What is a Supply Chain?

stay-calmThe term Supply Chain Management (SCM) was developed to express the need to integrate the key business processes, from end user through original suppliers. The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory, and labor. Ideally, a supply chain seeks to match demand with supply and do so with the minimal inventory. Various aspects of optimizing the supply chain include liaising with suppliers to eliminate bottlenecks; strategically sourcing to strike a balance between lowest material cost and transportation, just-in-time techniques to optimize manufacturing flow; maintaining the right mix and location of factories and warehouses to serve customer markets; and using location allocation, vehicle routing analysis, dynamic programming, and traditional logistics optimization to maximize the efficiency of distribution. Supply chains link value chains. Quite often people confuse logistics with value chains. In general, logistics refers to the distribution process within a given company. Value chains involve multiple companies such as suppliers, manufacturers and retailers. A true value chain fosters efficient collaboration amongst different internal business segments with a focus on superior customer satisfaction.

When you think about the sexiest profession in the world, supply chain management isn’t necessarily the first thing that comes to mind. The difficult behind-the-scenes job of getting the right product at the right time to the right people at the right cost is historically a little unglamorous and unsexy but that is changing quickly. Here is why:

Supply Chains Are the Backbones of Successful Products

The world’s best products depend on the flawless operation of their supply chains. From the newest iPhone to the latest collection at your local ZARA store, market-leading products owe as much to innovation as they do to the quality of their supply chains. Tim Cook, the CEO of Apple, administratively the company’s supply chain before he was tapped for the top job.

Supply Chains Are Run with the Newest Technology

As globalization continues, supply chains are becoming more global and more outsourced every day. As a result, they are more complex and harder to control. Companies deploy some of the newest technology to manage their ever-expanding networks of supply chain partners around the globe. Similar to how we use social networking sites like Facebook to manage our social connections, many companies are now moving away from traditional enterprise resource planning (ERP) software. They are relying on cloud-based collaboration platforms to orchestrate their global networks of trading partners in a much more efficient and scalable way.

Supply Chains Need to Be Fast and Agile

Supply chains are under constant assault from shifting market forces, competitive pressures and unexpected disruptions. To operate a successful operation requires the ability to respond swiftly to sudden changes on the demand side and unforeseen disruptions on the supply side. The need for speed and agility makes modern supply chain management much more demanding, but also more exciting than any other corporate function.

Supply Chain Management Is a Global Business

World giants like Adidas, CAT, Nestlé or Pfizer are not the only companies who operate global supply chains any longer. Today, companies of any size can tap into cloud-based business networks, and immediately start sourcing and selling globally without the budgets and resources required just a few years ago. The democratization of business-to-business (B2B) connectivity infrastructure effectively leveled the playing field of global trade. As a result, it’s more common in supply chain management than in any other field to interact with business partners from all over the world on a daily basis.

Supply Chain Management Is About Big Data

In 2013, Harvard Business Review (HBR) named “data scientist” the sexiest profession of the 21st century. A data scientist, according to HBR, is a high-ranking professional with the training and curiosity to make discoveries in the world of big data. The ability to turn big data along the extended supply chain into real-time, actionable business intelligence is quickly becoming a game-changing skill in supply chain management as well. In summary, supply chains form the backbones of the world’s most successful products, and require the newest technology to operate smoothly and efficiently. They have to be fast and agile to compete globally and are a prime target for big data analysis. That’s why supply chain management is the sexiest job in the world. (source: Supply & Demand-Chain Executive 2014)

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