refurbishing and discounting, or otherwise finding use for the reacquired inventory.   Risk Management: Identifying, evaluating, and then choosing which risks to address first, with the goal of reducing overall risk in a supply chain.   S&OP: Sales and Operations Planning is a management process that aligns its constituent parts to ensure that the organization is only focused on operations that improve sales. Learn more about S&OP here .   Strategic Sourcing: Formalizing a company’s information gathering in order to use its purchasing power to take advantage of the best values in the marketplace of suppliers.   Theory of Constraints: A methodology that identifies the largest limiting factor in production, then finding a way to remove it to improve the efficiency of the entire production.

Current Issues in SCM

In addition to the major terms, it’s important to keep aware of legal, political, and social events which affect supply chain management when seeking a career in the field. Here are some of the bigger issues of the day:   Dodd-Frank Decision: This was a 2010 law which included a clause on “Conflict Minerals.” It requires companies to audit their supply chains in order to determine whether gold, tungsten, tantalum, and tin came from the Democratic Republic of the Congo, and report on their due diligence. It adds an extra layer of complexity and costs to SCM for those involved in chains with those minerals.   NGO Actions: Activist groups of all kinds work to end common practices within major companies’ supply chains, such as sweatshop labor, or push consumers towards less complicated supply chains by encouraging them to support local businesses and farms.    SEC Regulations: Whereas NGO actions can force a company’s hand for PR reasons or changing the marketplace of ideas, the Securities and Exchange Commission can slap that same company with fines, making company’s quick to comply. Third-party audits of supply chains are an important part of keeping in step with these regulations.    SECH Ratings: This is a rating that involves economic, social, and environmental judgements to gauge a company’s overall sustainability.   Transparency: Though protecting data is important, certain measures of transparency can improve company performance. Among consumer products, many younger, disruptive brands make their supply chain a selling point in marketing by being upfront about how and where they get their components, and where they make their products. The reasoning goes, if a company is hiding something, there must be an unethical component to it.   Sustainability Measures: As major companies and countries around the globe move towards sustainable production, all supply chains become impacted. Whether due to changing regulations or seeking good PR, many companies are working to reduce pollution and other issues in their chain.

The Future of Supply Chain Management

Aside from the issues of the day, it’s also vital to see where the field is going. The future of SCM is bright, but certainly evolving. We asked a group of experts and innovators in supply chain management to discuss what they believe the future of SCM holds: ​

Jake Rheude , Director of Business Development and Marketing for Red Stag Fulfilment

Over the next decade, we will see massive and disruptive forms of innovation both in terms of technology that expedites the speed at which customers receive their products ( drone delivery ) as well as technologies that drastically enhances the online shopping experience for customers, ( virtual reality ).

While these and other technologies no doubt have the opportunity to significantly change the landscape of online shopping and the supply chain, I expect we will see firms diverge on two different strategies. Some will rush to implement these costly new technologies in order to drive down the total time between an order being placed and last mile delivery, while other firms will stand by the current landscape (for most B2C online sellers) of product delivery in approximately two-days, acting cautiously, particularly in regards to the cost of these new technologies versus their impact on the overall value chain for consumers.

Certainly, there are niche industries where significant investments in drone delivery technology will provide a distinct competitive advantage, but I predict that for many B2C online sellers, the impact on the overall value chain of these new technologies will be misaligned with a consumer's perception of value, and therefore make the initial cost of these new technologies unjustified.

Lauren Stafford , Digital Publishing Specialist for Explore WMS

Embracing big data is an essential principle of modern SCM, specifically real-time data which has the potential to improve the efficiency of a supply chain and negate potential risks to strategy. We know that logistics optimization through technological innovations and data integration can make supply chains more efficient and more financially sound.

The future of the multi-modal SCM depends on successful integration with data and systems to achieve synchromodality. To achieve this, there needs to be a connection to all available transport modalities in the form of a real-time data flow. Once any issues with connectivity are addressed, a ranking system is required to consider a variety of variables such as dock schedules and material restrictions. Pricing data is another integral component.

The great advantage of a synchromodal platform is that it’s informed by every available option and makes a selection based on key factors like speed requirements. There is still significant work to be done in terms of how best to access and integrate a supply chain partner’s real-time data but, as these platforms are developed, we’re likely to see faster order processing times for large shipments and systems which can help generate a better ROI. The way we understand it, SCM is changing because now an efficient supply chain can be a competitive asset as opposed to a cost center.

John Boyd , founder of The Boyd Company, Inc

Probably the most dynamic link in the supply chain in recent years has been the "last mile": that movement of goods from a DC to a final destination in the home. E-commerce king Amazon has done much to challenge and ultimately rewrite the rules of last mile delivery. Last mile delivery has also produced a new warehousing subsector: the locker. Studies show that online shoppers not only want their packages now, they also want their packages delivered to places other than their homes. These lockers can be viewed as "micro warehouses" and will come with additional costs. We expect many to be operated by an emerging sector of third-party logistics (3PL) providers specializing in this particular segment of the supply chain.

Lockers are now common in Europe, where densely populated and congested urban centers make them a natural fit. We anticipate that lockers will also become the next boom sector within logistics/distribution site selection in the United States. Amazon already has automated lockers in six states, while the U.S. Postal Service has lockers located within post offices in the Washington, D.C., area.

Upstart third-party logistics providers will be looking for sites where they can locate lockers, such as in transit centers, apartment buildings, convenience stores, or any establishment that provides off-hours access for picking up packages. Also, the growing online meals industry is expected to fuel the need for temperature-controlled lockers for the delivery of perishables.

Careers in Supply Chain Management

With a bright future filled with unique challenges, a career in SCM is a strong choice. It might be surprising to hear about an industry that’s all about outsourcing and automation, but new experts are more vital than ever for global organizations and even local ones to grow. Look at these industry stats:

Career Paths

What kind of positions can you take on in supply chain management?   Supply Chain Business Analyst: Examine your company’s workflow and come up with creative ways to streamline its business processes. Live and breathe efficiency.   Inventory Control Administrator: Ensure that inventory systems’ data is accurate with physical inventory, troubleshoot discrepancies, discover root causes and interact with everyone related to this inventory.    Purchasing Specialist: Work out deals with suppliers and compare bids to minimize cost across the supply chain.   Procurement Manager: Research, evaluate, and purchase large quantities of products for companies to resell or use in operations. Determine what is in your company’s store, ecommerce shops, and more.    Operations Analyst: Evaluate, report on, and improve the management of activities that generate recurring revenue for your organization, i.e. its core competencies.   Material Planning Manager: Plan, monitor, and manage products and the materials required to make them in your organization’s manufacturing operations. You ensure the constant flow of materials so the factory never runs out. 

Logistics Analyst: Evaluate and report on transportation of goods and services up and down your organization’s supply chain, ensuring that everything gets where it needs to go and when it needs to get there.

Top Higher Education Programs

Supply chain management is a game with global stakes, as such major universities and academies around the world offer Bachelor’s and Master’s degrees in the subject. If you want to secure a job in the sector with a Fortune 500, becoming accredited in SCM is vital. Look at some of the top schools on this list for more details on breaking into the industry:

• Cambridge University
• Copenhagen Business School
• Cranfield School of Management
• Eindhoven University of Technology
• London Business School
• Vlerick Business School

Certifications in Supply Chain Management

If a full Master’s program seems like too big a commitment, explore some of the short-term certifications available below. They give you a shot at entry level jobs if you’re inexperienced, and are a nice brush-up on current SCM standards for seasoned professionals.

• Chartered Institute of Supply Chain Management (CISCM) Chartered Supply Chain Management Professionals (CSCMP)
• Institute for Supply Management (ISM) Certified Professional in Supply Management (CPSM)
• Institute of Supply Chain Management (IOSCM)
• International Institute for Procurement and Market Research (IIPMR) Certified Supply Chain Specialist (CSCS) , Certified Procurement Professional (CPP) and Certified Supply Chain Associate (CSCA)
• International Supply Chain Education Alliance (ISCEA) Certified Demand Driven Planner (CDDP) and Certified Supply Chain Manager (CSCM)
• Association (SCMA) Supply Chain Management Professional (SCMP)
• The Association for Operations Management (APICS) Certified Supply Chain Professional (CSCP) and Certified Production and Inventory Management (CPIM)

Supply Chain Management Templates

Outside of the physical work of checking inventory, or the personal work of communicating with different members of the supply chain’s links, much of your work as a supply chain manager is using systems and dashboards to get an understanding of logistics, operations, and flows. What follows are some templates that can help manage and streamline workflow, while understanding and sharing inventory reports and more.

Download Risk Management Matrix Template

Excel  |  Word  |  PDF  |  Smartsheet

Download Stock Inventory Control Template

Excel  |  Smartsheet

‌ Download Supply Chain Dashboard Template

‌ Download Microsoft Excel Template for Choosing MRP Software

‌ Download RFP Vendor Template

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How To Do Strategic Supply-Chain Planning

• Supply Chains & Logistics

Any company that has a global supply chain should consider introducing its strategic left hand to its operational right hand. Strategic supply-chain planning that combines aspects of business-strategy formulation with aspects of tactical supply-chain planning can make each far more valuable to the planning effort than either would be alone. Strategic supply-chain planning is the Pegasus of strategy: It can soar, but it also needs to keep its feet on the ground. Although companies routinely weigh long-term supply-chain-related decisions in light of alternative sources of supply, new geographic markets or new products, various levels of management use different approaches, often in isolation. Senior managers make such decisions as part of formulating business strategy; supply-chain planners, as an extension of their tactical supply-chain planning.

How should companies ensure that relevant supply-chain details inform the business-strategy formulation and that strategic direction and the supply chain are in alignment? They can do so through early communication between senior managers and supply-chain planners, which shortens strategy-implementation time while letting each group pursue its forte: senior managers formulating strategy to maximize shareholder value; supply-chain planners running optimization models to minimize total supply-chain costs.

One Company’s Story

Consider a strategic supply-chain planning exercise at a polyvinyl chloride (PVC) manufacturer that we’ll call Acme Vinyl Co. Acme’s North American revenues came from PVC for building (55%), packaging (15%), consumer goods (10%), the electronic industry (10%), the automotive industry (4%) and from non-PVC products (6%). At the end of the 1990s about 4% of those revenues came from Asia. Acme had been seeing revenue growth for several years, mostly as a result of acquiring other PVC manufacturers.

With fragmented spare capacity around North America, a falling stock price and a need to rationalize the postacquisition supply chain, Acme’s leaders considered their options. Some favored consolidating manufacturing into one or two new mega-plants; others suggested closing existing plants or lines. Management chose to do a strategic supply-chain planning exercise to assist decision making.

The Planning Spectrum

Strategic supply-chain planning falls in the middle of a decision-making spectrum that has business-strategy formulation at one end and tactical supply-chain planning at the other. (See “Strategic Supply-Chain Planning and the Planning Spectrum.”) With a focus on fundamental changes in manufacturing and distribution capacity, it is long-term in scope and impact but can benefit from detailed optimization models and advanced planning-and-scheduling (APS) technology that is more often associated with medium- and short-term planning. Used in this strategic context, the tools help determine what would be an appropriate supply-chain configuration for sourcing and which plants or distribution centers should be closed or kept open.

Strategic Supply-Chain Planning and the Planning Spectrum

View Exhibit

Strategic supply-chain planning falls in the middle of a decision-making spectrum that has business strategy formulation at one end and tactical supply-chain planning at the other.

In contrast, tactical supply-chain planning is short- or medium-term in scope and impact, with supply-chain planners using past demand to make forecasts for the near term and adjusting these forecasts on the basis of market intelligence or planned promotions. Used in this context, optimization models and APS technology help determine where and when to produce what items and how to distribute them.

Planning Processes and Optimization

Although business-strategy formulation also uses tools and frameworks, it requires much more creativity than tactical planning. The optimum route to maximizing shareholder value is rarely obvious. It takes creative thinking and freewheeling negotiations to identify, understand and agree upon possible actions. Computers and spreadsheets support analysis, but they don’t determine strategy.

For tactical supply-chain planning, the decision options and the factors affecting them (production capacity, distribution capacity, variable costs, demand forecast) are clearly defined. The goal of minimizing total supply-chain costs — for manufacturing, storage and handling, and transportation — is narrower.

Because tactical planners can identify beforehand possible decisions and factors that might affect these decisions — and can build those elements into the software — they can use optimization models that rely on mathematical techniques. The models make recommendations that both minimize costs and help companies meet forecasted demand without exceeding production and distribution capacity. Advanced planning-and-scheduling technologies are available from several companies. 1

Business-strategy planners can’t plug clearly defined factors into software as supply-chain planners do, because strategy formulation is, in part, about trying to identify just what those factors are. But strategic supply-chain planning can benefit from appropriately used optimization models because tactical supply-chain models can be extended to include strategic decisions about closing or opening plants and distribution centers. APS vendors offer software for that purpose. The factors rarely change — production capacity, distribution capacity and variable costs. The goal of minimizing cost is extended to include the fixed costs of keeping plants and distribution centers open and the one-time costs of opening new ones and closing existing ones. These more strategic computer models can then guide decision making.

Optimization models for tactical supply-chain planning and models for strategic supply-chain planning differ only slightly in their design, but markedly in their use. Even if supply-chain planners tweak the production and distribution schedule obtained from tactical models to expedite an order to a key customer, they largely retain the model’s recommendation. In contrast, when using a strategic supply-chain model, managers are trying to determine how much the opportunity cost of a particular decision differs from the model’s recommendation.

At General Motors Corp., for instance, Electronic Data Systems Corp. consultants found that 90% of the time, GM managers used their models’ recommendations to benchmark actions that they were likely to consider. 2 The candidate decisions were based on qualitative criteria not included in the models. Creating benchmarks in this way is unique to optimization models using linear programming, a method using advanced mathematics to capture all the constraints, such as capacity, and to find the best possible recommendations that would minimize the total operating cost or some other stated objective. Such models guarantee the lowest possible supply-chain cost. Spreadsheet calculations or simulation models cannot provide that sort of benchmarking capability. 3

Use of Optimization for Strategic Supply-Chain Planning

A variety of industries have successfully implemented optimization-based tools, including one called Strategic Analysis of Integrated Logistics Systems (SAILS). 4 Baxter International Inc. used SAILS software to evaluate consolidation approaches following its 1985 acquisition of American Hospital Supply Corp. SAILS also helped Pet Inc. assess supply-chain synergies from two potential acquisitions. In another case, a personal-computer manufacturer made successful strategic use of an optimization model for its global manufacturing and distribution network. 5 GM uses a tool called Production Location Analysis NETwork System (PLANETS) to determine what products to produce —and how, when and where to make them. 6 The now defunct Digital Equipment Corp. (DEC) probably lengthened its life by using supply-chain models to decrease costs. 7

The Need for a Combined Process

Clumsy integration following mergers or acquisitions points to the dangers of relying on only one type of decision making. M&A business-strategy formulation rarely entails the use of models to optimize the supply chain before and after a merger, even though most operating costs reside in the supply chain. In one study, researchers surveyed 700 high-value international mergers and acquisitions occurring from 1996 to 1998 and found that failure to integrate supply chains was the main reason four out of five deals “failed to enhance shareholder value.” 8

Using an optimization model without a good strategy is similarly lacking. DEC’s strategic supply-chain planning system of the early 1990s improved manufacturing, distribution and service, but, without a robust business strategy, the company ultimately succumbed to acquisition by Compaq Computer Corp. 9

As supply chains become increasingly global, managers are making more strategic decisions about supply-chain design and reengineering. Thus supply-chain management has evolved from a function garnering little attention or prestige to a highly visible and respected one. 10

But improvements in tactical supply-chain planning resulting from the use of technology from advanced planning-and-scheduling software vendors has created unwarranted expectations that, with similar software, senior leaders could delegate strategic supply-chain planning to supply-chain planners. But senior executives’ aloofness from strategic supply-chain planning tools creates the same problems as ignorance of tactical advanced planning-and-scheduling tools. DEC likely relied too much on supply-chain planners. And after Nike Inc.’s $400 million APS technology implementation, $100 million in inventory got misdirected, ultimately triggering a $2.5 billion loss in market capitalization. 11

The reason that senior managers keep aloof is lack of knowledge, and even suspicion. Managers at Royal Dutch/Shell Group, for example, harbored a distrust of optimization models that biased the company against using such models in its scenario-planning processes during the early 1980s. 12 The extensive detail, rigid structure and managers’ lack of familiarity with optimization models aren’t conducive to the freewheeling discussion that strategy development needs. Moreover, because management education is focusing less on analytical strategic planning and operations research, M.B.A.s rising to the senior ranks since the mid-1980s have shown less and less interest in the technical side of management. 13

That’s why they need input from supply-chain planners who are familiar with optimization models. Only through a seamless process that encompasses those who are developing strategy and those who are using detailed supply-chain models can companies align their business strategy and their supply chain.

Scenarios and Scenario Planning

In scenario planning — a flexible process for formulating business strategy — senior managers build internally consistent, alternative views of possible future outcomes, including some that are “unthinkable,” as Herman Kahn suggested in his 1950s examination of Cold War scenarios. 14 Typically, to keep the focus on important factors in relation to the long-term future, only a few business scenarios are developed.

Building scenarios is more art than science. The creative input needed from managers differs too much from one company to another for experts to offer more than guidelines. 15 (See “Three Approaches to Scenario Planning.”) Leaders creating business strategy use “what if ” situations based on the plausible interplay of factors expected to have long-term effects. The only constraint is plausibility.

Three Approaches to Scenario Planning

The idea of strategic supply-chain planning draws mainly on three scenario-planning techniques.

Erik Larsen, professor of management and systems at London’s Cass Business School, has identified three phases of scenario planning. Scenario building involves identifying issues, driving forces and factors that produce uncertainty, then devising rough scenarios that are further fleshed out. In scenario planning, managers evaluate possible decisions, policies and strategies to determine their effects in each scenario, modifying and reevaluating them as necessary. Scanning the business environment involves checking early indicators of change in the environment to see which scenario or combination of scenarios is actually unfolding, thus enabling managers to revise and refine the decisions made earlier in Phase Two.

Consider Acme Vinyl’s scenario planning in light of Larsen’s approach. Acme managers deemed three decisions as likely candidates: first, the rationalization of existing production capacity and the closing of plants or parts of plants, while possibly expanding other plants; second, the concentration of production at one or two new megaplants; and third, the rationalization of the company’s distribution network, the closing of some distribution centers and the opening of others.

They identified four main drivers affecting the company’s prospects: macroeconomic forces that determine growth in the gross national product (GNP) of the United States and Canada and the growth of demand in most sectors; the efforts of western European governments and the European Union to phase out PVC, partly in response to Greenpeace activism; fluctuating oil prices and their impact on the cost of raw material (and the company’s margins); and the cycle of prices for PVC goods.

The managers also predicted business trends: continued U.S. construction growth; slower industrial growth in the United States, Japan and western Europe; rapid growth from 2000 through 2005 in Asia (excluding Japan); a gradual shift from PVC to packaging polymers by major Japanese and western European producers of household goods, chemicals and construction materials; and a reduced use of PVC compounds in the auto industry in western Europe.

After their analysis, the managers developed two business scenarios: a so-called “Official Future” and one referred to as “Sunrise-Sunset.” The Official Future reflected senior managers’ belief that, for at least four or five years, the company’s business would grow at the same rate as the GNP growth of the United States and Canada (about 2% per year). Some sectors, such as electronics and consumer goods, would continue to grow faster than others. Asian demand (excluding Japan) — a small proportion of Acme’s total North American production — would grow as the GNP of Asian countries grew and as Acme achieved greater market penetration. Those trends would continue for 20 years, and U.S. government policies would remain favorable to the PVC industry regardless of which political party was in power. The electronics and consumer-goods businesses and growth in Asian demand would eventually slow down.

The Sunrise-Sunset scenario anticipated that events in western Europe and Japan would lead to a downturn in the U.S. and Canadian PVC industry. Concerned about dioxin emissions from the burning of PVC, state governments would begin to file lawsuits against PVC manufacturers and garbage-incineration companies. Non-PVC polymer production would gain in importance. Meanwhile, a new day would dawn for PVC exports to Asia, where an overwhelming need for buildings, water and sewer lines would increase demand for 20 years despite environmental issues. The total market would expand and Acme would see its market penetration increase, especially in India, China, Thailand and Indonesia, where Acme might even need to build or acquire plants.

Middle Ground

The ideal process adds a step between business-scenario creation and final decisions: using supply-chain planners’ optimization models. (See “Strategic Supply-Chain Planning Using Scenario Planning.”) For each of the business scenarios, supply-chain planners can create multiple detailed model scenarios to run with their supply-chain optimization models. The result: a supply-chain configuration that minimizes the total fixed and variable, long-term supply-chain costs for the particular business scenario.

Strategic Supply-Chain Planning Using Scenario Planning

The senior team, which uses brainstorming and other hard-to-measure approaches to formulate strategies that increase shareholder value, combines its strengths with those of supply-chain planners, who rely on optimization software to reduce supply-chain costs.

How do these model scenarios of supply-chain planning differ from the more familiar business scenarios of scenario planning? Model scenarios feature an array of demand forecasts and tactical production configurations (extra shifts, planned maintenance and the like). The underlying factors are built into optimization models for use with advanced planning-and-scheduling software. Creating model scenarios is straightforward and involves little creativity or discussion. It is similar to a company taking a macro business scenario and creating micro scenarios for business units or regions. 16 Only convenience and the time it takes to solve a model scenario constrains how many a company can have for each business scenario.

Linking each business scenario to multiple model scenarios and uniting the creative work of strategy formulation with the analytical, optimization-model approach results in a powerful synergy with “right brain” strategizing joined to “left brain” planning. 17

Phase One: Scenario Building

In Phase One, the strategy team identifies the candidate decisions and their attendant uncertainties, then outlines business scenarios. The supply-chain team develops or modifies its supply-chain model on the basis of input from the strategy team regarding possible decisions. The two teams then validate the model. The strategy team garners useful information about the supply chain and updates its notions about how long-term supply-chain configurations affect total supply-chain cost. Next, the strategy team fleshes out the business scenarios using this information and data-on-demand forecasts, plant locations, distribution centers and so on. Finally, the supply-chain team develops multiple model scenarios for each business scenario to run through its software.

After developing the Official Future and Sunrise-Sunset scenarios, Acme’s strategy team met with the supply-chain team. The teams agreed that the supply-chain group should make recommendations for both scenarios to reconfigure the supply chain to minimize the cost of manufacturing, distribution, the closing of old plants and the establishment of new ones. They identified possible locations for megaplants and determined which of the existing plants could be altered or closed; they also identified 14 product families that, in aggregate, totaled several hundred products. Then the supply-chain team, focusing on demand for North American production, developed model scenarios.

Phase Two: Scenario Planning

In Phase Two, the supply-chain team runs the model scenarios and makes scenario-specific recommendations. Then the strategy team modifies its pool of possible decisions, finally choosing one that it then shares with other managers.

Acme’s supply-chain team used software from an APS vendor and ran model scenarios requested by the strategy team. The latter group weighed the resulting recommendations with factors relating to the long-term profitability of the business. As a result, Acme decided to spin off part of the vinyl business as a joint venture with a supplier; it also chose to merge with a non-PVC polymer company.

Phase Three: Scanning the Business Environment

In Phase Three, the strategy team identifies leading indicators (in the case of a company like Acme, it might be housing starts) that enable early detection of which scenario or combination of scenarios is actually unfolding. When the strategy team has determined which scenario is occurring, it informs the supply-chain team. With the new information, that group revises the scenarios and runs the model again to fine-tune its recommendations. The strategy team then revises its decisions and shares them widely so they can be acted on.

Upsides and Downsides

Acme preserved shareholder interests following the exercise and the merger, its stock price remaining level despite the plunging prices of other chemical stocks during the same period. Having executives who formulate business strategy participate in scenario planning was critical to the final decisions, which undoubtedly would have been different had the company used only supply-chain optimization modeling.

But even without optimization-based planning, scenario planning would have elicited the same decision regarding the merger. The main benefit of optimization lies in refining the decisions that emerge from scenario planning, including rationalizing the supply chain.

Whenever a company considers a merger, it must evaluate its own assets accurately (in addition to its target’s) so that its shareholders get the best deal. Acme’s main assets were plants and long-term customer contracts, and supply-chain modeling and optimization helped senior managers understand which, in a merger, could be spun off to increase Acme’s value.

Like any other management tool, however, both scenario planning and optimization modeling can have their downside. Some managers become seduced by colorful future possibilities in scenario planning when they should be focusing on the trends, underlying factors and uncertainties relevant to genuinely possible decisions. Others remain aloof, relying first on consultants and later ignoring the scenarios when making decisions. Similarly, development of a strategic supply-chain planning optimization model sometimes serves no practical use, becoming unwieldy or taking too long to complete because of multiple motives.

Still, the joint use of scenario planning and optimization models is the better road to shareholder value — more effective than using either approach in isolation. Strategic supply-chain planning, like Pegasus, is more than the sum of its parts.

About the Author

ManMohan S. Sodhi is an associate professor of supply-chain management at Cass Business School in London. Contact him at [email protected] .

1. Suppliers of APS technologies include SAP, i2 Technologies, Manugistics and Logility.

2. R.L. Breitman and J.M. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

3. Optimization models can be built into spreadsheets by using the Solver feature within Excel, for instance, or by using add-on software, but these models are not comprehensive enough to take into account the scope and detail needed for a global supply-chain model. For such optimization, the cost of APS software, including implementation, may exceed $1 million.

4. A.M. Geoffrion and R.F. Powers, “Twenty Years of Strategic Distribution System Design: An Evolutionary Perspective,” Interfaces 25 (September–October 1995): 105–127.

5. M.A.. Cohen and H.L. Lee, “Strategic Analysis of Integrated Production-Distribution Systems: Models and Methods,” Operations Research 36, no. 2 (1988): 216–228; and M. Cohen and H. Lee, “Resource Deployment Analysis of Global Manufacturing and Distribution Networks,” Journal of Manufacturing and Operations Management 2, no. 2 (1989): 81–104.

6. R. Breitman and J. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

7. B. Arntzen, G. Brown, T. P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93.

8. A. Macdonald and D. Beavis, “Seize the Moment — Radical Supply Chain Integration as a Means of Increasing Shareholder Value and Enabling Acquisitions To Deliver on Their Promises,” Manufacturing Engineer 80, no. 4 (2001): 175–178; C. Farrell and R. Melcher, “The Lofty Price of Getting Hitched,” Business Week, Dec. 7, 1997; and D. Henry, “Mergers: Why Most Big Deals Don’t Pay Off,” Business Week, Oct. 14, 2002, 72–78.

9. B. Arntzen, G. Brown, T.P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93; J. Muller, “Compaq Will Buy Digital in a Record $9.6b Deal,” Boston Globe, Jan. 27, 1998, p. A1; and “Compaq To Acquire Digital for $9.6 Billion,” Compaq press release, Jan. 26, 1998, New York, http://h18020.www1.hp.com/newsroom/pr/1998/pr260198c.html.

10. D.J. Frayer and R.M. Monczka, “Enhanced Strategic Competitiveness Through Global Supply Chain Management,” Annual Conference Proceedings of the Council of Logistics Management (Oak Brook, Illinois: Council of Logistics Management, October 1997): 433–441.

11. J. Greenbaum, “SCM Is Dead, Long Live SCM,” July 16, 2002, http://itmanagement.earthweb.com/columns/entad/article.php/1407831.

12. A.P. de Geus, “The Living Company” (Harvard Business School Press: Boston, 1997), 69.

13. H. Mintzberg, “The Rise and Fall of Strategic Planning” (New York: Free Press, 1994).

14. See M. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance” (Free Press: New York, 1985); B. Melzer, “The Uncertainty Principle,” CIO Insight, June 1, 2001, www.cioinsight.com; and H. Kahn, “Thinking About the Unthinkable” (New York: Horizon Press, 1962).

15. E. Larsen, “What Is Scenario Planning?” teaching note, Cass Business School, London, 2000; P. Schwarz, “The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company” (New York: Doubleday, 1991); P.J.H. Schoemaker, “Multiple Scenario Development: Its Conceptual and Behavioral Foundation,” Strategic Management Journal 14 (March 1993): 193–213; and P.J.H. Schoemaker, “Scenario Planning: A Tool for Strategic Thinking,” Sloan Management Review 36 (winter 1995): 25–40.

16. T.F. Mandel and I. Wilson, “How Companies Use Scenarios: Practices and Prescriptions,” SRI International, Menlo Park, California, report no. 822, spring 1993.

17. H. Mintzberg, “Planning on the Left Side and Managing on the Right,” Harvard Business Review 54 (July–August 1976): 49–59. Also published as H. Mintzberg, “Planning on the Left Side, Managing on the Right,” in “Mintzberg on Management: Inside Our Strange World of Organizations” (New York, Free Press, 1989), pp. 43–55.

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What is supply chain planning?

• Demand-Driven Material Requirements Planning
• Demand Forecasting
• Inventory Optimization
• Response and Supply Planning
• Sales and Operations Planning

Supply chain planning: What it is and how it's used

Supply chain planning optimizes the manufacturing and delivery of goods – from raw materials to finished products, and from suppliers all the way to customers. Essentially, it’s a demand-driven balancing act between shortage and surplus.

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Supply chain planning overview

In the past few years, a big chunk of our small talk has shifted from “looks like rain” to “how about these supply chain problems?” Of course, the pandemic was the cause of much of that disruption…but not the only cause. With the rise of AI, the ubiquity of online and omnichannel shopping, and the generally supersonic pace of social and technological change – it’s no wonder that supply chain planning is today, one of the most deeply affected and vulnerable operational areas.

To compete, modern supply chain planners must be responsive, accurate, and agile if they want to keep up with fast-shifting customer demands, heightened competition, and unpredictable global events.

People tend to focus mostly on inventory and logistics when they think of supply chain planning. But of course, it’s so much more than that. For physical products and manufacturing, it starts way back with managing the suppliers who grow and mine raw materials, and goes right up to the moment an item is delivered to a shelf or a front door – and even beyond, to returns, recycling, and reverse logistics. Supply chain planning is also informed by consumers at every level: their shopping habits, their reviews and feedback, and their ever-changing shopping behaviours.

Components of the supply chain planning process

The best integrated solutions can help you optimize, coordinate, and centralize the core aspects of supply chain planning. Following are key functionalities that can be used as stand-alone solutions, but are more powerful when combined:

Demand forecasting

It goes without saying that improving demand forecasting and demand management are key to better integrated business planning. Companies rely upon accurate demand predictions to manage their entire range of supply chain operations, from raw materials sourcing to last mile delivery and fulfillment.

As a vital part of effective supply chain planning, demand forecasting helps businesses avoid costly surplus and anticipate customer needs to maximize profits.

Inventory management

Inventory management allows you to meet service level targets without carrying or paying for more inventory than you actually need. To simplify a complex distribution network and respond to demand variability, organizations must first learn how to master these inventory challenges. Integrated, cloud-based planning solutions give you a single, unified view of inventory, using complementary data sets and advanced analytics to help give more precise predictive recommendations.

Response and supply planning

The best practices of response and supply planning help organizations meet their operational challenges through intelligence supplied by AI and machine learning. This creates a business supply chain that is more resilient , efficient, and adaptable.

Sales and operations planning (S&OP)

Sales and operations planning offers you the opportunity to make better decisions that are informed by key supply chain drivers, such as sales, production, inventory, and marketing. Improving your S&OP process involves using better data, rigorously defining your performance metrics, and aligning goals and objectives company-wide to ensure that clear roles and expectations are developed, defined, and carried through.

Demand-driven replenishment (DDMRP)

Materials procurement has traditionally been driven by analysis of past demand data – an approach that has obvious limitations in times of demand fluctuation and uncertainty. Today’s solutions, however, include predictive models. Demand-driven material requirements planning (DDMRP) – an extension of traditional MRP – helps organizations become more agile and adaptable without compromising the quality of their product.

Supply chain monitoring

At the center of your supply chain lies a data dashboard known as the supply chain control tower that offers real-time end-to-end visibility of every component of your supply chain. With AI , machine learning , and collaborative information sharing, today’s supply chain monitoring provides insights that can improve every stage of your supply chain and manufacturing process.

From supply chain planning to integrated business planning (IBP)

Traditional supply chain technologies and manual processes are simply no match for modern demands for speed, visibility, and agility. Business planning solutions had to evolve to meet these needs by incorporating powerful AI-driven optimization algorithms, advanced analytics, and real-time forecasting capabilities -- allowing businesses to adjust their plans dynamically and optimize their supply chain performance on demand. And just as importantly, planning solutions needed to become truly integrated, to take full advantage of each aspect of supply chain planning technology.

Cloud-based solutions offer scalability and flexibility, allowing organizations to accommodate business growth and seamlessly integrate with third-party systems. This delivers a holistic view of the supply chain, facilitating collaboration among different teams and stakeholders, and breaking down silos that hindered efficient planning processes in the past.

By streamlining supply chain planning processes, integrated planning solutions help businesses improve operational efficiency and navigate the complexities of today's supply chain landscape.

Successful supply chain planning examples

One of the best ways to see how incorporating new technology solutions can lead to better supply chain planning is by looking at companies that have already done it. Here are case studies of global businesses that have successfully integrated new technologies and approaches to optimize their supply chain strategies and planning.

1. Deutsches Rotes Kreuz (DRK) / German Red Cross (of Saxony)

With only two weeks between the signing of the contract and the go-live, the Deutsches Rotes Kreuz Landesverband Sachsen e.V (German Red Cross State Association of Saxony) was given the monumental task of planning, launching, and running a state-wide COVID-19 vaccination program. This included complex and sensitive supply chain and logistical issues related to the procurement, transport, and storage of these essential vaccines. This local DRK association reacted quickly to various sets of changing circumstances, including supply chain shortages and delivery delays, all while maintaining strict safety and data protection standards. To manage these challenges and get vaccines into Saxony’s four million arms on time, the DRK used SAP Vaccine Collaboration Hub, which is based around the key components of integrated business planning solutions. When run on cloud ERP and analytics solutions, it offered the coordination and planning team end-to-end visibility of the vaccine supply chain, allowing them to make more accurate plans based on resource availability. From there, it integrated SAP Vaccine Collaboration Hub with existing third-party vaccine appointment management software to help citizens plan their visits based on real-time resource availability. The solution even allowed the association to prioritize first and second shots based on need, to ensure the most vulnerable were protected.

Through better forecasting models, businesses can achieve more responsive integrated business planning and, in turn, improve resilience and agility.

When a customer needs a new mattress, they don’t want it in weeks – they need it in days. Zinus, Inc. is a South Korean mattress manufacturer dedicated to offering customers in-home comforts faster than any competitors. The only way that it can make this happen is with a more resilient and transparent supply chain. To help accelerate growth and keep the company agile while offering consumers the reliable customer service they expect, Zinus sought to improve visibility across its supply chain. This visibility would allow it to make improvements to the supply chain overall, leading to increased agility in response to customer demands and market trends. The easiest way for Zinus to adopt these central tenets of integrated business planning was to take advantage of customized supply chain software applications. Their automation and integration capabilities allowed Zinus to reduce manual work and automate many aspects of demand forecasting, inventory planning, and even sales and operations. The solutions were natively integrated with a powerful ERP, allowing them to be quickly factored into company-wide decision-making. After adjusting to the new applications, Zinus was able to harmonize their planning and execution, thanks to improved forecast accuracy and optimized planning results from responsive forecast algorithms. These powerful supply chain analytics empowered their team, allowing them to make more informed, proactive, and transparent decisions.

3. Orkla Food Ingredients

If you’ve ever been to Europe and have enjoyed the taste of a fresh bakery bun or decadent ice cream, chances are you have experienced some of the products supplied by Orkla Eesti AS . This Estonian confectionery company was established in 1806 and since then has developed a massive line of products manufactured out of its two Estonian factories. To continue providing customers with high-quality products where and when they need them, Orkla sought to automate and standardize a wide range of its supply chain processes. To do this, it required flexible and responsive modern software solutions that could offer real-time supply chain insights. The goal of this new scalable solution was to provide company leadership with integrated business planning components that were easy to access and could be simultaneously rolled out across multiple countries. Using integrated business planning tools, project leaders leveraged a standard solution for demand planning that offered comprehensive business process knowledge and expertise. The result was a 100% improvement in supply chain transparency, with a 7% increase in company-wide planning accuracy. Having reliable, transparent data has significantly reduced redundant work, made the decision-making process more consistent, and allowed for optimized costs, enabling the company to pass these savings on to its customers.

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Perspectives on supply chain planning

Explore this collection of key insights on how supply chain planning can help improve operations and navigate complexities.

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A Simpler Way to Modernize Your Supply Chain

• David Simchi-Levi
• Kris Timmermans

Conventional wisdom says it takes three to five years and tens of millions of dollars to digitize a corporation’s supply chain. However, a few companies have reaped major benefits—including higher revenue and customer retention—with a faster, cheaper approach. It involves assembling available data; using analytics to understand and predict customers’ and suppliers’ behavior and optimize inventory, production, and procurement; and adding automation to revamp or introduce processes. The transformation requires three main initiatives: replacing consensus forecasts with one unified view of demand, changing one-size-fits-all supply strategies to segmented ones, and creating a plan to continually balance supply and demand and manage deviations or disruptions.

How to spend less and accomplish more

Idea in Brief

The conventional wisdom.

Digitizing a company’s system for managing its supply chain is a megatransformation project that takes three to five years and costs tens of millions of dollars.

The Reality

There is an alternative: Substantial benefits can be reaped from a modernization effort that takes 12 to 24 months and costs a few million dollars.

What It Entails

Assembling readily available data; using advanced analytics to understand and predict customers’ and suppliers’ behavior and to optimize inventory, production, and procurement decision-making; and adding some automation to revamp existing processes and introduce new ones.

Most executives believe that digitizing a major corporation’s supply chain costs tens of millions of dollars. The assumption is that it will be a massive three- to five-year transformation effort—requiring major investments in cloud technology, the installation of RFID tags and readers on every product container and in every facility, the deployment of 3D-printing and robotics technologies, and new instruments on machines on the shop floor to monitor their performance and condition. All that is necessary, the thinking goes, to break down the walls between functional areas and create an integrated supply chain that provides a competitive advantage.

• David Simchi-Levi is a professor of engineering systems at Massachusetts Institute of Technology and the head of the MIT Data Science Lab.
• Kris Timmermans is a senior managing director at Accenture and the head of its supply chain and operations practice. Connect with him on LinkedIn .

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A 6-step Guide to Create an Effective Supply Chain Management Plan

October 5, 2023

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Supply chain management is the foundation of any thriving business. It serves as the intricate web connecting suppliers, manufacturers, distributors, and customers. In today's hyper-connected global markets, streamlining and optimizing your supply chain is not only an option; but a strategic necessity. A well-crafted supply chain management strategy can be the defining factor between excelling in a competitive marketplace or grappling with customer satisfaction and cost control challenges.

In this comprehensive blog, we will demystify the intricacies of supply chain management and provide you with a step-by-step guide encompassing six essential actions to craft an efficient supply chain management plan.

According to Invesp, the majority, or 79%, of companies excelling in their supply chain management experience revenue growth surpassing the industry average.

Why Businesses Need an Effective Supply Chain Management Plan 

An effective supply chain management plan is indispensable for businesses due to several compelling reasons.

• Operational Efficiency: An effective supply chain management plan streamlines the movement of goods and services, reducing operational bottlenecks and ensuring smooth processes.
• Risk Mitigation: Businesses can proactively address disruptions in the supply chain, minimizing potential setbacks and ensuring continuity in operations.
• Data-Driven Decision-Making: Supply chain analytics empower data-driven decision-making, offering valuable strategic planning and adaptability insights.
• Resilience: It enhances a business's ability to weather unforeseen challenges and market fluctuations, contributing to long-term resilience and sustainability.
• Cost Reduction: This leads to significant cost savings by optimizing inventory levels, transportation, and procurement, contributing to improved profitability.
• Customer Satisfaction: Timely deliveries and product availability, facilitated by a well-managed supply chain, enhance customer satisfaction and foster brand loyalty.
• Competitive Edge: A robust supply chain management plan is crucial for staying competitive in the modern business landscape, where responsiveness and efficiency are key to success.

6 Steps to Create an Effective Supply Chain Management Plan

Here are the key steps to design a supply chain management plan to enhance operational efficiency and meet customer demands effectively.

1. Define Clear Objectives and Goals

Start by establishing well-defined objectives and goals that align with the organization's broader mission, vision, and strategic direction. These objectives should adhere to the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound). 

Goals should not only reflect the company's values but also consider market demands, customer expectations, and competitive positioning. Objectives might encompass improving efficiency, cost reduction, customer satisfaction, inventory optimization, or sustainability. Ensuring alignment with the organization's overall goals is essential for the supply chain plan to effectively contribute to the company's success. 

2. Conduct In-Depth Market Analysis

The next critical step involves conducting a thorough market analysis. This entails a comprehensive study of market trends, demand patterns, and competitor strategies to gain valuable insights. Analyze consumer behaviors, economic fluctuations, technological advancements, and regulatory changes impacting the industry. Comprehend the dynamics of the supply and demand chain and identify potential risks and opportunities.

A comprehensive market analysis informs decisions related to production volumes, inventory management, supplier selection, and distribution channels. It also ensures that the supply chain strategy remains agile and responsive to evolving market dynamics, helping the organization maintain its competitive edge. Regularly reviewing and updating this analysis is crucial for adapting the supply chain management plan as the market evolves.

Is the supply chain different from logistics?

Yes, supply chain and logistics are related but distinct concepts. The supply chain encompasses a broader network, including procurement, production, distribution, and logistics, focused specifically on transporting, storing, and distributing goods. Click here to know how 'A Global Logistics Shipment Solutions Provider Successfully Improved Efficiency Levels with Our Support.'

3. Design an Efficient Supply Chain Network

After market analysis, the third step involves designing an efficient supply chain network. This entails optimizing the sourcing, manufacturing, warehousing, and distribution structure. Evaluate factors like location, capacity, and technology to streamline goods' flow and minimize costs. 

Consider proximity to suppliers and customers, transportation routes, and consolidation hubs. Employ technology and modeling tools to simulate network configurations and scenarios for data-driven decisions. Aim for a network balancing cost-efficiency with responsiveness. Include contingency plans for disruptions and resilience. Collaborate with stakeholders and seek feedback for design fine-tuning, setting the stage for optimized operations and customer satisfaction.

4. Carefully Select Suppliers and Partners

Following network design, the fourth step is meticulous supplier and partner selection. Identify suppliers meeting quality, reliability, cost-effectiveness, and ethical criteria. Evaluate financial stability, capacity, delivery timelines, and track record. Establish clear communication and expectations for mutual benefit. 

Consider strategic partnerships for collaboration and innovation, negotiating contracts with terms, conditions, pricing, and metrics. Prioritize trust, transparency, and shared goals in long-term relationships. Regularly review supplier performance, diversifying sources to mitigate risks, enhancing supply chain resilience and efficiency.

5. Develop Robust Inventory and Demand Management Strategies

The fifth step involves developing strong inventory and demand management strategies. Categorize products based on demand patterns and criticality. Implement just-in-time (JIT) or just-in-case (JIC) approaches for optimized stocking and reduced carrying costs while ensuring availability.

Leverage forecasting models, historical data, and market trends for accurate demand predictions. Collaborate with sales and marketing to align forecasts with activities. Employ technology and demand planning software for enhanced accuracy. Establish efficient order management with automation and digital tools. Use data analytics to identify slow-moving or obsolete inventory, taking timely action. 

Regularly review and update these strategies to match market dynamics and preferences. Effective inventory and demand management optimize stock, cash flow, and customer satisfaction.

6. Implement Performance Metrics and Continuous Improvement Processes

The sixth step involves implementing performance metrics and continuous improvement processes for ongoing enhancements. Set KPIs aligned with objectives: cost efficiency, on-time delivery, inventory turnover, customer satisfaction, and sustainability. Track and analyze these metrics regularly.

Promote a culture of continuous improvement, fostering collaboration, innovation, and best practice sharing. Conduct reviews to identify inefficiencies and use methodologies like Six Sigma or lean principles. Encourage open communication and feedback loops for proactive problem-solving. Embrace emerging technologies for a competitive edge.

By measuring performance, nurturing a culture of improvement, and using data-driven insights, refine and adapt the supply chain to evolving business needs, resulting in a more effective supply chain management plan.

Supply Chain Management future is on the edge of transformative changes, propelled by cutting-edge technologies such as IoT, blockchain AI and data analytics. These groundbreaking innovations hold the potential to usher in a new era of heightened visibility, unparalleled efficiency, and enhanced sustainability within the SCM landscape.

Nonetheless, these advancements also bring forth novel challenges, encompassing cybersecurity vulnerabilities, apprehensions regarding data privacy, and the essential task of upskilling the workforce. Hence, to adeptly navigate this intricate terrain, forging partnerships with industry authorities emerges as an imperative strategy. 

At Invensis , we bring specialized insights and a wealth of experience to optimize supply chain operations, identify and mitigate risks, and harness emerging technologies. Reach out to us to stay ahead of the curve and safeguard your operations against evolving threats and challenges with our supply chain and logistics BPO services .

Mark Anderson is an esteemed supply chain and logistics partner with a wealth of experience spanning more than a decade. His mastery in optimizing supply chain operations across diverse industries has made him a trusted resource for businesses seeking efficiency and cost-effectiveness. Mark excels at translating intricate logistical challenges into pragmatic strategies that drive collaboration among departments. As a prolific writer, Mark delivers clear and concise insights, empowering businesses to navigate the complex world of supply chain management with confidence.

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• What Is Supply Chain Management?
• How SCM Works

5 Phases of Supply Chain Management

Types of supply chain models, example of scm, the bottom line.

• Supply Chain

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

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.

Key Takeaways

• Supply chain management (SCM) is the centralized management of the flow of goods and services to and from a company and includes all of the processes involved in transforming raw materials and components into final products.
• By managing the supply chain, companies can cut excess costs and deliver products to the consumer faster and more efficiently.
• Good supply chain management can help prevent expensive product recalls and lawsuits as well as bad publicity. 
• The five most critical phases of SCM are planning, sourcing, production, distribution, and returns.
• A supply chain manager is tasked with controlling and reducing costs and avoiding supply shortages.

Investopedia / Alex Dos Diaz

How Supply Chain Management Works

Supply chain management represents an ongoing effort by companies to make their supply chains as efficient and economical as possible.

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of a product . By managing the supply chain, companies can cut excess costs and needless steps and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories , internal production, distribution , sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market does so as the result of efforts by multiple organizations that make up a supply chain. Although supply chains have existed for ages, most companies have only recently paid attention to them as a value-add to their operations.

A supply chain manager's job is not only about traditional logistics and purchasing but finding ways to increase efficiency and keep costs down while also avoiding shortages and preparing for unexpected contingencies. Typically, the SCM process consists of these five phases:

To get the best results from SCM, the process usually begins with planning to match supply with customer and manufacturing demands. Companies must try to predict what their future needs will be and act accordingly. This will take into account the raw materials or components needed during each stage of manufacturing, equipment capacity and limitations, and staffing needs. Large businesses often rely on enterprise resource planning (ERP) software to help coordinate the process.

Effective SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails working with vendors to supply the materials needed throughout the manufacturing process. Different industries will have different sourcing requirements, but in general, SCM sourcing involves ensuring that:

• The raw materials or components meet the manufacturing specifications needed for the production of the goods.
• The prices paid the vendor are in line with market expectations.
• The vendor has the flexibility to deliver emergency materials due to unforeseen events.
• The vendor has a proven record of delivering goods on time and of good quality.

Supply chain management is especially critical when manufacturers are working with perishable goods. When sourcing goods, companies should be mindful of lead times and how well equipped a supplier is to meet their needs.

Manufacturing

This is the heart of the supply chain management process, where the company uses its machinery and labor to transform the raw materials or components it has received from its suppliers into something new. This final product is the ultimate goal of the manufacturing process, though it is not the final stage of supply chain management.

The manufacturing process may be further divided into sub-tasks such as assembly, testing, inspection, and packaging. During the manufacturing process, companies must be mindful of waste or other factors that may cause deviations from their original plans. For example, if a company is using more raw materials than planned and sourced for due to inadequate employee training, it must rectify the issue or revisit the earlier stages in SCM.

Once products are made and sales are finalized, a company must get those products into the hands of its customers. A company with effective SCM will have robust logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of its products.

This includes having a backup or diversified distribution methods should one method of transportation temporarily be unusable. For example, how might a company's delivery process be impacted by record snowfall in distribution center areas?

The supply chain management process concludes with support for the product and customer returns. It's bad enough when a customer needs to return a product, but even worse if that's due to an error on the company's part. This return process is often called reverse logistics, and the company must ensure it has the capabilities to receive returned products and correctly assign refunds for them. Whether a company is conducting a product recall or a customer is simply not satisfied with the product, the transaction with the customer must be remedied.

Returns can also be a valuable form of feedback, helping the company to identify defective or poorly designed products and to make whatever changes are necessary. But without addressing the underlying cause of a customer return, the supply chain management process will have failed, and future returns will likely persist.

Supply chain management does not look the same for all companies. Each business has its own goals, constraints, and strengths that will shape its SCM process. These are some of the models a company can adopt to guide its supply chain management efforts.

• Continuous flow model: One of the more traditional supply chain methods, this model is often best for mature industries. The continuous flow model relies on a manufacturer producing the same good over and over and expecting customer demand will show little variation.
• Agile model: This model is best for companies with unpredictable demand or custom-order products. This model prioritizes flexibility, as a company may have a specific need at any given moment and must be prepared to pivot accordingly.
• Fast model: This model emphasizes the quick turnover of a product with a short life cycle. Using a fast chain model, a company strives to capitalize on a trend, quickly produce goods, and ensure the product is fully sold before the trend ends.
• Flexible model: The flexible model works best for companies affected by seasonality . Some companies may have much higher demand requirements during peak season and low volume requirements in others. A flexible model of supply chain management ensures that production can easily be ramped up or wound down.
• Efficient model: For companies competing in industries with very tight profit margins, a company may strive to get an advantage by making its supply chain management process the most efficient. This includes utilizing equipment and machinery in the most ideal ways in addition to managing inventory and processing orders most efficiently.
• Custom model: If any model above doesn't suit a company's needs, it can always turn toward a custom model. This is often the case for highly specialized industries with high technical requirements, such as an automobile manufacturer.

Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. decided to transform its supply chain by investing in technology to streamline the entire process. That included using big data , collected from its 9,000 stores and 20,000 suppliers, to help improve its forecasting capabilities and better manage sales and inventory. In 2019 it appointed its first-ever chief supply chain officer, a key leadership role in the company.

The company has also incorporated supply chain management into its environmental, social, and governance (ESG) initiatives, including those involving human rights, animal testing, sustainability, and transparency regarding product ingredients.

Why Is Supply Chain Management Important?

Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand. At the same time, control over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides multiple opportunities for companies to improve their profit margins and is especially important for businesses with large and international operations.

How Are Ethics and Supply Chain Management Related?

Ethics has become an increasingly important aspect of supply chain management, so much so that a set of principles called supply chain ethics was born. Many investors today want to know how companies produce their products, treat their workforce, and protect the environment. As a result, companies respond by instituting measures to reduce waste, improve working conditions, and lessen their impact on the environment—all of which can involve SCM.

How Much Do Supply Chain Management Jobs Pay?

Supply chain managers across the United States had average annual salaries in the range of $109,645 to $140,513 as of December 2023, according to the website Salary.com.

A supply chain starts with the ordering of raw materials or components from a supplier and ends with the delivery of a finished product or service to the end consumer. In supply chain management, every link in that chain may offer an opportunity to add value or reduce inefficiency. A well-run SCM program can increase a company's revenues, decrease its costs, and bolster its bottom line .

Cision PR Newswire. " Walgreens Transforms Supply Chain Management with Kyvos, Tableau, and Big Data ."

Walgreens Boots Alliance. " Walgreens Boots Alliance Announces Key Leadership Appointments Live ."

Walgreens Boots Alliance. " Environmental, Social & Governance. "

Salary.com. " Supply Chain Manager Salary in the United States ."

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Supply chain management is the handling of the entire production flow of goods or services—starting from the raw components to delivering the final product to consumers. A company creates a network of suppliers that move the product from raw materials suppliers to organizations that deal directly with users.

Effective supply chain management systems minimize cost, waste and time in the production cycle. The industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers. Retailers can then restock shelves almost as quickly as they sell products. One way to further improve on this process is to analyze the data from supply chain partners to see where to improve further.

By analyzing partner data, CIO identifies three scenarios where effective supply chain management increases value to the supply chain cycle: 1

Identifying potential problems

When a customer orders more products than the manufacturer can deliver, the buyer can complain of poor service. Through data analysis, manufacturers might be able to anticipate the shortage before the buyer is disappointed.

Optimizing price dynamically

Seasonal products have a limited shelf life. At the end of the season, retailers typically scrap these products or sell them at deep discounts. Airlines, hotels and others with perishable “products” typically adjust prices dynamically to meet demand. By using analytic software, similar forecasting techniques can improve margins, even for hard goods.

Improving the allocation of “available to promise” inventory

Analytical software tools help to dynamically allocate resources and schedule work based on the sales forecast, actual orders and promised delivery of raw materials. Manufacturers can confirm a product delivery date when buyers place orders—significantly reducing incorrectly-filled orders.

This guide summarizes what sustainability-forward organizations look for in their ESG software platform to help achieve their goals.

Register for the guide to the EU's CSRD

Most experts and practitioners refer to five critical components of supply chain management:

Plan and manage all resources required to meet customer demand for a company’s product or service. When the supply chain is established, determine metrics to measure whether the supply chain is efficient, effective, delivers value to customers and meets company goals.

Choose suppliers to provide the goods and services needed to create the product. Then, establish processes to monitor and manage supplier relationships. Key processes include: ordering, receiving, managing inventory and authorizing supplier payments.

Organize the activities required to accept raw materials, manufacture the product, test for quality, package for shipping and schedule for delivery.

Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and receive payments.

Create a network or process to take back defective, excess or unwanted products.

The supply chain is the most obvious “face” of the business for customers and consumers. The better and more effective a company’s supply chain management is, the better it protects its business reputation and long-term sustainability.

IDC defines supply chain management by identifying the five Cs of the effective supply chain management of the future: 2

• Connected: Accessing unstructured data from social media, structured data from the Internet of Things (IoT) and more traditional data sets available through traditional enterprise resource planning (ERP) and business-to-business (B2B) integration tools.
• Collaborative: Improving collaboration with suppliers increasingly means the use of cloud-based commerce networks to enable multi-enterprise collaboration and engagement.
• Cyber-aware:  Hardening systems and protecting them from cyber-intrusions and hacks is a crucial enterprise-wide concern for the supply chain.
• Cognitively enabled:  Collating, coordinating, and conducting decisions and actions across the chain, the AI platform serves as the modern supply chain's control tower, enabling most of the supply chain to be automated and self-learning.
• Comprehensive: Scaling analytics capabilities with data in real time to ensure that insights are comprehensive and fast is critical, as latency is unacceptable in the future supply chain.

Many supply chains have begun this process, with participation in cloud-based commerce networks at an all-time high and with major efforts underway to bolster analytics capabilities.

While yesterday’s supply chains focused on the availability, movement and cost of physical assets, today’s supply chains are about the management of data, services and products bundled into solutions. Modern supply chain management systems are about much more than just where and when. Supply chain management affects product and service quality, delivery, costs, customer experience and ultimately, profitability.

As recently as 2017, a typical supply chain accessed 50 times more data than just five years earlier. However, experts analyze less than a quarter of this data. That means the value of critical, time-sensitive data—such as information about weather, sudden labor shortages, political unrest and microbursts in demand—can be lost.

Modern supply chains take advantage of massive amounts of data that the chain process generates and that analytical experts and data scientists curate. Future supply chain leaders and the ERP systems they manage will likely focus on optimizing the usefulness of this data—analyzing it in real time with minimal latency.

With IBM Services®, you can evolve your supply chain processes into intelligent workflows to reach new levels of responsiveness and innovation. Challenge siloed processes to uncover efficiencies and enable your teams to execute and deliver. Use emerging technologies like AI and blockchain to unlock opportunities in every step of the value chain—from demand planning to order orchestration and fulfillment.

A supply chain control tower is traditionally defined as a connected, personalized dashboard of data, key business metrics and events across the supply chain.

Order management is the tracking of orders from inception to fulfillment, and the management of the people, processes and data connected to the order as it moves through its lifecycle.

Inventory management, a critical element of the supply chain, is tracking inventory from manufacturers to warehouses and from these facilities to the point of sale.

EDI is the intercompany communication of business documents in a standard format. It is a standard electronic format that replaces paper-based documents such as purchase orders or invoices.

Supply chain analytics helps to make sense of the massive amounts of data a supply chain generates by uncovering patterns and generating insights.

Supply chain optimization makes use of technology and resources like blockchain, AI and IoT to maximize efficiency and performance in a supply network.

Blockchain for supply chain solutions help supply chain leaders use data to handle the disruptions of today and build resiliency for the future.

B2B integration is the automation of business processes and communication between two or more organizations.

MFT is a technology platform that allows organizations to reliably exchange electronic data securely and in compliance with applicable regulations.

IBM Sterling® Order Management software enables you to orchestrate your entire fulfillment network with powerful core capabilities and next-level options.

The IBM Sterling® Transparent Supply application provides a blockchain platform that enables companies to join or build their own data-sharing network with trusted supply chain partners.

IBM Food Trust® is a collaborative network of growers, processors, wholesalers, distributors, manufacturers, retailers and others, enhancing visibility and accountability across the food supply chain.

Retail technology solutions from IBM® help optimize your retail supply chain with the ability to respond to trends at any scale.

Find articles on everything from supply chain sustainability to relevant technology trends and government regulations.

Make your supply chain smarter, resilient and more sustainable with state-of-the-art solutions from IBM.

Explore five essential supply chain management strategies that can help chief supply chain officers distinguish themselves from the competition.

Learn how Farmer Connect and IBM Food Trust are connecting coffee growers and consumers with blockchain.

IBM Sterling Supply Chain Intelligence Suite is an AI-based optimization and automation solution. Designed for organizations struggling to solve supply chain disruptions through traditional transformation, the suite facilitates supply network resiliency and sustainability, increases agility and accelerates time-to-value through actionable insights, smarter workflows and intelligent automation.

1 " What is supply chain management? Mastering logistics end to end " (link resides outside ibm.com), Bart Perkins, Sarah K. White, Thomas Wailgum, CIO, 28 October 2021

2 " The Path to a Thinking Supply Chain " , Simon Ellis, John Santagate, IDC Technology Spotlight, August 2018

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How to Create a Supply Chain Strategic Plan that Will Work for (Nearly) Any Business

• Continuous Improvement Supply Chain Management Supply Chain Strategy

2017 is about to start with new set of goals and challenges; it can be hard to know where you should first focus your efforts and what your supply chain strategic plan for coming year should be. After all, by now you’ve probably read so much about supply chain strategic plans that you’re left feeling overwhelmed and not sure of what needs to be done.

When you feel like this, it’s important to take a step back and create your plan. In this post, we’re going to take a look at how you can create a supply chain strategic plan for nearly any type of business, regardless of size, nature and industry.

We’ll examine how you can build a rock-solid supply chain strategic plan for the next year, from the ground up, what would be key elements of consideration and how you can adapt your plan, if changes need to be made.

By the end of this post, you should feel less overwhelmed and more confident about how to take your supply chain to the next level.

Understand Supply Chain Goals, Strategy and Tactics

When you’re creating an online marketing plan, it’s important that you understand the difference between goals, strategy and tactics. When you do, you’ll be better able to adapt your approach, when conducting a supply chain strategic plan.

On top of that, you’ll also be able to better judge how you can implement things that you learn from various articles that you may read in the future.

So, what’s the difference between goals, strategy and tactics?

A Goal is the overarching result that you’re looking to achieve.  It’s often what you focus on first, as shown above. So a goal of yours might be to drive 95% On-Time Deliver performance , by doing daily root cause analysis for highest Pareto issues and committing to improvement actions .

Strategy is a set of decisions you want to make in a certain direction and is high-level thinking related to how you might achieve that goal. So, the strategy might be to get people through APICS or CIPS or SCMDOJO Academy training to develop supply chain competencies to give your business a competitive advantage.

Tactics are the specific set of actions that you take in order to achieve the strategy. So, tactics might include to start an inventory ABC analysis for inventory optimization or strategic pricing in 2017.

One of the best way to aligned and communicate Strategy, Goals and Tactics is deploying S&OP process so the same message is delivered at all levels of organization.

A lot of the supply chain content that you’ve probably read by now focuses on tactics, rather than goals and strategy or linkage of 3.

For example, a blog post, telling you how you’re going to get more throughputs out of your warehouse, doesn’t always include strategy, in terms of how it is linked to your overall business strategy and goals.

As a result, after reading such an article, you probably tried to apply the tactics mentioned in the blog to either Slot Most Ordered Products in Picking Areas or Narrow the Aisles or Take Advantage of Overhead Space but you didn’t see how increasing throughput would contribute to the larger picture of supply chain strategic plan.

When creating supply chain strategic plans, based on content that you have read, it’s important that you know how to link supply chain tactics with supply chain strategy and goals.

Okay, so now that we’ve cleared that up it is very important to under understand your customer needs and expectation known as Voice of Customer. As with all supply chain efforts, it is absolutely essential that you know who your end customer is.

Let’s take a look at how you can outline your goals, tactics and strategy. I can explain this by showing you how I do it. To start with I always keep 4 Pillars of Supply Chain Strategy in mind. And then I think about What Results & Goals I have to achieve next year, what my Key initiatives are and what are my key Strategic Projects which have a longer term (more than 12 months) impacts.

Studying competitors is important while thinking about Goals, Strategy and Tactics, because doing so lets you know what tactics are already working in your niche or markets and you might adopt/learn a thing or two.

Procurement Toolbox # 1: Category Management

Fundamentals of Returns Costs in Supply Chain

Understanding Third Party Logistics (3PL) Selection and Management

Supply chain strategic planning process.

Now it is time to explain the 3 Step process to define Supply Chain Goals/Results, Key Tactics/Initiatives and Strategy

Step 1: Define your key Supply Chain Goals & Results:

Looking at your business model and competitors, list down key goals and results you want to achieve. A typical example of goals could look like:

• Maintain On Time Delivery Performance >95%
• Manage Working Capital – £3.8M <68 DOH (Days on Hand) as Inventory Target
• Improve Supplier On Time Delivery > 85%
• Improve ERP Planning Parameters to achieve On Time Delivery Performance 95% level.
• Reducing Lead Time of 70% of product we sell by 25%.
• Reducing total logistic cost as percentage of sale by 6% from previous year.

Step 2: Define Key Tactics & Initiatives to Achieve Goals

Tactics in general could be a set of short terms initiatives you are taking to achieve your short term goals, which also contribute towards your long terms strategy. A typical example of initiative could look like:

• Develop Individual Personal Development Plans for each Supply Chain team member.
• Develop advance project management skills.
• SCMDOJO Academy certifications to support in Supply Chain team knowledge development
• Conduct ABC analysis with all strategic suppliers (Min/Max stocks, Lead-time reduction).
• Implement Direct Line Feed (DLF) with high running manufacturing cells.
• Deliver Cost Out projects committed in freight & warehousing spend.
• Deploy best practices in your supply chain .

Step 3: Outline Supply Chain Strategy

As Max McKeown (2011) defines, “strategy is about shaping the future and is the human attempt to get to desirable ends with available means”.

Most of us have read or heard of this strategy definition at some point in some variation. But what strikes me most in this definition is the “desirable ends with available means”. Whilst it is always great to be ambitious but what needs to be considered in achieving the strategy with available means.

The following is a typical example of what supply chain strategic themes may look like:

• 100% deployment of Material Handling Training and Safety Culture training (safety first!)
• Drive Consignment inventory or Vendor Manage Inventory programme with key strategic suppliers.
• Develop & Implement Supplier Development Strategy – Improve supplier performance through scorecards, reviews, and action plans.
• Localize in Eastern Europe to reduce total lead time and possibly reduce total supply chain cost.
• Introduce supplier self-assessment programme.
• Create Robust SIOP (S&OP) Process – with more focus on capacity planning & supply management.
• Explore sourcing options in North Africa.

Supply Chain Strategic Plan – how you can combine everything

Combining everything – decide on how your Supply Chain Strategic Plan is going to be effective?

Once you’re clear on your goals, who your customer are, the results you’re aim to achieve and how you will get them, you then need to decide how you’re going to make it happen. Sound obvious right! But is it that simple?!

To start with you can put the all three elements in one slide like below image and sit down as a team and agree on the short term and long term actions with owners, due dates and projected results. Pulsing these actions effectively and systematically takes lot of effort and focus – this in itself is a huge area to be covered in a different blog!

Note: When you’re working on this stage of your supply chain strategic plan, it also helps to decide on a figure that you’re willing to spend, in order to achieve your goal. Having that figure in mind will help make it easier to select the tactics that you can take advantage of.

Also above image is just an example, you need to create one suitable for your business and market.

See my talk at IPSM Conference 2019, Ukriane on  ‘How to create a supply chain strategic plan’, which you will find it useful.

The foundation of nearly every successful supply chain effort comes down to a well-conceived plan.

It’s important to know the difference between tactics and strategy when you’re formulating your supply chain strategic plan – otherwise, you might just end up going round in circles.

It also helps to see what’s already working well in your industry, so that you can learn from those who have come before you.

Are there any tips you can share when it comes to creating a supply chain strategic plan? Please let me know in the comments below!

About the Author-  Dr Muddassir Ahmed

Dr MuddassirAhmed  is the Founder & CEO of SCMDOJO. He is a  global speaker ,  vlogger  and  supply chain industry expert  with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles.   Dr. Muddassir  has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.

You can follow him on  LinkedIn ,  Facebook ,  Twitter  or  Instagram

• APICS Research & Improvement

6 Steps to Write a Supply Chain Management Plan

The Value behind Writing a Supply Chain Management Plan

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By Daniela McVicker, 29 July, 2020

Supply chain standardization is a challenging yet beneficial process for all businesses regardless of their scale or target markets. With COVID-19 crisis underway, writing a reliable supply chain management plan for your company has become more than a welcome addition to its business model. 

However, drafting such a document without insight into typical supply management practices can be tricky. Businesses which deal with import/export, as well as those who require raw materials for processing, know what such documents should and shouldn’t contain. With that in mind, let’s discuss the steps to write a supply chain management plan in 2020 in order to better streamline your procurement pipeline.

Why should you pay attention to strategic supply chain management in your company? After all, you’ve handled procurement without such documents before, what is different now? As we’ve briefly mentioned, the current global crisis has put a wrench in the proverbial machine for numerous industries, physical shipping included. 

Whether you operate as a redistribution or packaging company for your local market or work in manufacture and require raw substances, proper supply management matters. Businesses in the B2B sector tend to work with long-time and reputable brands far more than they do with new players on the market. 

Here are some relevant facts in regards to supply chain management as published by Finances Online recently:

• 57% of companies believe that proper supply chain management gives them a competitive edge
• 62% of companies have limited visibility of their supply chain management
• 74% of companies utilize 4-5 transportation methods based on current situation
• 46% of businesses don’t track their inventory and have no automated method to track it

Despite the potential loss of revenue, industry reputation and public trust, many businesses still fail to use a supply chain management plan to their benefit. This opens the doors for your own and other companies who are willing to go forward and write such a plan to maximize future productivity. Doing so will also bring several crucial advantages into your corner, including:

• Increased net revenue
• Better B2B networking potential
• Improved in-house productivity
• Lowered margin for supply management errors
• Better analytics possibilities due to standardization

Steps to Write a Supply Management Plan

1.Assess your Current Supply Pipeline

The best place to start writing your supply chain management plan is through an internal audit of your company. More specifically, analyze the ways in which you have procured goods or services up to this point. What worked well and what caused you problems? Which companies were willing to work with you long-term and which ones turned out to be less than ideal for cooperation? 

Go through the available documentation and try to separate your current supply management pipeline into “good” and “bad”. Whatever is good, you can carry over into standardized procurement going forward, and vice versa. Don’t write a supply chain management plan without a clear idea of where your company currently stands on.

2.Define the Supply Management Outline

A supply chain management plan is a written document which serves to standardize your procurement processes. As such, you should start writing it with the goal of creating a long-term template which your sales department can use for the foreseeable future. Start by outlining your company’s basic information on the front page. You can use a thesis writing company in order to write or edit your supply management documentation in a reliable manner.

Data related to your legal and contact information should find their place on the aforementioned front page. Leave an empty table on the first page just below the legal information as you will copy the data in regards to your order here afterward. The purpose of the outline page is to give your recipient a clear idea of the procurement request without having to read through multiple pages.

3.Quality Assurance (QA) Overview

Depending on your warehousing units and available technology, your QA details should find their way into the supply chain management plan. This will give both your employees and procurement companies you work with ample information on what can and cannot be stored on your property. 

Certain items might require refrigeration or special storage due to their chemical properties, unlike electronics or paper products which are more durable. The information on your QA requirements in regards to transport and storage will let the supplier know exactly what logistical resources you have available. It will also proactively ensure that no goods arrive at your company without explicitly following the QA standards.

4.Break down your Supply Needs

The list of goods you require from a supplier should be highlighted in the supply chain management plan to allow for quick and easy access. Depending on the industry you operate in, this list can take the form of a spreadsheet, a bulleted list or a chart with visualized supply elements. 

You should account for any special requests you may have and clearly outline what those refer to in a separate section. If you require pipes of a specific diameter, length and material which is otherwise not standard for your supplier, make sure to annunciate that point. Make sure that there are no typos or spelling mistakes in this section as they can severely hinder your efforts at supply standardization. Proofread both your supply chain management plan’s template and any future supply procurement requests you file using said template.

5.Develop a Supply Timeline

Once you assemble a list of goods you require, you should proceed to outline the delivery timeline for your supplier’s benefit. Do you simply require these items to be packaged and ready for pickup by your company? Or, do you require different amounts of items to go to different warehouses or retail storefronts under your brand? 

The supply timeline is just as important as the breakdown of your required goods as short deadlines or wide distribution requirements may not be viable. The timeline will give your supplier enough information to make an objective decision on whether or not to proceed with your order. As such, this section should include contact information for your sales department representative which can be used to confirm or further discuss the procurement request.

6.Government Laws & Regulations

Lastly, international shipping will require you to list laws and regulations in regards to your government’s import standards. Whether you transport goods by international roads, water or air, government regulations should be made available to your supplier. The same can be said for state-to-state shipping in the US, as different states will have drastically different shipping standards. 

Including this section in your supply chain management plan will significantly speed up customs processes on both ends. Likewise, it will ensure that your supply arrives as was intended, which is important for goods which require special storage and handling (see QA standards). 

Follow Up and Reinvent (Conclusion)

While the goal of writing a supply chain management plan is to standardize your procurement process, you can build on the foundation through supplier feedback. Inquire about how legible, organized and informative your supply documentation is with companies. 

Ask for feedback on what works and doesn’t work, as well as what they would do differently in your place. The role of the supply chain management plan template is to help you, not hinder your productivity – be on the lookout for more development opportunities. Adopting such a mindset will ensure that your documentation becomes of higher quality and easier to manage over time.

Image source : https://unsplash.com/photos/oh0DITWoHi4  

Author’s bio. Daniela McVicker is a passionate digital marketer. Daniela is interested in everything related to SEO and blogging. She collaborates with Essayguard and other websites where she shares her experience and helps marketers make their names in the online world.

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An Introduction to Supply Chain Management (SCM)

Table of Contents

What is supply chain management, what is a supply chain, supply chain management process, parts of a supply chain model, benefits of supply chain management, supply chain management faq.

Supply chain management (SCM) is the discipline that manages the flow of supplies through all of the stages of a production cycle. SCM applies to any organization that executes projects, produces goods or provides services, as those activities require a supply chain to maintain a steady flow of resources.  That’s where supply chain management comes in.

Supply chain management is very important in the business administration field because it affects other key business areas such as operations management, inventory control and quality management. But what really makes SCM so important is that it can also become an important competitive advantage for businesses.

The main goal of supply chain management is to make the most of the resources involved in a supply chain and be as productive as possible. People are managed and supplies require management as well . Whether those supplies are goods or services, they must be accounted for and carried through from start to finish with deliberate control. To better understand SCM, let’s define what a supply chain is.

A supply chain is a network that connects a company to suppliers of raw materials. It is also used to deliver a product to customers. The better the supply chain management, the more of a competitive advantage the company has.

Supply chains are steps that are required to get raw materials, products or services from the original state to the customer and improve customer relations. Large companies and projects usually have more than one supply chain, which is known as a supply network. Having supply chain managers and supply chain management is key to delivering customer value and maximizing the efficiency of your supply network.

Project management software can help you manage your supply chain and supply network. ProjectManager is a cloud-based work and project management software that has visual workflow features, such as kanban boards, that help keep your teams working at capacity without excess raw materials that need storage space. Get started with ProjectManager today for free!

The supply chain process is fundamental to good supply chain management. It is used by companies to make their supply chain as efficient and cost-effective as possible and deliver customer value and give them a competitive advantage. There are five steps to the supply chain process. They are as follows.

1. Planning

In order to control inventory and the manufacturing process companies must plan to match demand with supply, which is known as supply chain planning . This prevents overspending on warehouse space or not having raw materials needed for your manufacturing and slowing down delivery of product.

2. Sourcing

This step involves finding those vendors who can get the goods and services you need when you need them. Sourcing is how you get supplies when you need them and meet the demand of your customers .

Here is where those raw materials you procured are made into the products that meet your customers’ demand. This is where assembling, testing and packing occurs. Getting customer feedback is key to delivering customer value.

4. Delivering

Getting your finished product to the customer is the next crucial step in the SCM process. If you’re not able to get what you make to your customers all the previous steps are for naught. This makes delivering key to supply chain performance.

5. Returning

Returning or reverse logistics is part of what’s called post-delivery customer support process. It is important to have a clear channel for returns or risk tarnishing your brand. The company can then take these low quality, defective or expired materials and return them to their suppliers.

Related: 10 Free Manufacturing Excel Templates

To get the most out of SCM requires looking at the big picture in terms of an organization’s management. No longer is managing an individual company function enough. The integration of all activities involved in the supply chain is necessary: that means integration between different departments, such as purchasing and marketing.

Supply chain management also needs integration and collaboration between buyers and suppliers, joint product development, common systems and shared information. Here are the most important parts of any SCM system or model.

• Customer-Relations Management: There must be a managed approach to interacting with the company’s current and potential customers in order to understand what they want and expect.
• Customer-Service Management: This differs from customer-relations management in that it focuses on the interactions between the customer and the company instead of a more strategic management process. It helps facilitate a mutually satisfying goal for both customer and the company, as well as eliciting customer feedback and maintaining communications between the two parties, so there are positive feelings from both parties.
• Demand-Management Style: A methodology to forecast, plan for and manage the demand for products and services. This can address both macro-levels, as in global economics, but also micro-levels within the company.
• Order Fulfillment: The order fulfillment process that encompasses everything from point-of-sale interest to delivery of that product or service to the customer. It is the way a company responds to customer orders.
• Manufacturing-Flow Management: Manufacturing is a process, and supplies feed that process based on historic data surrounding how it has been done and what was needed historically. But that process needs flexibility as quantities change. Therefore, one must manage all activities related to planning, scheduling and managing the manufacturing process.
• Supplier Relationship Management (SRM): Supplies likely are coming from a third party, and those interactions must be strategically planned for. SRM is key to a healthy supply chain.
• Product Development and Commercialization: To reduce time to market, customers and suppliers are integrated into product vision and the product development process. Shortening the product life cycle keeps the company competitive. This process includes coordinating with customer relationship management to know customer needs, selecting materials and suppliers with procurement and developing a production technology in the flow of manufacturing to integrate the best supply chain flow for the product and market. When successful, this has a positive impact on cost, quality, delivery and market share.
• Returns Management: There will always be returns and the better they’re managed, the more productive and competitive the SCM process. Management of this aspect of the SCM means fast and easy returns management, automation and deciding how to process returned materials. Make sure information is visible to capture early in the process. Then control the flow of product, including receipts and reconciliation, noting if there are any quality issues.

Supply chain management is a hefty task with hefty rewards. Here are a few ways that well-executed SCM can benefit your business or project.

Keeps Businesses Competitive & Paces with Technology

The simple answer to why SCM is important to any business is that it helps them remain competitive. Markets change, and as the marketplace becomes increasingly global, the need for better efficiency is crucial. As management goals change, too, there is a move away from the past traditional relationships to incorporate and organize all business processes throughout a value chain of multiple companies.

Advances in information technology and the increasing use of outsourcing has also added to the expansion of the supply chain. This has created a need for a more collaborative network, so different enterprises can work harmoniously together.

Creates Productive Environments

These changes in how businesses are managed have led to the development of supply chain environments. Multinational companies, joint ventures, strategic alliances and other partnerships, as well as technological advancements, have contributed to more cooperation among those in the supply chain network. As supply chains become more holistic and cooperative, companies must adapt.

Proactive Strategy

But supply chain management is not merely reactive, it also helps to stimulate innovation and productivity by assisting companies with organizational learning. The more extended a company is in terms of its supply chain, the more adaptive it has to be. That leads to creative thinking, which results in innovation and increased productivity.

Satisfies Customers While Reducing Operating Costs

Customer service also benefits. Customers demand quality and they expect products to be available where and when they want them or delivered when on time. Supply chain management will also help with sale support after they’ve made the purchase.

But it’s not just the customer who benefits. As noted, SCM is instrumental in cutting operation costs. When smartly applied it can decrease purchasing, production and total supply change costs. This improves a company’s financial position by adding to profit leverage, reducing fixed assets and increasing cash flow.

SCM is a complex topic and you might have even more questions about it. Here are some quick answers about supply chain management topics.

What are the Components of Supply Chain Management (SCM)?

The 5 components of the supply chain management process are planning, sourcing, making, delivering and returning.

What Is Supply Chain Analysis?

Supply chain analysis is the process of auditing all the different steps of the supply chain to identify any possible areas of improvement.

What Is a Supply Chain Strategy?

A supply chain strategy is a roadmap that a company uses to source information, materials and equipment from its suppliers to create products and deliver them to its customers.

Supply chain management is just one more screw that can be tightened on the ship of business to help it sail better through the turbulent waters of industry. But it’s a complicated process, one that benefits from having robust project management tools to plan, monitor and report on the many aspects of the supply chain that need control. ProjectManager is a cloud-based software that has the tools to make you manage more efficiently and effectively. See what it can do by taking this free 30-day trial.

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Supply Chain Management Business Plan Sample

Published Nov.28, 2014

Updated Apr.24, 2024

By: Shawn Jensen

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Table of Content

Do you want to start Supply Chain Management Business?

Do you want to start a supply chain management business? Well that can be an amazing idea if you want to quickly start a business. One of the main reasons is that this supply chain business plan will not need you to have any specific technical knowledge or degree. You can start this business with just a few contacts and grit.

Even though it is relatively easier to start a career in supply chain management, it still doesn’t mean you should go in unprepared. The best thing you can do is go through a business plan for supply chain management. You can get a business chain management plan supply from anywhere on the internet. And if you want, this document is also a great place to look for help supply chain business plan .

Executive Summary

2.1 the business.

Clark’s Management will be a supply chain management startup owned by Clark Bridgers. The main objective of the supply chain business plan is to guide and assist companies in streamlining their supply chains in Oakland. It will offer versatile resources and services for the best supply chains.

2.2 Management of Supply Chain Management Company

To ensure that your company is well managed, you need to develop a supply chain management business plan as the first step.

In this supply chain strategy model, we will including all the important aspects of a business for buy side due diligence .

In order to make your supply chain business plan , you can study a sample pdf of supply chain management like this one. You can also use the internet to go through a plan for supply chain management filetype pdf. These will give you a good idea of what you should include in your supply chain business plan . And this will apply even if you are developing a business plan for video production .

2.3 Customers of Supply Chain Management

Our clients will be from all industrial and professional domains since supply chain is a part of the lifecycle of any product or service. Keeping that in mind, our recurring customers will include:

• Product Businesses
• Service Businesses
• Hybrid Large/Small Businesses
• Manufacturing Units

2.4 Business Target

The primary goal of our supply chain business plan is to become the most reliable and trusted option for our clients whenever they want to improve their supply chains.

The financial targets that we aim to achieve in the first two years are shown below:

Company Summary of Supply Chain Management

3.1 company owner.

Clark Bridgers will own Clark’s Management. Clark completed his Bachelor’s in Management about 3 years back. After his studies, he pursued a job in a corporation as a business management consultant. But he left job in pursuit of starting his own supply chain business plan .

3.2 Why the Supply Chain Management Company is being started

Clark observed that a lot of businesses are looking for ways to reduce their production costs. But there are very few businesses that offer any help in the area. He quickly realized that he could use his innovative ideas and knowledge to improve supply chain management for these companies.

3.3 How the Supply Chain Management company will be started

Step1: Plan Everything

Before you look into things like what is supply chain strategy definition, you need to consult supply chain business plan experts. They will guide you in development of supply chain organization models.

Clark decided to offer his services to both service and product based companies. So, you can use this or any related supply chain management project report pdf to get started with your own supply chain business plan . These documents will help you understand the role of supply chain management in business plan.

Step2: Define the Brand

A crucial step in starting a new supply chain business plan is to get noticed. You will have to identify and highlight your core values and market those to your potential customers to gain attention.

Step3: Establish a Web Presence

The most important part of any business in the digital age is online promotion. For this, Clark decided to establish social media presences for his supply chain business plan . He also decided to outsource a simple website through which people can book appointments and reach out.

Step4: Promote and Market

As the final step, you need to create and follow a marketing plan to promote your supply chain business plan .

Services of Supply Chain Management

When you are starting supply chain business , one of the major things you need to figure out the services you will be providing to your customer base. You can refer to a sample business plan supply chain management for an idea.

The requirements of supply chain management in a business plan is different as compared to other plans such as aerial tourism business plan .

But since Clark decided to provide a whole array of services so this example of supply chain strategy can also be used for other ventures like internet radio business plan . You can gain a lot of insight from this plan for operations and supply strategy.

• Identifying and Dealing with Logistics Problems

Our company will offer solutions to all basic problems that may occur in the supply chain. If, for instance, a customer complains about service quality, it can reflect poorly on the supply chain business plan . But our company ensures that most problems are identified beforehand through data analysis.

• Price Optimization

Many businesses offer products or services that are seasonal. Since seasonal offers are not needed throughout the year, businesses have to find a way to reduce their prices and sell them. Our company will help businesses set these marketable prices through analytical software. This will ensure that:

• Products are sold, and
• Business is still profitable
• Dynamic Resource Management

Businesses have limited resources. Our company will help businesses organize and allocate their resources such as equipment and workforce in a way that optimizes performance.

• Supply Chain Consultation

Our company will also provide consultation experts that can help businesses with supply chains reduce their costs and improve their performance.

Marketing Analysis of Supply Chain Management Company

When you are describing your company for supply chain management in a business plan, you will need to describe your customer base. Identifying your customers is one of the essential steps of starting a supply chain business plan . And you have to include this information in your plan even it is a business plan template for summer camp .

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You should have detailed information about your customer. And the best way to get these details is through a market analysis. The market analysis included in your supply chain development strategy, should have all information regarding past, present and future market trends.

The supply chain strategic management is used to analyze the market prices and to figure out the financial goals of your own supply chain reporting structure. You can use a supply chain management project pdf sample like this to see how the market analysis is presented.

5.1 Market Trends

According to ExploreWMS, the number of warehouse in US have grown by 6.8% in the last five years. This means that more and more companies need better supply chain management techniques and services. And due to the shift for efficiency, supply chain management positions are increasing faster than economic averages. So, there is no deficiency of demand in the market for a supply chain management or services.

5.2 Marketing Segmentation

The potential customers of Clark’s Management are divided into the following categories:

Business plan for investors

5.2.1 product businesses.

Our main customers will be the product based businesses that rely on the sale of their products. Since the sale of a product is affected by a lot of factors in the supply chain so these businesses are more likely to regularly use our services.

5.2.2 Service Businesses

Our second target customers will be service providing businesses much like ours. Services are also provided as a result of a supply chain that involves ideation, planning and development as some of its parts. So service businesses are also expected to utilize our services quite often.

5.2.3 Hybrid Small/Large Businesses

Every supply chain business  works for an endpoint through a series of pre-defined steps. These steps form a supply chain even in hybrid (product and service) businesses. Since these businesses are usually big corporations with their own management departments so they are likely to use our services every so often.

5.2.4 Manufacturing Units

Manufacturing units on their own also require management tips to work more smoothly. They are expected to avail our services often to streamline their operations.

5.3 Business Target

• To become the best supply chain management company throughout Oakland
• To increase the range of our offered services over time
• To earn a net profit of around $30k per month by the end of the second year
• To achieve and maintain customer satisfaction above 90%.

5.4 Product Pricing

Our prices will be a little bit higher than the market average. But we will offer more services over a longer period of time as a compensation. This will help our customers more in the long run as compared to our competitors.

Marketing Strategy of Supply Chain Management

To gain attraction in a huge industry, you need to find areas where you have competitive advantage. For this, you need a solid marketing strategy and branding so that people can recognize your offers.

In the present supply chain management report template, we are describing the marketing strategy for Clark’s Management. You can also refer to an example such as business plan supply chain management to improve your business proposal. This is helpful even if you are just starting a paintball business .

6.1 Competitive Analysis

• We have amazing customer support available. We will deal with all customers patiently and also gain feedback for future improvement.
• Through our physical shops, website and social media, customers have different ways to contact us. And we will respond to them at the earliest.
• We will provide consultations and services in accordance with all the standard practices so that our customers can focus on their work without worry.

6.2 Sales Strategy

• We will advertise through word of mouth, Google Ads, Social Media, and billboards.
• We will provide long-term services in reasonable and market-competitive prices.
• We will also provide special discounts to first-time and long term customers.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan of Supply Chain Management

No business can run without the diligence of its workers. The success of any business actually depends a lot on the behavior of employees. Clark knew the importance of hardworking and patience workforce and so he developed a selection criterion for employees. This criterion will be a part of business plan for supply chain management.  You can also find examples of this in a sample business continuity plan supply chain management on the internet.

7.1 Company Staff

• 1 Co-Manager for overall assistance
• 2 Purchasing Agents
• 3 Logistics Analysts
• 1 Operations Manager
• 3 Planning and Expediting Clerks
• 2 Storage and Distribution Managers
• 3 Operations Consultants

7.2 Average Salary of Employees

Financial plan.

You can’t become successful by just selling products or services. To be profitable, you need to carry out a detailed financial analysis. Usually, like in this supply chain business plan sample, financial analysis is included. Every good supply chain management business plan has a thorough financial plan included.

In your financial plan, you need to show how you will cover your expenses with your sales and profits. You also need to identify ways to reduce your expenses and increase your efficiency.

We have provided a comprehensive financial plan for supply chain management business. But you can also refer it for business plan movie selection .

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

8.5 Projected Balance Sheet

8.6 business ratios.

• How do I write a business plan for supply chain management?

You can write a business plan for supply chain management by reading business plans like the one here or by consulting a business plan expert.

• What is supply chain in business plan?

Supply chain consists of processes that are involved in the production of a product or the provision of a service. And in reference to a supply chain business plan , it includes all the details needed to start a business in supply chain management.

• What are the examples of supply chain management?

Supply chain management is involved in all kinds of supply chains including product design, manufacturing, farming, packaging, and transportation etc.

Download Supply Chain Management Business Plan Sample in pdf

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What To Include In Your Supply Chain Contingency Plan

In an era marked by unprecedented global challenges and uncertainties, the resilience and adaptability of supply chains have emerged as critical factors toward determining a company’s success. Whether facing natural disasters or market disruptions, companies must navigate a complex landscape fraught with risks and uncertainties. In this context, the development of a robust supply chain contingency plan has become imperative for companies seeking to safeguard their operations. There are essential components you need to have in a comprehensive supply chain contingency plan, providing actionable insights and practical guidance for companies looking to enhance their resilience and responsiveness to disruptions. From risk assessment and mitigation strategies to technology integration, each element plays a crucial role in ensuring continuity of operations and mitigating the impact of unforeseen challenges. Let’s dive into the intricacies of supply chain resilience and explore the key considerations for developing a robust contingency plan that empowers companies to thrive in the face of adversity.

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• Security Alerts. Know when a delay in shipment has occurred so the problem can be addressed immediately.

Why You Need a Supply Chain Contingency Plan

In today's interconnected and rapidly evolving business landscape, the need for a robust supply chain contingency plan cannot be overstated. A supply chain contingency plan serves as a proactive strategy to anticipate and mitigate disruptions that can disrupt the flow of goods and services across the entire supply chain. One of the primary reasons why such a plan is essential is the inherent complexity and vulnerability of modern supply chains. Today, supply chains often span multiple states and even countries, involve numerous suppliers, carriers, and logistics partners, and rely heavily on just-in-time inventory management practices to optimize efficiency and reduce costs. While these practices offer significant benefits, they also increase a supply chain’s susceptibility to disruptions. A well-developed contingency plan for supply chain management enables fleet managers to identify potential risks and vulnerabilities, assess their potential impact on operations, and implement proactive measures to mitigate these risks. By conducting a thorough risk assessment, companies can identify critical dependencies within their supply chain, such as key transportation routes and develop alternative strategies to reduce reliance on single pathways. Supply chain contingency planning provides fleet managers with the agility and flexibility needed to adapt to changing circumstances and navigate disruptions effectively. Additionally, a well-prepared supply chain contingency plan enhances employee safety and welfare by providing clear protocols and support mechanisms during emergencies. The implementation of a supply chain contingency plan is not just a prudent business practice; it is a critical imperative for organizations operating in today's dynamic and unpredictable business environment.

What to Include in Your Contingency Plan For Supply Chain Management

1. Risk Assessment In the risk assessment portion of your supply chain contingency plan, you need to include several key components to effectively identify, evaluate, and mitigate potential risks. Firstly, your plan should encompass a comprehensive identification of potential risks that could disrupt the supply chain, ranging from natural disasters to transportation bottlenecks. Once identified, each risk should be analyzed for its probability of occurrence and potential impact on various aspects of your supply chain, such as operations, revenue, customer service, and reputation. Critical dependencies within your supply chain should be clearly outlined to understand how disruptions to these dependencies could propagate throughout the network. Historical data analysis collected through asset tracking technology provides valuable insights into recurring patterns or trends in supply chain disruptions, informing risk mitigation strategies. External factors and trends, such as market conditions, should also be considered to anticipate future risks. You need to make a plan for how you are going to stay updated on changing market conditions. This is important because recently, markets across every industry are making changes frequently. If you are unaware of what’s going on, you risk falling behind competitors and having to play catch up. 2. How To Address Problems As you determine the best way to address unforeseen problems, it is imperative to outline clear and actionable strategies for responding to disruptions and restoring normal operations as quickly as possible. Developing a detailed communication plan to ensure timely and transparent communication is an important part of properly addressing problems. You should also outline specific steps for activating alternative supply chain routes, backup suppliers, or logistics partners to mitigate disruptions caused by interruptions. It’s also important to establish protocols for prioritizing orders, allocating resources, and reallocating inventory to meet urgent customer demands and maintain service levels. You should leverage asset tracking technology to monitor the status of your supply chain in real time and identify bottlenecks. You should also implement continuous improvement of the contingency plan based on lessons learned from past incidents, changes in the business environment, or new emerging risks. 

3. A Plan To Prevent Problems There are certain problems that fleet managers can come to expect as a part of supply chain management. Some of these problems are unavoidable, but others can be circumvented. Losing cargo is a common problem companies face. Lost cargo costs you extra money and delays the overall process. If you put a prevention plan in place, you can prevent the loss of cargo along with all of the negative impacts that loss has on you and your customers. The best way to prevent loss is through a trailer tracking system. This system tracks and monitors the location of assets in real time. You can also set up geofencing around your facility and receive alerts when the virtual boundary is crossed. This way you can know when something has the property the moment it does so it can be retrieved quickly. This is just one example of something you can do to prevent problems from occurring. The best way to deal with problems is to prevent them. If you can prevent a problem, you should. You’ll thank yourself when you see the ROI. 4. Continuous Improvement It's crucial to establish a systematic process for ongoing evaluation and optimization of contingency measures to enhance resilience and responsiveness to disruptions. One way to do this is to establish KPIs to measure the effectiveness of the contingency plan for supply chain disruption. Don’t just stick with the same plan forever, either. Instead, regularly monitor and analyze your KPIs to identify areas of weakness or opportunities for improvement. Evaluate how well the plan is working and how efficient your operations are, and make adjustments accordingly. If you look for ways to improve, you’ll find them, leading to supply chain success .

5. Trailer Tracking Technology Investing in a trailer tracking system is the best way to enhance supply chain visibility and efficiency to effectively manage disruptions. By incorporating trailer tracking technology into your contingency plan, you gain the ability to monitor the movement of goods in transit and proactively respond to disruptions. This level of visibility enables you to make informed decisions, such as reallocating resources to address bottlenecks or capacity constraints. Additionally, trailer tracking technology helps mitigate risks associated with loss or theft of cargo by providing alerts in case of unauthorized access or movement of trailers. By leveraging real-time data and analytics provided by a trailer tracking system, you will enhance supply chain resilience and minimize the impact of disruptions. Trailer tracking supports continuous improvement initiatives by providing valuable insights into logistics operational efficiency and asset utilization. By analyzing historical data and performance metrics, you can identify opportunities to optimize overall supply chain efficiency. Including trailer tracking technology in your supply chain contingency plan is a proactive strategy to enhance visibility and resilience in managing supply chain disruptions.

6. Reporting

Data reporting is one of the most important steps you can take as part of your supply chain contingency plan. Data reporting is crucial for enabling informed decision-making in response to disruptions, and it provides valuable supply chain visibility, including asset utilization. Supply chain reporting enables you to monitor KPIs in real time, identify potential bottlenecks, and proactively respond to disruptions. For example, data reporting can help you track inventory levels at different locations, enabling you to quickly identify shortages or excess inventory and adjust procurement and distribution strategies accordingly. Additionally, data reporting enables you to analyze historical trends and patterns to identify potential risks and opportunities for improvement. By analyzing past incidents and performance metrics, you can identify root causes of disruptions, assess the effectiveness of contingency measures, and implement corrective actions to prevent recurrence. Data reporting supports continuous improvement efforts by providing insights into supply chain performance and efficiency. Leverage data reporting tools and analytics so you can make data-driven decisions, optimize transportation routes, and allocate resources more effectively to ensure timely delivery of goods to customers. 

Are You Building Your Supply Chain Contingency Plan For Success?

Developing a comprehensive supply chain contingency plan is not just a prudent business practice; it is a strategic imperative in today's dynamic and unpredictable business landscape. By incorporating key elements such as a risk assessment, technology integration, and continuous improvement, companies can enhance their resilience, responsiveness, and adaptability to disruptions. A well-designed contingency plan enables fleet managers to anticipate potential risks, mitigate their impact, and maintain continuity of operations even in the face of unforeseen challenges. It also fosters a culture of preparedness, innovation, and collaboration within the organization, empowering employees to respond effectively to emergencies and drive positive outcomes. As companies continue to navigate evolving risks and uncertainties, investing in supply chain management technology has never been more critical. By prioritizing proactive planning and leveraging technology, companies can position themselves for success in an increasingly complex and volatile business environment. To learn about the role our trailer tracking solution, AirFinder Everywhere, plays in your supply chain contingency plan, book a demo with our team of experts.

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Written by Emily Saldivar

Emily Saldivar is a Marketing Specialist for Link Labs and has been with the company since 2020. She has a background in content writing and is furthering the Link Labs mission through social media and other platforms.

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A roadmap to sustainability: integrating practices into global supply chains.

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Morten Johansen is the COO of DP World Americas .

In an era where global commerce intersects with pressing environmental challenges, companies and the broader logistics industry have a responsibility to escalate their sustainability efforts. The importance of environmental sustainability within supply chains is no longer just about compliance; it has become an important strategy for corporate responsibility and a way to distinguish competitive edges in a crowded marketplace.

On March 6, 2024, the U.S. Securities and Exchange Commission set forth the nation's climate disclosure rules . These mandates compel publicly listed companies to divulge their Scope 1 and 2 emissions , which refer to emissions directly from a company's operations and indirect emissions from energy use.

Notably absent, however, was the inclusion of Scope 3 emissions , which encompass the indirect emissions from a company’s supply chain and product use. For many companies, Scope 3 emissions account for 70% or more of their carbon footprint. This gap underscores a critical area where businesses must voluntarily step up to address their complete environmental impact.

When it comes to global trade, I've found companies often prioritize cost reduction, reliability and timeliness over sustainability. Despite the regulatory omission of Scope 3 reporting, I believe forward-looking companies must recognize the necessity of a unified approach to managing supply chains—one that incorporates meticulous data practices, proactive supplier engagement and the strategic adoption of technology to effectively diminish emissions.

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Robust carbon accounting is foundational. It allows companies to gain a transparent understanding of their emissions across all scopes. This clarity is essential not only for internal management but also for communicating with stakeholders, investors and regulatory bodies. To get there, companies must develop solid methodologies for measuring and reporting emissions to ensure these practices encapsulate all significant emission sources within the supply chain. To address emissions at my company, for example, we concentrate on sharpening data accuracy in carbon accounting and employing technology to track and mitigate emissions.

Collect high-quality data.

While emission calculation might seem straightforward, obtaining accurate data can prove the opposite. Incomplete data is often the result of a complex web of entities and owner groups involved in the various links of the value chain. For companies aiming to boost their sustainability initiatives, overcoming this hurdle and collecting high-quality data is central to creating and managing decarbonization programs.

Companies should define precise data requirements and engage with suppliers to ensure consistent and accurate data collection and reporting. In my experience, using global databases that provide standardized emission factors for diverse materials can aid in gathering accurate data while providing insights into specific supply chain operations. Organizations can consider exploring technologies to automate data aggregation and facilitate data sharing among stakeholders. Furthermore, regular audits and quality checks are vital to uphold data integrity and resolve discrepancies.

From my perspective, advancements in artificial intelligence could transform traditional carbon reporting into a predictive tool that tracks and drives improvements in corporate sustainability efforts. For example, an AI-enabled carbon reporting system could integrate Internet of Things sensors and machine learning algorithms to gather and analyze real-time data on energy consumption, resource utilization and supply chain operations. This system could offer predictive analytics to forecast future emissions trends, while its continuous learning capabilities could enhance its predictive accuracy and operational recommendations over time.

Enhance supplier engagement.

Involving suppliers in sustainability goals can cultivate deeper, more collaborative relationships and lead to more stable supply chains and mutual innovations that benefit all involved parties. For example, companies might encourage suppliers to establish their own science-based targets. This not only aligns them with global sustainability efforts but also promotes cooperation and shared investment in sustainable technologies.

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Indianapolis is the Crossroads of America, which positions you perfectly to earn a supply chain management degree in the hub of a logistics capital. Plus, our data indicates Kelley Indianapolis supply chain graduates earn the highest wages out of college among all business majors. Kelley Indianapolis supply chain management graduates often pursue the following career paths:

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An inside look at supply chain management.

Create the game plan and set the stage for the sourcing, production, and delivery of the finished product.

Work hand-in-hand with suppliers and manage inventory to ensure the product is ready for manufacturing.

This is where the product is made and prepared for the final step of the supply chain.

The product is finished and out the door, but it's critical that it arrives safely and on-time to the customer.

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Below are the median incomes for professionals in Indiana in these supply chain management fields:

Experienced Operations Manager

Experienced Logistician

Experienced Industrial Production Manager

What do they do?

It's an operations manager's job to make sure an organization is running as smoothly as possible. This is a senior role that typically involves overseeing the production of goods and/or services.

Logisticians are responsible for the entire life cycle of a product, including acquisition, distribution, internal allocation, delivery and final disposal of resources.

Production managers plan, direct and coordinate the work activities and resources necessary for manufacturing products in accordance with cost, quality and quantity specifications.

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The supply chain major offers great career opportunities in Indiana, with lots of jobs here that pay well. With our faculty's ongoing connections at local companies, you'll have many chances to interact with companies and see supply chain in action. Amrou Awaysheh, Associate Professor of Operations and Supply Chain Management

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In and out of the classroom, you’ll track the best practices in supply chain management. You’ll even have the opportunity to earn your Six Sigma Green Belt, a certification in business management strategy that will strengthen your résumé.

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