What is Supply Chain Management and Why Is It Important?
Managing the supply chain is an essential part of any business. Supply chain management ensures that raw materials are processed into products, which then reach their distribution venues and go on to the consumer. Organizing a supply chain management system is a demanding job, but if you can organize a company’s operations to be efficient and quick, you can expect to become a highly prized asset to the business.
Here we are going to discuss what exactly supply chain management is and how it has become one of the most important aspects of any business today.
What is Supply Chain Management?
Supply chain management, or SCM, is the management of a business’s processes to make them as streamlined as possible and promote efficiency of both time and cost. In order to effectively manage a supply chain, a manager must liaise with multiple departments within a company, and also a company’s suppliers and those that the company supplies.
If manufacturing furniture, for example, a company would need a steady supply of timber from a supplier, then this wood would have to be processed into the furniture, which would then need to be supplied to distribution venues to reach stores or private buyers. At every step, there is the potential for a bottleneck to occur.
Any restriction in the flow of this wood, as it is turned from raw material into a finished product and moved on to be sold, would disrupt the entire process. These disturbances in the work flow will inevitably cause both money and time to be lost and raise the cost of production of each product, reducing the product’s profit margin. From this small and simplified example, we can see how crucial effective supply management can be to a business.
Why is Supply Chain Management So Important?
Supply chain management revolves around linking a business’s different departments and forming a cohesive chain that your company’s products and processes flow through smoothly. As a Supply Chain Manager tweaks and perfects the chain profitability, customer satisfaction can rise exponentially. When a customer is faced with a delay related to supply, it is often a contributing factor in the loss of that customer, either immediately or at the end of that sale. Similarly, when a customer’s expectations are surpassed by being able to source stock that is immediately available, or your company delivering a product ahead of schedule, a customer is not just likely to return but also recommend your company to their friends.
Supply chain managers also have the opportunity to negotiate rates with suppliers and have direct management responsibilities over stock purchase. This can allow an attentive manager to take advantage of discounts that suppliers may have due to market factors and house any excess supply until it is needed later, which increases profitability. A good supply chain manager will also monitor stock levels closely to ensure that the company does not begin to build up too much inventory.
For example, if a business supplying books online began to hold too much stock of one book, or one genre of books, they would not have the space to hold new releases or other books that may be more popular with customers. If supplies of this book continue to arrive at the warehouse as existing stock goes unsold, the warehouse will fill with unpopular products at the expense of the products the customers want and the customer will take their demand to a competitor who can supply them.
An excellent Supply Chain Manager is often seen as one of a company’s most prized assets. With their ability to control the flow of production, their control over materials expenditure, and the effect their decisions have on a product’s profit margin, it is easy to understand their value. Supply Chain Managers are even influential in the design and composition of a business’s buildings. By reducing the use or levels of stock, then the size of the warehouses and plant buildings can be reduced, and with it the costs of maintenance and energy supply are also reduced. When working with some of the world’s largest companies, these savings can be massive and may even be a factor in a business’s relocation.
How Do I Become a Supply Chain Manager?
The tasks and responsibilities of a Supply Chain Manager are exhilarating but also challenging. Though it is not impossible to progress through a company to the role, the vast majority of Supply Chain Managers have earned a qualification like a Masters in Supply Chain Management.
Becoming a Master of Supply Chain Management graduate and taking your place in the industry has become simpler in recent times. The excess demand for qualified personnel has led some of the world’s top colleges to offer online programs to make a career in Supply Chain Management accessible to all. The flexibility an online program offers has helped many people make the step up, not just to a Master’s degree, but also to the challenge of managing a complex supply chain. When looking for a masters degree in supply chain management, it is important to ensure the college is fully accredited and has a history of successful online programs.
Though often overlooked by the outsider, the Supply Chain Manager is an integral part of our daily lives. Just about every product and all of its components have been through a supply chain, and that chain has been dutifully managed by someone seeking to get the finished product to you as quickly as possible while ensuring that their business is profitable.
Choosing a career in supply chain management creates an opportunity to not just see the world, but also make a mark upon it. Supply Chain Managers touch the lives of millions throughout their career, not just through the products that travel their supply chain, but also through the decisions they make and how the decisions affect their co-workers and customers. Being a Supply Chain Manager takes skill and confidence and there is no better way to prepare yourself for the task than with higher education.