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Supply chain management: a how-to guide for businesses

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A supply chain management process considers all the links involved in building a product or service and delivering it to customers.

What is supply chain management?

Supply chain management analyses the flow of goods and services along a chain of suppliers, with the aim of minimising waste and maximising value to the customer.

Some businesses may have dedicated supply chain managers looking at the process, while other (perhaps smaller) businesses will need to consider the function among other roles.

Today’s supply chains are often driven by just-in-time (or lean) processes, in which goods and services are made (and shipped) only when there’s customer demand. 

This mindset places the customer’s needs first, but it’s important that all elements in the supply chain are managed efficiently.

Here’s a definition of supply chain management…

Supply chain management is how the flow of goods and services is managed within a business and among its suppliers, from buying raw materials to delivering products to customers. Its aim is to cut costs, increase revenue, and improve the service to customers.

It’s different to the supply chain itself, which links individuals, businesses, technologies, and everything else involved in making (and delivering) a product or service.

How does a supply chain management system work today?

While supply chains of the past involved more straightforward movement through a network of suppliers, technology is changing the supply chain management process.

In part, this is because of the changing needs of customers. Consider how some customers now prioritise convenience – many online businesses are able to get goods into the hands of customers quickly.

What’s more, some processes are becoming more connected and increasingly automated, helping businesses add greater value to customers.

Technology and increasing connectedness mean that supply chains can also be decentralised. So, instead of a centralised headquarters and warehouse, a supply chain has lots of links along the network (for example, smaller offices and warehouses that enable the business to work effectively at a local level).

Why is supply chain management important?

Supply chain management helps businesses gain a competitive advantage and give a better experience to customers.

By actively studying the supply chain, businesses can identify where to cut costs. It also helps them practise a culture of continuous improvement (in which problems are raised, discussed and solved as they arise in regular meetings and retrospectives).

Finally, the world is waking up to unethical practices within supply chains. As these practices become more transparent, an effective supply chain management process means you can avoid working with suppliers who go against your principles.

The supply chain management process

Supply chain management isn’t just about the logistics of getting products and services into the hands of customers. A proper supply chain management process considers the steps from an overall strategy to how customers can return products.

There are five key elements to the process:

  • working out a plan or strategy (including how to align supply chain management with your business’s principles and philosophy)
  • how products or services are built (for example, where raw materials are sourced)
  • manufacturing (involving maximising efficiency and value to the customer)
  • delivery and logistics (for example, transportation)
  • how customers can return items (if they’re faulty or not what they wanted)

The supply chain management process also involves opportunities for quality control, minimising shipping delays, and avoiding oversupply.

Supply chain management courses

If you (or people in your business) want to upskill in supply chain management, there’s lots of courses you can choose from.

Many of these courses are online and flexible, meaning that you can fit them around your busy working hours.

This course from the University of Derby is a 10-week online course in Global Supply Chain Management and Logistics, which carries credits that can go towards the institution’s online MBA.

The University of Cambridge runs an eight-week online short course in Sustainable Supply Chain Management. 

You could also have a look at the Institute of Supply Chain Management, which has courses you can study at different levels.

Would you like to know any more about supply chain management? Let us know in the comments below.

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Photograph 1: Travel man/stock.adobe.com

Sam Bromley

Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.

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