Supply Chain Management (SCM) is a career choice that is exploding due to the rising demands of the private and public business sectors. If you look on the internet, you will find hundreds of online and onsite courses, certifications and programs for those who want to participate in the field. If you think supply chain management is for you, it is important to understand what it is, why it is important and how to start down the career path to becoming an SCM professional.
Six Common Questions on Supply Chain Basics
1. What exactly is the supply chain? The supply chain is made up of the following five basic stages, each starting with an “S”:
● Strategizing: A plan to determine how to deliver your products to consumers in an efficient and cost-effective way.
● Sourcing: Decide which suppliers will provide the goods and services you require to create, store and ship your products.
● Supplying: This is where you supply your product by making it, testing it and packaging it for shipping.
● Sending: This is the logistics phase where warehousing, picking, shipping and invoicing happens.
● Supporting: This is where problems are solved, such as defective products and where good customer service plays a major role.
2. What is supply chain software? The types of supply chain software vary widely, depending on the supply chain phase they work with, but most companies need software to help with logistics, supply and manufacturing status. Although some vendors have combined some of the six phases, most do not include them all because software needs differ from product to product. One exception of software that is helpful for all businesses is that which helps share data with suppliers and chain partners.
3. What does supply chain collaboration mean? This means communicating and sharing data between suppliers and manufacturers, manufacturers and retailers and others in the chain to help the process run smoothly and save on inventory and management costs.
For example, sharing data via supply chain software can alert a supplier when a plant is running low on production materials, or a manufacturer when a store is running low on product. Collaboration helps automate payments and invoicing, too.
4. What does the term, “extended supply chain,” mean? The extended supply chain simple includes every single entity that contributes to creating, storing and shipping a product. SCMs need to know each link in the chain, so if one is broken, they know where to fix the problem. For example, a magazine can’t be mailed out to subscribers if the paper mill doesn’t deliver to the printer.
5. How has globalization of the supply chain affected the business world? A global supply chain may be difficult due to long distances and exchange rates, but modern innovations, technologies, and software have made if far more sufficient. With proper management, it can save you money on supplies, help raise standards of living in developing countries, reduce storage costs, provide opportunities to enter new markets, enable 24/7 service due to varying time zones, and allow business owners to exchange ideas and learn from each other.
6. What new technologies are coming out that will affect the supply chain? Some new technologies that are having a positive effect on the supply chain include RFID tagging, which is a big improvement from the old barcodes, providing a large amount of data quickly that can be easily disseminated throughout the supply chain. Other technologies include the Internet of Things and Big Data, which will transform the supply chain into a more mobile, digitally-connected grid where each link will have the information necessary to keep things running along problem-free.
Understanding the Complexities of the Supply Chain
According to the Council of Supply Chain Management Professionals (CSCMP), the supply chain encompasses all of the steps manufacturers, retailers, distributors and other companies take to produce and deliver a variety of products to consumers. All of these entities work together to complete the design, production, and delivery of services and products for customers to buy.
The supply chain enables producers to give customers what they want, when they want it, and at a reasonable cost. The supply chain network includes:
- Vendors: Produces and provides raw materials.
- Producers: Transforms raw materials into products.
- Warehouses: Stores raw materials and products.
- Distribution Centers: Collects and delivers products.
- Retailers: Offers products to consumers via online or brick and mortar stores.
Supply chains are the reason that the producer can provide customers with what they need, when and where they need it, at the price they want.
Why the Buzz: The Many Benefits of Supply Chain Management
SCM professionals work to provide products to people faster and more efficiently, and at a lower cost, too. The cooperation of SCMs working together can lower the cost of items by making the raw materials easier and less costly to access. For this reason, most companies require the assistance of well-training SCM professionals, and according to the CSCMP, businesses like Toyota, Dell, Proctor & Gamble, Nokia and Wal-Mart all attribute their overall success to SCM.
1. Improved Customer Service – SCM can improve customer service by focusing on product:
- Availability: Consumers look for a variety of offerings in any quantities they desire.
- Location: Customers want products to be there when they need them, such as when a repair shop needs computer parts to fix a customer’s PC.
- Support: Consumers expect fast repairs, as well as the quick delivery of replacement products, if necessary.
- Delivery: People expect to get their products in a timely manner, for example, a gift that has to arrive in time for a friend’s birthday.
2. Lower Operating Costs – SCM reduces overall operating costs by:
- Lowering Purchase Prices: Retailers keep prices low for consumers by not having to store, protect and insure expensive inventory items, but they need them delivered quickly when consumers want them, such as a big box retailer who needs the latest HDTV delivered to a customer.
- Decreasing Total Supply Chain Expenses: SCMs create efficient networks that fulfill customer service objectives at the least expense, helping companies compete better in today’s busy marketplace. One example, according to the CSCMP was when Dell decided to build each computer according to what customers ordered, shipping directly to them.
- Keeping Production Costs in Check: Manufacturing plants count on supply chains to deliver materials on time to prevent the shutdown of a production line due to a lack of materials. The CSCMP reports that an unanticipated delay of a shipment to an automotive assembly plant, for example, can cause a temporary factory closing that can add up to millions of dollars a day in lost wages and a whopping $20,000 each minute in lost revenue.
3. A Bigger Bottom Line – SCM can increase profits by:
- Controlling Supply Chain Costs – Reducing supply chain prices can save companies money and increase profits overall.
- Speeds Up Cash Flow – SCMs can design a supply chain that moves faster, enabling them to bill customers quicker; therefore, they get paid sooner.
- Decreases Fixed Assets – Supply chain management makes things work efficiently and reduces the need for fixed assets like warehouses, factories, and transportation vehicles. A company can save money if they can cut down on the number of buildings and vehicles they need to move and store product.
Supply chain managers can provide many benefits to businesses, but they also help with ensuring human survival by designing supply networks to help with disaster relief missions, medical emergencies, terrorist attacks and other types of public disasters.
Stepping Stones: The Supply Chain Management Career Path
Those interested in supply chain management can follow a number of career paths depending on their talents and interests. They can also choose the type, location, size, and structure of a particular company they want to work for, as well as the various departments within a particular company. SCMs can choose from a huge variety of industries, types of employers and industries, from consulting firms and logistics services, to manufacturers and retailers during the course of their careers.
The SCM Mindset – To be successful as an SCM, you should aim to:
- Be a highly-efficient decision maker who takes responsibility for all your actions.
- Gather skills that are transferable to a variety of positions and tasks.
- Become a valuable, cooperative team player that people want to work with often.
- Learn a large number of business skills including the supply chain process through education, experience, and hands-on training or internships.
Supply Chain Management: Entry Level Positions on Your Path to Success
SCM program graduates can go for entry-level jobs in logistics or procurement as a purchasing, traffic or inventory control analyst or a buyer. Graduates who demonstrate strong managerial skills can climb the ladder to the head of operations, procurement or logistics for all kinds of manufacturing, medical, service and retail businesses, both public and private. These jobs include:
● Buyer: Manages the purchasing of goods and services for a company by working with internal sources, like production, operations and marketing, and also external sources, like finding and managing contracts and relationships with outside suppliers.
● Planner or Analyst: Assembles and analyzes data using quantitative methodologies to make recommendations, and improve and manage the supply chain process.
● Inventory Specialist: Assures inventory accuracy and quality by creating a supply process to keep costs down and improve customer service. Manages the movement and storage of stock, and improves worker productivity and space usage in distribution areas.
● Materials Planner, Materials Analyst: Manages inbound inventory and raw materials by collaborating with internal departments, as well as external suppliers for more cost-efficient delivery to the production line. Some responsibilities include inbound transporting of materials, scheduling, receiving and storing.
● Traffic Analyst or Transportation Coordinator: Chooses and monitors transportation carriers for inbound goods, as well as relationships with internal customers and carriers to deliver goods promptly.
● Scheduler, Production Coordinator or Operations Analyst/Planner: Coordinates daily production schedules and predicts production needs for the future using statistical process control and predictive analysis.
No matter what they do, almost every business and association has to purchase goods, manage inventory, create products, manage consumer relationships and move supply, so the opportunities for supply control managers are nearly endless.
A Starting Point: Where to Look for Jobs in SCM
Fresh faced graduates can look for work in the following areas:
● Retailers and Distributors– Retailers and distributors employ SCMs for inventory and transportation cost management, as well as to improve customer service by enhancing in-stock availability.
● Service Firms – Service firms help with supply chain management by providing professional services, such as commercial real estate, managing, financing, and executive recruiting. The service firms themselves also have a need for supply chain expertise to help with their own operations. Supply chain opportunities are available in the service sector in hotels, banks, restaurants and more.
● Production and Manufacturing Companies – Manufacturers create many products for sale or resale to private consumers, other companies, or even both. For example, a laptop manufacturer may simultaneously serve as a supplier to a large educational institution, but also supply laptops to a small retail store that sells to consumers.
● Third-Party Logistic Firms – Third-party logistics (3PL) providers and asset-based 3PLs offer a variety of supply chain services to their customers. Non-asset based 3PLs advise clients on supply chain operations and may provide warehousing, transportation, and other 3PL services.
● Transport Company – Transportation companies supply freight delivery services in all modes of transportation including water, air, motor, rail or even via a pipeline. Most transportation firms offer intermodal transportation services to their customers, moving basic components, raw materials, and other items through the supply chain.
● Consulting Firms – These firms provide advice to customers who need supply chain management help by offering a broad range of services. They offer information on effective supply chain processes and can help create specialized supply chain network designs and improvements based on the critique of a company’s current supply chain practices.
● Government Agencies – Agencies operating at the local, state or federal level benefit from the management of the supply, purchasing, and transportation of items, as well as their storage and distribution.
● Universities and Educational Institutions – These institutions teach people who want to increase their level of supply chain management expertise. These organizations combine teaching, research and industry partnerships to increase knowledge, resources, and interest.
Supply chain management means looking at the overall supply chain and managing each link to enable the efficient movement of products, information and services between suppliers, manufacturers, and customers. At the same time, an SCM must consider the end goal, which is to increase growth and revenues, while reducing costs.