“It’s not the organisations that are competing, it’s the supply chains that are competing.”- Wael Safwat, Supply Chain Management Association of Ontario
On the hottest days of the year, there’s always a refreshing drink waiting for you at the nearest convenience store. Ever wondered how that specific drink made it to that specific place? From procurement to labeling, pricing, insurance, storage, transportation and eventually distribution – that drink took a long supply chain journey!
In 1982, Keith Oliver, a consultant at Booz Allen Hamilton (now Strategy), introduced the term “Supply Chain Management” into the public domain in an interview for the Financial Times. The term gained currency when a number of books and articles were released in the public domain. A robust end to end supply chain is integral to the success of any organisation. It involves optimising operations to maximise speed (since customers value fast service) and at the same time maximising efficiency to prevent costs from shooting up.
A well-oiled supply chain gets the right product into the right consumer’s hands, in the right quantity and at the right time – from raw materials extraction to consumer purchase.
The primary components of Supply Chain Management process are:
- Planning: The initial stage is to identify the prevailing demands of existing and potential customers and address their requirements. Good facilitation skills ensure implementation of team decisions such as assignment of orders to suppliers, best locations for production and direction of logistics. Leadership skills are desired to enhance project management from time to time. In a fiercely competitive environment, businesses must deliberate on the right strategy for meeting the customers’ needs while increasing the bottom line. Sustainability, strategic sourcing & forecasting and risk/compliance are the focus areas for excelling in the SCM planning process. Those with great organisational and decision-making skills are best suited to steer SCM planning, so as to be prepared for emerging market segments and successfully launch new products. The Certified Professional in Supply Management (CPSM) designation, offered by Institute for Supply Management (ISM) is an internationally recognized program that can help build your expertise in critical areas of global supply chain management.
- Forecasting: A vital component in SCM, supply, demand and price forecasting helps companies fill orders on time, avoid unnecessary inventory expense and plan for price fluctuations. Forecasting professionals must be well equipped with strong analytical and problem-solving skills to mitigate unforeseen losses. Today’s highly volatile market requires individuals who can think critically and increase readiness to rapid environmental and technological changes. Strong interpersonal and presentation skills are also desired to effectively interact with the planning, design, human resources, analytics and cost management teams. The Certified Production and Inventory Management (CPIM) certification, providing an in-depth understanding of internal operations like product forecasting, operation scheduling and inventory movement, offered by The Association for Operations Management (APICS) is well known to employers worldwide.
- Purchasing: It denotes the act of and the financial responsibility for procuring material and services based on customer demands. A Purchasing Manager has to obtain materials in the right quantity, quality, at the right price, at the right time, and from the right supplier, by locating appropriate vendors. The best employees have deep knowledge of the product along with a proficiency in statistics. The Purchasing Manager must have commendable negotiation and communication skills, to be able to retain suppliers and sustain profitable partnerships in order to minimise costs and save time. For instance, recently, Unilever developed a Business Partner Code to ensure their suppliers meet their expectations on social and environmental impact.
- Product Assembly: This stage is considered as the most metric-intensive unit of the supply chain, where firms can gauge the quality levels, production output and team productivity. The job requires an eye for detail so as to monitor and inspect product quality or performance. Knowledge of advanced techniques like Lean Six Sigma and Kaizen is relevant in supply chain management systems. Lean six sigma optimises design and minimizes defective products and services, increasing the revenue and customer satisfaction. Kaizen systematically seeks to achieve small, incremental changes in processes by collaborating with the management. Zara, for instance, has implemented a Lean business model by assembling material from suppliers close to the factory, buying fabric in only 4 different colours and ultimately designing and cutting in-house. Its employees are expected to be adaptable, responsive and agile, in order to make any garment available at any store across the world in just 2-3 weeks by adopting just-in-time logistics management.
- Storage & Distribution: Storage & Distribution cover the monitoring and overseeing of the inventory levels and delivery of finished goods to buying centers. Decision-making skills and critical thinking are required to plan optimization of storage and distribution, to avoid damages and ensure timely delivery to the right destination. Failure to deliver the goods to the right destination can cause the business to incur another round of delivery costs to do two things: to bring back the wrong goods and to deliver the right ones. Due to delays, goods can get damaged and intended recipients may not want to accept and pay for the delivery. The Certified Supply Chain Professional designation, offered by APICS, is the most widely recognized credential in this field. It helps to understand the usage of enterprise resource planning systems and other technologies to improve the entire supply chain management process.
- Delivery: Reliable and on-time delivery is crucial for success and has a huge influence on associated expenses. The supply chain logistics manager provides ongoing analyses in areas such as transportation costs, parts procurement, backorders or delivery processes. He needs to evaluate and select the appropriate channel based on cost and profitability. He must be analytical to resolve arising conflicts through the channel. Michigan State’s Master Certificate in Supply Chain Management and Logistics teaches you to reduce costs across the supply chain, driving operational excellence throughout all levels by gaining an integrated perspective of procurement, operations and logistics. “SCM is competitive,” says Mike Wolfe, director of operations at Delgado Stone Distributors. “A mistake or missed deadline can cost a company a few hundred thousand dollars and open the door to a competitor.”
- Customer service: Providing exceptional customer service is crucial to building brand loyalty and get a leg up on the competition. Customer service entails the following aspects:
- Delivering products to customers faster and with greater accuracy by implementing time management skills.
- Constant tracking of shipments to ensure they reach their destinations safely and on time.
- Maintaining optimal inventory levels so you always have the right items in stock.
For instance, Macy’s, a large American department store, guarantees that online orders are ready for pick up in store in four hours. However, using efficient coordination and clear communication skills, most orders are made ready in just two hours on average. The customer will go back to Macy’s for recurring orders as Macy’s provides quick service.
According to the Wall Street Journal, supply chain companies across the U.S. are on the lookout to find candidates who possess the right mix of technical skills like analytics, forecasting, six sigma, and soft skills, including the 3C’s i.e. Communication, Collaboration and Change. Good communication skills, a strong work ethic and time management are important attributes. Haslam College of Business, for instance, anticipates a 20% increase in supply chain management jobs by 2020. Those with a bachelor’s degree in mathematics, supply chain, computer science, business, finance, operations research or economics can opt for a career in SCM.
Shifting trends have given consumers more power, causing consumer activity to change and forcing retailers to adjust accordingly. Some of the biggest global trends affecting consumer activities are:
- Changing consumer experience – shopping today can be done from home, work, even from a phone. Companies need to set adequate inventory at all times and trace faulty products through their supply chains to ensure availability as per demand.
- Growing e-commerce – online sales account for a high proportion of retail sales today. A strong supply chain helps to reach the customer quickly and often directly. It eliminates the need for multiple distribution centers, reducing costs and increasing order supply. Today, 54% of the world population is living in cities, expected to grow to 66% by 2050. Supply chains, therefore, must focus on shortening the response time to meet citizens’ expectations for convenience, quality and price. Amazon, for example, has already started developing its response to this trend with Amazon Prime Air, a future service that will allow it to deliver packages of five pounds or less to customers within 30 minutes via drones.
A competent Supply Chain team, therefore, helps improve the flow of products, information and money. If you seek to establish a credible place in the SCM field, be assured that with the right career preparation, there are a wide variety of supply chain management career options waiting for you!