What is Supply Chain Management and Why is it Important?

To meet today’s consumer demands, supply chains must be dynamic and agile, data driven and demand aware. A modern, thinking supply chain can be a competitive advantage for organizations that capture and utilize modern data analytics. Supply chains must also be resilient against disruptions caused by severe weather, labor fluctuations or regulatory concerns.

While manufacturers will approach supply chain management (SCM) differently based on their individual goals, the specific products they are manufacturing and delivering, cost analyses, customer demand and other factors, there are some basic components to the SCM process, which include:

The process begins with careful planning and forecasting to determine what resources are required for the fulfillment of orders, and to predict the cost and availability of those resources. This is often accomplished through the use of analytical tools like material requirement planning software.

Careful sourcing of materials is crucial to maintaining production timelines and profit margins. This step requires identifying and working with vendors who can supply the required materials within budget and in the most efficient manner. 

In this phase of the process, companies assemble, test and package finished products. Production operations may be adjusted during this phase, based on customer needs or to improve efficiencies, requiring some alterations in the supply chain.

When delivering final products to customers (distributors, retailers or end-users) the focus is on meeting customer expectations. This means improving efficiency, to be sure orders are fulfilled promptly and accurately, and product quality, ensuring customer satisfaction and minimizing returns.

After products are delivered, customer support plays a role in the SCM process. Here’s where companies will look to improve efficiencies and strive to maintain a positive customer experience when defective, excess or unwanted products are returned. The process of managing returned products is sometimes referred to as reverse logistics.

There are 6 different supply chain models, each focusing on either efficiency or responsiveness and each with its own unique characteristics that support an organization’s goals.

Organizations determine which model to use based on the framework of their particular industry, their management’s focus and the value proposition the business intends to put forth.

These include the continuous flow chain, the fast chain and the efficient chain. All 3 of them prioritize efficiency and are geared towards getting consumers what they want quickly while keeping costs down. 

One of the most traditional supply chain models, continuous flow is used in situations where there is very little variance in production. Manufacturers that produce the same goods over and over again without fluctuation, such as in commodity manufacturing, can benefit from this model.

This supply chain model is optimal for manufacturers that respond to trends by producing products with very short life cycles. It works well for businesses that have to change products frequently and deliver them quickly, before a trend dies out. 

The efficient chain model works well for businesses in very competitive markets that must maximize end-to-end efficiency to reduce costs and preserve profitability in manufacturing and delivering their products.

SCM like these are ideal for situations where there is uncertainty in product manufacturing and provide flexibility for industries that produce custom-order products. Examples of responsive supply chain models are:

This method of SCM works for businesses that make specialty order items, focusing on the company’s ability to ramp up production when needed, while maintaining consistency during times when demand wains.

This hybrid – a combination of the agile and continuous flow models – allows for custom configurations during assembly and production. 

With the ability to be switched on and off easily, this model gives businesses the flexibility to meet demand during peak periods and then manage long periods of diminished volume.

Why is supply chain management important? Effective SCM is crucial to any manufacturing company to reduce cost, maximize production efficiencies and minimize waste, and gain a competitive advantage. Just-in-time delivery, a lean manufacturing concept originated that in Japan, was elemental to the development of modern SCM, but may not serve all of our modern world’s logistical needs.

Today’s manufacturers can use a range of sophisticated analytics methods that didn’t exist in the mid-20th century to achieve lean supply chains.  By using modern analytical software, companies can identify potential supply chain problems before they impact customer relationships, optimize pricing based on demand and allocate resources based on sales forecasts. In the not-too-distant future, supply chain managers could also employ technologies like driverless trucking to maximize efficiency.

There are several important benefits of a robust SCM strategy, like:

At this point you may be wondering, what does a supply chain manager do? Career roles in SCM can revolve around analytics, operations, procurement and logistics, but regardless of their title, professionals in this field are responsible for one thing – making the supply chain more efficient.

The Bureau of Labor Statistics (BLS) calls professionals in this occupational category logisticians. The BLS that job growth for logisticians will increase by 28% from 2021 to 2031, with 24,800 job openings projected for each year.1 While this rate of growth is significantly faster than the average for all occupations, it’s important to note that this growth is projected on a national level and will vary by location. It is also not specific to DeVry graduates and may include earners at all stages of their career, not just entry level.

The BLS attributes this demand to the growth of e-commerce, the growing complexities of supply chain management and an emphasis on timeliness of delivery.

Some examples of supply chain management careers include:

If you want to prepare to pursue a supply chain management career, it’s important to familiarize yourself with the education and experience employers might look for.

Due to the complexities of modern supply chains, companies typically prefer to hire logisticians who have at least a bachelor’s degree in a logistics or supply chain management, according to the BLS.

At DeVry, our Bachelor’s Degree Specialization in Global Supply Chain Management can help you cultivate supply chain and operations skills and explore the diverse cultural, political and economic circumstances of foreign markets. Our MBA Specialization in Global Supply Chain Management can help you level up your SCM skills and pursue career opportunities where a graduate degree may be required or preferred by an employer.

Want to add a credential to your resume while you earn your MBA? Our online Graduate Certificate in Global Supply Chain Management is a standalone credential that can help you elevate your skills in logistics, supply chains and operations research while you work toward a master’s degree with us.²

In addition to earning a degree, consider obtaining industry-recognized certifications that can help you work to become a more competitive candidate. Certifications are much more than resume builders. They help validate the skills you’ve learned and send a clear message to potential employers that you are determined to learn what it takes to meet the challenges of the job.

The Association for Supply Chain Management (ASCM) offers a range of certifications that you may want to consider as you move through your career, each focused on a different aspect of supply chain management.

Supply chain management software (SCMS) and enterprise resource planning (ERP) programs are used in the planning, control and execution of production. Knowledge of platforms such as Shippabo, Magaya Supply Chain, SAP Business ByDesign, Oracle NetSuite ERP or FreightPOP may come in handy as you prepare to pursue SCM career opportunities.

Finally, if you have a strong understanding of project management tools and methodologies, they can help you demonstrate your ability to keep things well organized and respond to challenges effectively while maintaining a positive attitude.