business plan in supply chain management

Supply Chain Planning: Strategy, Processes and Practices

Supply chain planning helps your business meet customer demand in the most efficient way possible. But to increase profitability and keep demand from outstripping supply, every step in the supply chain planning process—from ordering raw materials to product delivery—has to be reliable.

The process also has to be adaptable, efficient and accurate to address changing market forces. It sounds like a tall order, but there are best practices that can help.

Video: What is Supply Chain Planning (SCP)?

What is Supply Chain Planning?

Supply chain planning helps you match product supply with customer demand using forecasting, pricing strategy and inventory management techniques. Before delving into the details of supply chain planning, here are two key concepts you need to know.

Supply chain planning vs. supply chain execution

Supply chain planners are long-term prognosticators, asked to peer months or even years into the future. But their predictions aren’t based on what they see in crystal balls. Instead, they analyze manufacturing, logistics and inventory data to make their plans.

Supply chain execution, on the other hand, is the day-to-day implementation of that plan—order fulfillment, transporting goods, warehousing. Think of them as two sides of the same coin.

What is supply chain management software?

Supply chain management software supports planning and execution. It forecasts demand and manages inventory so you can keep costs down and deliver products faster. It provides real-time updates about the status of your supply chain, lets you inspect your operations and helps balance supply with demand.

Supply Chain Benefits

Supply chain planning is a way to improve your operations by standardizing procedures, reducing waste and planning for variability.

It also plays a pivotal role in price and delivery—two of the most important aspects of customer satisfaction. A well-run supply chain lowers manufacturing costs, improves the reliability of deliveries and helps you respond to unplanned demand.

Importance of Supply Chain Planning

Supply chain planning affects your top and bottom lines. Stock shortages can result in lost sales or rush shipping charges. Too much inventory ties up cash. And over-forecasting and canceling orders can damage important relationships with suppliers and disrupt your own business.

It’s difficult to argue with the why , but there’s often less agreement on how the process should be structured.

Supply Chain Planning Process

Achieving desired business benefits requires strategic, long-range supply chain planning. However, in a flexible supply chain, managers are empowered to respond tactically to changing conditions and alter those plans on the fly.

Strategic planning:

This phase focuses on the long term and establishes a framework for your supply chain. In this phase, you’ll factor in elements like the location of your business and suppliers. You’ll map transportation routes and determine the size and location of warehouse space for materials and finished products. If you already have a location, this is when you determine how to leverage it.

Tactical planning:

The next phase delves deeper into individual aspects of this framework. For example, you might place standing purchase orders with certain suppliers for just-in-time delivery. You may decide to store safety stock of key materials to avoid shortages. And even the best-laid plans can require tactical adjustment, such as changing sourcing strategy or rebalancing inventory among overseas warehouses if new tariffs raise your costs, for example.

Supply Chain Strategies and Methods

Many planners use a combination of just-in-time delivery and safety stock to cut costs while hedging against shortages. The just-in-time approach delivers materials right before they are needed for manufacturing or other processes. With less inventory, less cash and space are tied up.

But companies risk pauses in production if there are delays in shipping or problems with materials. Alternatively, with the safety stock approach, companies store more inventory to provide an extra buffer against supply chain disruptions; the downside is an increase in inventory costs.

Supply Chain Planning Elements

A product requires supply chain planning at every phase of its life cycle. Steps include:

Demand planning and management: Accurately forecasting demand for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without having to store surpluses. Supply chain planners look at historical customer behavior, projected versus actual sales, market conditions and other factors. Increasingly, they use predictive analytics to better understand the demand for a particular product—how much, where and when it should arrive. Then, supply chain planners estimate the internal demands on each link in their supply chains.

Supply management: Supply management involves sourcing and procuring trusted sources of raw materials, components, software and other goods that go into making your product or service.

Production management: In parallel, capacity planning addresses your own company’s production lines in terms of machinery, staff and efficiency. The key question: How much can we realistically produce during the planning period? Keep in mind that this could be less than your demand forecast.

Inventory management: How a company orders, handles and stores goods can significantly impact costs, operational efficiency and customer satisfaction. Companies aim to manage inventory levels with supply chain partners to keep stock on hand at an optimal level while ensuring reliable customer service.

Inventory management can also provide other financial advantages, such as the ability to capitalize on volume prices from suppliers and accurately include the value of inventory in assets listed in company balance sheets and tax filings. More sophisticated inventory management systems can identify high- and low-performing products and trigger reorders when stock dwindles.

Pricing strategy: Setting an optimal price is part art, part science. Honing an effective strategy is critical, however, to manage the balance between supply and demand . For example, price cuts can stimulate sales during periods of low demand, helping you cover the fixed costs of production lines and your workforce.

Event management: This involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain and developing contingency plans, such as workarounds, buffers and backups.

Integrated business planning (IBP): This is an approach that links your supply chain planning with the rest of your business, from sales and operations through finance. Because IBP gathers information from across the enterprise, it also can help companies perform better predictive analysis to grow the business and manage risk.

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7 Steps to Supply Chain Planning Success

Here are seven basic principles that leading supply chain planners adopt:

• Synchronize supply chain planning and execution, how often you update your data and planning horizons—or how far into the future your company will project.
• Systematically manage data so that you can use consistent information throughout your supply chain planning and management processes. This includes data about items, customers, manufacturing resources and suppliers.
• Build cooperative relationships with suppliers and primary customers so you can more easily adjust forecasts, orders and increase sales.
• Examine the data used in your demand planning for flaws, such as forecast errors or bias.
• Focus on actual point-of-sale data more than your company’s sales orders.
• Continuously analyze the product lifecycle, looking for ways to improve the links between product development and the supply chain.
• Create a culture of steady improvement to better understand customer behavior.

Supply Chain Planning Trends

Despite the fact that companies increasingly use technology to improve supply chain planning and management, demand forecasting remains a formidable challenge for many organizations.

Companies are turning to predictive analytics to better understand buyer behavior and other factors that influence demand. Predictive analytics is also becoming an important tool for planning the production, distribution and other supply chain functions needed to fulfill that demand.

Supply Chain Defined

A supply chain is a coordinated network that includes all the companies, facilities and business activities involved in sourcing, developing, manufacturing and delivering products. Each business relies on its supply…

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Supply Chain Management 101: Principles, Examples, and Templates

By Andy Marker | June 25, 2017 (updated February 22, 2022)

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Globalization has become an undeniable part of commerce over the last few decades, as large companies have grown first to source labor and parts from developing regions, and then to start selling in those same areas as they grew in wealth and buying power. Supply chains have had to keep in step, passing through numerous countries to obtain goods most efficiently and cost effectively, and growing more complex as a result. And on the other end, the supply chain grows more frayed in order to deliver to countless countries for consumption. For the largest companies, managing a supply chain can require dedicated teams in every area the chain touches. It’s safe to say that supply chain management is both an art and a science.   This article will cover what a supply chain is, with examples; discuss how supply chain management works and its principles; and vital concepts in the field. Then we’ll move on to current issues and where the field is going. Finally, you’ll find useful resources, templates, and education programs. Ready? Let’s get started.

What Is a Supply Chain?

A supply chain is a collection of suppliers required to create one specific product for a company. The chain is made up of nodes or “links,” which can include multiple manufacturers for parts, then the completed product, then the warehouse where it is stored, then its distribution centers, and finally, the store where a consumer can purchase it. The concept of the chain is important, because each link is connected in a specific direction and order, and the next link cannot be reached without going through the previous one. Each link adds time and costs, and can involve labor, parts, and transportation. Every product a company carries may have its own supply chain, though they may use certain suppliers for multiple products. You can see why this gets so complicated, especially for international supply chains.

The process described above was that of a typical retail supply chain. However, there are many different types in practice. Here are three examples from well-known masters of supply chains:    Example: Walmart and “Big Box” Retailers The “Big Box” store, which represents one of the major disruptions of the retail model from the last century, thrives on size, ubiquity, and well-planned supply chains to drive out the competition. How else would a company like Walmart make a profit on a t-shirt made overseas that retails for $5.00?   Walmart succeeds by having fewer links in its supply chain, and buying more generic goods directly from manufacturers, rather than from suppliers with brand names and markup. It uses “Vendor Managed Inventory” to mandate that manufacturers are responsible for managing products in warehouses owned by Walmart. The company is also is particularly choosy with suppliers, partnering only with those who can meet the quantity and frequency it demands with low prices, and with locations that limit transportation needs. They manage their supply chain like one firm, with all partners operating on the same communication network.    By buying at large enough quantities to take advantage of economies of scale, moving products directly from manufacturers to warehouses, and then delivering to stores which are large enough to be distribution centers, it reduces links in the supply chain and cost per item, translating to low prices for consumers. 

Example: Amazon and “Ecommerce Platforms” Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s “online big box” concept is a perfect example of unique supply chains. As an e-commerce shop, obviously they cut the retail store out and ship from distribution center to consumer’s homes directly. Where Amazon innovates is both in its supplier-side and its final supply chain link - delivery.    Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As a result, Amazon has more things than any other online store, so when people shop online, they think of Amazon. Then, it produces everyday goods cheaply, and underbids suppliers. Next, their warehouses make serious use of automation to store items going to like destinations together, ready for immediate transport. Finally, its investments in delivery staff and technology make 2-day shipping a basic expectation, and even same-day delivery a possibility. Amazon ditches third-party logistics (3PL) and fulfills orders itself.

Example: Tesla and Specialized, Owned Chains Automotive manufacturing has come a long way since Henry Ford used assembly line manufacturing to speed up the production of a single car model in a single color. Now, in a time when even American carmakers are opening factories abroad, Tesla is making innovative, incredibly popular, and luxurious cars right in California, a location with incredibly costly real estate.   Rather than having a long supply chain of cheap part makers, they have a vertically integrated supply chain, with a full-service auto plant near its corporate headquarters and plans for a supplier park and a massive battery factory, and Tesla owns it all. Even more interesting is the digital supply chain the company promotes - new firmware and algorithm updates are pushed out to existing car owners over the cloud.

What Is Supply Chain Management?

As the name implies, supply chain management (SCM) is handling and optimizing all the many complicated facets of a supply chain, involving goods and services. Even ensuring timely handoff from manufacturer to shipper to supplier to shipper to buyer is a massive task, but to do it cost effectively and build net value is truly a challenge.    Supply chain management is so important because modern commerce exists in a networked global economy. Most businesses are specialized - even department and big box stores are only really equipped to sell to customers, despite their wide variety of products. The value of vertical integration is hard to justify when communication costs and SCM tools are so inexpensive - it almost always makes more sense to outsource for price efficiency.

The concept of supply chain management was in effect long before the term was created in 1982. In the colonial era, international trade by ship was already making for complicated transportation issues and the need for efficiency. During the Industrial Revolution, the ability to quickly produce goods with machine assistance led to the need to manage significant inventory and constant consumption. By the time history arrives at Henry Ford’s famous assembly line for the world’s first car production in 1913, supply chain management had become an art.    As the century wore on, more companies were producing more goods and looking for ways to reduce costs. They vertically integrated into owned supply chains to try reducing costs at each stage. In the 1980s and on, globalization became a realistic dream for many companies, because of computer systems, easier communication, and commerce-friendly trade laws. Around the 1990s, it became a common practice for firms to specialize, and focus on core competencies and outsourcing the rest, abandoning the vertical integration of the previous era. At this point, supply chains became truly complex, in order to coordinate hundreds of otherwise unrelated and geographically-distant manufacturers, suppliers, shippers, warehousers, and retailers.    Now, in the “SCM 2.0” era, the Internet and new methodologies have led to collaborative platforms and democratized processes. This is allowing smaller competitors to use some of the same manufacturers as major players, and reducing inefficiencies for those manufacturers as a  result. Better communication and planning tools are providing a way for small and large companies alike to manage even more complex supply chains.

Variants of SCM

Global SCM: The combination of global manufacturing with supply chain management, which must account for tariffs and local taxes as goods and services travel internationally to ultimately provide greater value at the end of the chain.   SAP SCM: Systems, Applications, and Products (SAP) is a software company that revolutionized logistics and enterprise resource planning. It provides an automated way to manage supply chain networking, supply chain planning, and supply chain execution, along with production planning, business forecasting, and demand planning.   Logistics and SCM: The art of coordinating efforts between every member of the supply chain to get products from their source to the consumer.    Purchasing and SCM: The focus on the monetary aspect of SCM, from costs to value added at each link in the supply chain.

Principles of Good Supply Chain Strategy

‌ Download Supply Chain Management Checklist

The Basics of Supply Chain Management Processes

There are key supply chain processes that you must take into consideration to effectively understand and manage them. These processes are all at play regardless of the type of supply chain you’re using.   Customer relationship management (CRM) comes first, because as the principles of SCM state, you must adapt everything in the supply chain to the customer. If no one is buying, there’s no need to produce anything. At the front of your supply chain, where a store’s staff interacts with its consumers, they must have plans in place for ongoing relationships. They need CRM tools to gather customer information for marketing and market research, all to determine the products and services to offer in the future.   Customer service management is another process that ties in, as it is where you gather negative and positive feedback to determine future needs.   Demand management is closely linked with the previous two, as it takes customer interactions and orders into account to determine the workload all the way up the supply chain. At its core, customers buying more means make more, and customers buying less means make less. Customer forecasting is an important task that analysts must perform well to determine the current demand and what it will be in the future, to prevent waste in the supply chain.   Product development is an important part of the supply chain that is informed by consumer demand. You must work with CRM and customer service data to determine what they want, which influences new products, product line extensions, and also what to stop making. You must integrate suppliers in this process because it affects cost, quality, and delivery time.   Supplier relationship management goes without saying - if you want to produce your products on time and on budget, you need a solid rapport with everyone you’re outsourcing to in the chain. This impacts manufacturing flow management , which ensures everything gets where it needs to go without delay, and at the correct spec.    Order fulfilment involves coordinating with distribution centers and either retail locations or 3PL to get the product direct to consumers. You’ve now made it all the way back to the beginning of the cycle, and need to pay attention to new CRM and customer service data.   Returns management , also known as the “reverse supply chain,” is a vital part of the flow of products that doesn’t fit perfectly into the clean supply chain cycle. It involves picking up online orders from 3PL locations or from consumers’ addresses and accepting returns at retail locations. Once these items are put back into inventory, they must be ready to get to a different customer while the product run is still live. 

What Supply Chain Managers Look for When Managing Supplier Relationships

One of the most complex parts of SCM is handling all the other people in the supply chain. They have their own needs and motivations, and to keep them all happy and working together with partners they are only loosely affiliated with is a challenge - especially when trying to meet deadlines and turn a profit. The following are what managers should focus on most in such relationships:   Org Chart and Leadership Style: How is the supplier’s organization set up? Is it a vertical or horizontal structure? Is the leadership strong and long lasting, or fickle and prone to change? You need to know who you’ll be interfacing with, and who will be the next one in line should some shakeup occur. Business relationships are always between people, and don’t always survive a reorg.    Management Style: How do the leaders at this supplier run their shop? Make sure it works with your crew. A micromanager at a relatively replaceable link in your supply chain will waste inordinate time, just as a hands-off manager at a vital link could result in sloppy delivery or substandard product quality.   Company Culture: Always important for working with suppliers, determine what kinds of people rise to the top, and how everyone acts when nobody's watching. If, for example, middle managers are constantly in fear for their jobs because of ruthless quarterly performance reviews, they may over-promise, make excuses, or otherwise be unstable work partners.    Product Flows: Once you know that you can work with the people, make sure their facilities are in order. Are they equipped for orders of the size and frequency you plan to make? How do they handle emergency, fast-turn around orders? What about other customers - are they only able to use their facilities for your product flows at certain portions of the month due to full inventory? Leave no stone unturned.   Information Flows: Just as vital is the ability to control information about the day-to-day flow of materials, and to communicate and coordinate long-term plans. Is the supplier up on their product details, inventory, and SKU organization? Is their security and encryption up to the standards of your company, and your industry? Big data is useless if the right people don’t see it in time.   Rewards and Risks: Take into account opportunities and threats of working with this supplier. Maybe they’re well-equipped to handle your exact product because they also work with your competitors. Perhaps they are new and establishing themselves, so offer a substantial discount, but may not be able to deliver on time? Do what’s best for the company, and use risk assessment to keep your whole supply chain operable.

Vital Supply Chain Management Concepts to Know

Having a passing familiarity with the following terms will help you see just what kind of skillset and abilities will be required when working in supply chain management:   Border Adjustment Tax: Also known as a destination-based cash flow tax (DBCFT), it is a tax levied on imported goods which is important to know in global supply chains.   Customer Relationship Management: Also known as CRM, this concept refers to providing ongoing service to customers and collecting data about their likes and purchases. There are also CRM tools that help automate and record interactions with customers.   Cumulative Mean: A figure for knowing how much or how little to produce in advance, involving mean orders with all previous data treated as equally useful.   Demand Management: Understanding customer behavior and patterns to control how much is ordered and produced at each link in the supply chain, with the goal of eliminating wasted production.   Financial Flows: Credit terms, payment schedules, accounts payable and receivable, and other factors that you must monitor to determine if a supply chain is profitable or not.   Information Flows: Transmission of orders, delivery status, and other data that influence the supply chain’s responsiveness to demand.   Integrated SCM: This is a method of SCM wherein all of the links are tightly integrated, operating almost as one company rather than a loose association of buyers and sellers.   Inventory Management: Monitoring and controlling orders, storage, and use of owned components to create the products your company sells.   Lean Six Sigma: A data-backed philosophy of continuous improvement that focuses on preventing defects and mistakes rather than discovering them later, which reduces waste and production time via standardization. Read Everything You Need to Know About Lean Six Sigma to learn more about this methodology.    Logistics: The physical movement of products from one link in the supply chain to the next, and the practice of improving their efficiency.   Make vs. Buy: A simple evaluation of whether it is more cost-effective and time-efficient to produce a required product with your company’s existing resources, or to outsource the need.   New Product Development: The creation of new products both in response to and in anticipation of customer demand, using data gleaned from CRM and the whole supply chain. Read Innovation for Everyone: Everything You Need to Know About New Product Development to learn more about this process.   Operational Accounting: Accounting for a company that focuses on planning, directing, and controlling of daily activities by their costs and eliminating waste.   Physical Flows: The actual movement of parts and products throughout the supply chain, which the Logistics team must manage and analyze to keep going without pause.   Project Management: The process and tools involved in ensuring that a codified piece of work (project or product) gets done on time while keeping all contributors aware of their next step.   Reverse Supply Chain: Aftermarket customer service, which may involve accepting returns, refurbishing and discounting, or otherwise finding use for the reacquired inventory.   Risk Management: Identifying, evaluating, and then choosing which risks to address first, with the goal of reducing overall risk in a supply chain.   S&OP: Sales and Operations Planning is a management process that aligns its constituent parts to ensure that the organization is only focused on operations that improve sales. Learn more about S&OP here .   Strategic Sourcing: Formalizing a company’s information gathering in order to use its purchasing power to take advantage of the best values in the marketplace of suppliers.   Theory of Constraints: A methodology that identifies the largest limiting factor in production, then finding a way to remove it to improve the efficiency of the entire production.

Current Issues in SCM

In addition to the major terms, it’s important to keep aware of legal, political, and social events which affect supply chain management when seeking a career in the field. Here are some of the bigger issues of the day:   Dodd-Frank Decision: This was a 2010 law which included a clause on “Conflict Minerals.” It requires companies to audit their supply chains in order to determine whether gold, tungsten, tantalum, and tin came from the Democratic Republic of the Congo, and report on their due diligence. It adds an extra layer of complexity and costs to SCM for those involved in chains with those minerals.   NGO Actions: Activist groups of all kinds work to end common practices within major companies’ supply chains, such as sweatshop labor, or push consumers towards less complicated supply chains by encouraging them to support local businesses and farms.    SEC Regulations: Whereas NGO actions can force a company’s hand for PR reasons or changing the marketplace of ideas, the Securities and Exchange Commission can slap that same company with fines, making company’s quick to comply. Third-party audits of supply chains are an important part of keeping in step with these regulations.    SECH Ratings: This is a rating that involves economic, social, and environmental judgements to gauge a company’s overall sustainability.   Transparency: Though protecting data is important, certain measures of transparency can improve company performance. Among consumer products, many younger, disruptive brands make their supply chain a selling point in marketing by being upfront about how and where they get their components, and where they make their products. The reasoning goes, if a company is hiding something, there must be an unethical component to it.   Sustainability Measures: As major companies and countries around the globe move towards sustainable production, all supply chains become impacted. Whether due to changing regulations or seeking good PR, many companies are working to reduce pollution and other issues in their chain.

The Future of Supply Chain Management

Aside from the issues of the day, it’s also vital to see where the field is going. The future of SCM is bright, but certainly evolving. We asked a group of experts and innovators in supply chain management to discuss what they believe the future of SCM holds: ​

Jake Rheude , Director of Business Development and Marketing for Red Stag Fulfilment

Over the next decade, we will see massive and disruptive forms of innovation both in terms of technology that expedites the speed at which customers receive their products ( drone delivery ) as well as technologies that drastically enhances the online shopping experience for customers, ( virtual reality ).

While these and other technologies no doubt have the opportunity to significantly change the landscape of online shopping and the supply chain, I expect we will see firms diverge on two different strategies. Some will rush to implement these costly new technologies in order to drive down the total time between an order being placed and last mile delivery, while other firms will stand by the current landscape (for most B2C online sellers) of product delivery in approximately two-days, acting cautiously, particularly in regards to the cost of these new technologies versus their impact on the overall value chain for consumers.

Certainly, there are niche industries where significant investments in drone delivery technology will provide a distinct competitive advantage, but I predict that for many B2C online sellers, the impact on the overall value chain of these new technologies will be misaligned with a consumer's perception of value, and therefore make the initial cost of these new technologies unjustified.

Lauren Stafford , Digital Publishing Specialist for Explore WMS

Embracing big data is an essential principle of modern SCM, specifically real-time data which has the potential to improve the efficiency of a supply chain and negate potential risks to strategy. We know that logistics optimization through technological innovations and data integration can make supply chains more efficient and more financially sound.

The future of the multi-modal SCM depends on successful integration with data and systems to achieve synchromodality. To achieve this, there needs to be a connection to all available transport modalities in the form of a real-time data flow. Once any issues with connectivity are addressed, a ranking system is required to consider a variety of variables such as dock schedules and material restrictions. Pricing data is another integral component.

The great advantage of a synchromodal platform is that it’s informed by every available option and makes a selection based on key factors like speed requirements. There is still significant work to be done in terms of how best to access and integrate a supply chain partner’s real-time data but, as these platforms are developed, we’re likely to see faster order processing times for large shipments and systems which can help generate a better ROI. The way we understand it, SCM is changing because now an efficient supply chain can be a competitive asset as opposed to a cost center.

John Boyd , founder of The Boyd Company, Inc

Probably the most dynamic link in the supply chain in recent years has been the "last mile": that movement of goods from a DC to a final destination in the home. E-commerce king Amazon has done much to challenge and ultimately rewrite the rules of last mile delivery. Last mile delivery has also produced a new warehousing subsector: the locker. Studies show that online shoppers not only want their packages now, they also want their packages delivered to places other than their homes. These lockers can be viewed as "micro warehouses" and will come with additional costs. We expect many to be operated by an emerging sector of third-party logistics (3PL) providers specializing in this particular segment of the supply chain.

Lockers are now common in Europe, where densely populated and congested urban centers make them a natural fit. We anticipate that lockers will also become the next boom sector within logistics/distribution site selection in the United States. Amazon already has automated lockers in six states, while the U.S. Postal Service has lockers located within post offices in the Washington, D.C., area.

Upstart third-party logistics providers will be looking for sites where they can locate lockers, such as in transit centers, apartment buildings, convenience stores, or any establishment that provides off-hours access for picking up packages. Also, the growing online meals industry is expected to fuel the need for temperature-controlled lockers for the delivery of perishables.

Careers in Supply Chain Management

With a bright future filled with unique challenges, a career in SCM is a strong choice. It might be surprising to hear about an industry that’s all about outsourcing and automation, but new experts are more vital than ever for global organizations and even local ones to grow. Look at these industry stats:

Career Paths

What kind of positions can you take on in supply chain management?   Supply Chain Business Analyst: Examine your company’s workflow and come up with creative ways to streamline its business processes. Live and breathe efficiency.   Inventory Control Administrator: Ensure that inventory systems’ data is accurate with physical inventory, troubleshoot discrepancies, discover root causes and interact with everyone related to this inventory.    Purchasing Specialist: Work out deals with suppliers and compare bids to minimize cost across the supply chain.   Procurement Manager: Research, evaluate, and purchase large quantities of products for companies to resell or use in operations. Determine what is in your company’s store, ecommerce shops, and more.    Operations Analyst: Evaluate, report on, and improve the management of activities that generate recurring revenue for your organization, i.e. its core competencies.   Material Planning Manager: Plan, monitor, and manage products and the materials required to make them in your organization’s manufacturing operations. You ensure the constant flow of materials so the factory never runs out. 

Logistics Analyst: Evaluate and report on transportation of goods and services up and down your organization’s supply chain, ensuring that everything gets where it needs to go and when it needs to get there.

Top Higher Education Programs

Supply chain management is a game with global stakes, as such major universities and academies around the world offer Bachelor’s and Master’s degrees in the subject. If you want to secure a job in the sector with a Fortune 500, becoming accredited in SCM is vital. Look at some of the top schools on this list for more details on breaking into the industry:

• Cambridge University
• Copenhagen Business School
• Cranfield School of Management
• Eindhoven University of Technology
• London Business School
• Vlerick Business School

Certifications in Supply Chain Management

If a full Master’s program seems like too big a commitment, explore some of the short-term certifications available below. They give you a shot at entry level jobs if you’re inexperienced, and are a nice brush-up on current SCM standards for seasoned professionals.

• Chartered Institute of Supply Chain Management (CISCM) Chartered Supply Chain Management Professionals (CSCMP)
• Institute for Supply Management (ISM) Certified Professional in Supply Management (CPSM)
• Institute of Supply Chain Management (IOSCM)
• International Institute for Procurement and Market Research (IIPMR) Certified Supply Chain Specialist (CSCS) , Certified Procurement Professional (CPP) and Certified Supply Chain Associate (CSCA)
• International Supply Chain Education Alliance (ISCEA) Certified Demand Driven Planner (CDDP) and Certified Supply Chain Manager (CSCM)
• Association (SCMA) Supply Chain Management Professional (SCMP)
• The Association for Operations Management (APICS) Certified Supply Chain Professional (CSCP) and Certified Production and Inventory Management (CPIM)

Supply Chain Management Templates

Outside of the physical work of checking inventory, or the personal work of communicating with different members of the supply chain’s links, much of your work as a supply chain manager is using systems and dashboards to get an understanding of logistics, operations, and flows. What follows are some templates that can help manage and streamline workflow, while understanding and sharing inventory reports and more.

Download Risk Management Matrix Template

Excel  |  Word  |  PDF  |  Smartsheet

Download Stock Inventory Control Template

Excel  |  Smartsheet

‌ Download Supply Chain Dashboard Template

‌ Download Microsoft Excel Template for Choosing MRP Software

‌ Download RFP Vendor Template

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Supply Chain Management (SCM): How It Works & Why It's Important

What Is Supply Chain Management (SCM)?

Supply chain management (SCM) is the process of managing the flow of goods and services to and from a business, including every step involved in turning raw materials and components into final products and getting them to the ultimate customer. Effective SCM can help streamline a company's activities to eliminate waste, maximize customer value, and gain a competitive advantage in the marketplace.

Key Takeaways

• Supply chain management (SCM) is the centralized management of the flow of goods and services to and from a company and includes all of the processes involved in transforming raw materials and components into final products.
• By managing the supply chain, companies can cut excess costs and deliver products to the consumer faster and more efficiently.
• Good supply chain management can help prevent expensive product recalls and lawsuits as well as bad publicity. 
• The five most critical phases of SCM are planning, sourcing, production, distribution, and returns.
• A supply chain manager is tasked with controlling and reducing costs and avoiding supply shortages.

Investopedia / Alex Dos Diaz

How Supply Chain Management Works

Supply chain management represents an ongoing effort by companies to make their supply chains as efficient and economical as possible.

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of a product . By managing the supply chain, companies can cut excess costs and needless steps and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories , internal production, distribution , sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market does so as the result of efforts by multiple organizations that make up a supply chain. Although supply chains have existed for ages, most companies have only recently paid attention to them as a value-add to their operations.

A supply chain manager's job is not only about traditional logistics and purchasing but finding ways to increase efficiency and keep costs down while also avoiding shortages and preparing for unexpected contingencies. Typically, the SCM process consists of these five phases:

To get the best results from SCM, the process usually begins with planning to match supply with customer and manufacturing demands. Companies must try to predict what their future needs will be and act accordingly. This will take into account the raw materials or components needed during each stage of manufacturing, equipment capacity and limitations, and staffing needs. Large businesses often rely on enterprise resource planning (ERP) software to help coordinate the process.

Effective SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails working with vendors to supply the materials needed throughout the manufacturing process. Different industries will have different sourcing requirements, but in general, SCM sourcing involves ensuring that:

• The raw materials or components meet the manufacturing specifications needed for the production of the goods.
• The prices paid the vendor are in line with market expectations.
• The vendor has the flexibility to deliver emergency materials due to unforeseen events.
• The vendor has a proven record of delivering goods on time and of good quality.

Supply chain management is especially critical when manufacturers are working with perishable goods. When sourcing goods, companies should be mindful of lead times and how well equipped a supplier is to meet their needs.

Manufacturing

This is the heart of the supply chain management process, where the company uses its machinery and labor to transform the raw materials or components it has received from its suppliers into something new. This final product is the ultimate goal of the manufacturing process, though it is not the final stage of supply chain management.

The manufacturing process may be further divided into sub-tasks such as assembly, testing, inspection, and packaging. During the manufacturing process, companies must be mindful of waste or other factors that may cause deviations from their original plans. For example, if a company is using more raw materials than planned and sourced for due to inadequate employee training, it must rectify the issue or revisit the earlier stages in SCM.

Once products are made and sales are finalized, a company must get those products into the hands of its customers. A company with effective SCM will have robust logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of its products.

This includes having a backup or diversified distribution methods should one method of transportation temporarily be unusable. For example, how might a company's delivery process be impacted by record snowfall in distribution center areas?

The supply chain management process concludes with support for the product and customer returns. It's bad enough when a customer needs to return a product, but even worse if that's due to an error on the company's part. This return process is often called reverse logistics, and the company must ensure it has the capabilities to receive returned products and correctly assign refunds for them. Whether a company is conducting a product recall or a customer is simply not satisfied with the product, the transaction with the customer must be remedied.

Returns can also be a valuable form of feedback, helping the company to identify defective or poorly designed products and to make whatever changes are necessary. But without addressing the underlying cause of a customer return, the supply chain management process will have failed, and future returns will likely persist.

Supply chain management does not look the same for all companies. Each business has its own goals, constraints, and strengths that will shape its SCM process. These are some of the models a company can adopt to guide its supply chain management efforts.

• Continuous flow model: One of the more traditional supply chain methods, this model is often best for mature industries. The continuous flow model relies on a manufacturer producing the same good over and over and expecting customer demand will show little variation.
• Agile model: This model is best for companies with unpredictable demand or custom-order products. This model prioritizes flexibility, as a company may have a specific need at any given moment and must be prepared to pivot accordingly.
• Fast model: This model emphasizes the quick turnover of a product with a short life cycle. Using a fast chain model, a company strives to capitalize on a trend, quickly produce goods, and ensure the product is fully sold before the trend ends.
• Flexible model: The flexible model works best for companies affected by seasonality . Some companies may have much higher demand requirements during peak season and low volume requirements in others. A flexible model of supply chain management ensures that production can easily be ramped up or wound down.
• Efficient model: For companies competing in industries with very tight profit margins, a company may strive to get an advantage by making its supply chain management process the most efficient. This includes utilizing equipment and machinery in the most ideal ways in addition to managing inventory and processing orders most efficiently.
• Custom model: If any model above doesn't suit a company's needs, it can always turn toward a custom model. This is often the case for highly specialized industries with high technical requirements, such as an automobile manufacturer.

Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. decided to transform its supply chain by investing in technology to streamline the entire process. That included using big data , collected from its 9,000 stores and 20,000 suppliers, to help improve its forecasting capabilities and better manage sales and inventory. In 2019 it appointed its first-ever chief supply chain officer, a key leadership role in the company.

The company has also incorporated supply chain management into its environmental, social, and governance (ESG) initiatives, including those involving human rights, animal testing, sustainability, and transparency regarding product ingredients.

Why Is Supply Chain Management Important?

Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand. At the same time, control over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides multiple opportunities for companies to improve their profit margins and is especially important for businesses with large and international operations.

How Are Ethics and Supply Chain Management Related?

Ethics has become an increasingly important aspect of supply chain management, so much so that a set of principles called supply chain ethics was born. Many investors today want to know how companies produce their products, treat their workforce, and protect the environment. As a result, companies respond by instituting measures to reduce waste, improve working conditions, and lessen their impact on the environment—all of which can involve SCM.

How Much Do Supply Chain Management Jobs Pay?

Supply chain managers across the United States had average annual salaries in the range of $109,645 to $140,513 as of December 2023, according to the website Salary.com.

A supply chain starts with the ordering of raw materials or components from a supplier and ends with the delivery of a finished product or service to the end consumer. In supply chain management, every link in that chain may offer an opportunity to add value or reduce inefficiency. A well-run SCM program can increase a company's revenues, decrease its costs, and bolster its bottom line .

Cision PR Newswire. " Walgreens Transforms Supply Chain Management with Kyvos, Tableau, and Big Data ."

Walgreens Boots Alliance. " Walgreens Boots Alliance Announces Key Leadership Appointments Live ."

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A 6-step Guide to Create an Effective Supply Chain Management Plan

October 5, 2023

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Supply chain management is the foundation of any thriving business. It serves as the intricate web connecting suppliers, manufacturers, distributors, and customers. In today's hyper-connected global markets, streamlining and optimizing your supply chain is not only an option; but a strategic necessity. A well-crafted supply chain management strategy can be the defining factor between excelling in a competitive marketplace or grappling with customer satisfaction and cost control challenges.

In this comprehensive blog, we will demystify the intricacies of supply chain management and provide you with a step-by-step guide encompassing six essential actions to craft an efficient supply chain management plan.

According to Invesp, the majority, or 79%, of companies excelling in their supply chain management experience revenue growth surpassing the industry average.

Why Businesses Need an Effective Supply Chain Management Plan 

An effective supply chain management plan is indispensable for businesses due to several compelling reasons.

• Operational Efficiency: An effective supply chain management plan streamlines the movement of goods and services, reducing operational bottlenecks and ensuring smooth processes.
• Risk Mitigation: Businesses can proactively address disruptions in the supply chain, minimizing potential setbacks and ensuring continuity in operations.
• Data-Driven Decision-Making: Supply chain analytics empower data-driven decision-making, offering valuable strategic planning and adaptability insights.
• Resilience: It enhances a business's ability to weather unforeseen challenges and market fluctuations, contributing to long-term resilience and sustainability.
• Cost Reduction: This leads to significant cost savings by optimizing inventory levels, transportation, and procurement, contributing to improved profitability.
• Customer Satisfaction: Timely deliveries and product availability, facilitated by a well-managed supply chain, enhance customer satisfaction and foster brand loyalty.
• Competitive Edge: A robust supply chain management plan is crucial for staying competitive in the modern business landscape, where responsiveness and efficiency are key to success.

6 Steps to Create an Effective Supply Chain Management Plan

Here are the key steps to design a supply chain management plan to enhance operational efficiency and meet customer demands effectively.

1. Define Clear Objectives and Goals

Start by establishing well-defined objectives and goals that align with the organization's broader mission, vision, and strategic direction. These objectives should adhere to the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound). 

Goals should not only reflect the company's values but also consider market demands, customer expectations, and competitive positioning. Objectives might encompass improving efficiency, cost reduction, customer satisfaction, inventory optimization, or sustainability. Ensuring alignment with the organization's overall goals is essential for the supply chain plan to effectively contribute to the company's success. 

2. Conduct In-Depth Market Analysis

The next critical step involves conducting a thorough market analysis. This entails a comprehensive study of market trends, demand patterns, and competitor strategies to gain valuable insights. Analyze consumer behaviors, economic fluctuations, technological advancements, and regulatory changes impacting the industry. Comprehend the dynamics of the supply and demand chain and identify potential risks and opportunities.

A comprehensive market analysis informs decisions related to production volumes, inventory management, supplier selection, and distribution channels. It also ensures that the supply chain strategy remains agile and responsive to evolving market dynamics, helping the organization maintain its competitive edge. Regularly reviewing and updating this analysis is crucial for adapting the supply chain management plan as the market evolves.

Is the supply chain different from logistics?

Yes, supply chain and logistics are related but distinct concepts. The supply chain encompasses a broader network, including procurement, production, distribution, and logistics, focused specifically on transporting, storing, and distributing goods. Click here to know how 'A Global Logistics Shipment Solutions Provider Successfully Improved Efficiency Levels with Our Support.'

3. Design an Efficient Supply Chain Network

After market analysis, the third step involves designing an efficient supply chain network. This entails optimizing the sourcing, manufacturing, warehousing, and distribution structure. Evaluate factors like location, capacity, and technology to streamline goods' flow and minimize costs. 

Consider proximity to suppliers and customers, transportation routes, and consolidation hubs. Employ technology and modeling tools to simulate network configurations and scenarios for data-driven decisions. Aim for a network balancing cost-efficiency with responsiveness. Include contingency plans for disruptions and resilience. Collaborate with stakeholders and seek feedback for design fine-tuning, setting the stage for optimized operations and customer satisfaction.

4. Carefully Select Suppliers and Partners

Following network design, the fourth step is meticulous supplier and partner selection. Identify suppliers meeting quality, reliability, cost-effectiveness, and ethical criteria. Evaluate financial stability, capacity, delivery timelines, and track record. Establish clear communication and expectations for mutual benefit. 

Consider strategic partnerships for collaboration and innovation, negotiating contracts with terms, conditions, pricing, and metrics. Prioritize trust, transparency, and shared goals in long-term relationships. Regularly review supplier performance, diversifying sources to mitigate risks, enhancing supply chain resilience and efficiency.

5. Develop Robust Inventory and Demand Management Strategies

The fifth step involves developing strong inventory and demand management strategies. Categorize products based on demand patterns and criticality. Implement just-in-time (JIT) or just-in-case (JIC) approaches for optimized stocking and reduced carrying costs while ensuring availability.

Leverage forecasting models, historical data, and market trends for accurate demand predictions. Collaborate with sales and marketing to align forecasts with activities. Employ technology and demand planning software for enhanced accuracy. Establish efficient order management with automation and digital tools. Use data analytics to identify slow-moving or obsolete inventory, taking timely action. 

Regularly review and update these strategies to match market dynamics and preferences. Effective inventory and demand management optimize stock, cash flow, and customer satisfaction.

6. Implement Performance Metrics and Continuous Improvement Processes

The sixth step involves implementing performance metrics and continuous improvement processes for ongoing enhancements. Set KPIs aligned with objectives: cost efficiency, on-time delivery, inventory turnover, customer satisfaction, and sustainability. Track and analyze these metrics regularly.

Promote a culture of continuous improvement, fostering collaboration, innovation, and best practice sharing. Conduct reviews to identify inefficiencies and use methodologies like Six Sigma or lean principles. Encourage open communication and feedback loops for proactive problem-solving. Embrace emerging technologies for a competitive edge.

By measuring performance, nurturing a culture of improvement, and using data-driven insights, refine and adapt the supply chain to evolving business needs, resulting in a more effective supply chain management plan.

Supply Chain Management future is on the edge of transformative changes, propelled by cutting-edge technologies such as IoT, blockchain AI and data analytics. These groundbreaking innovations hold the potential to usher in a new era of heightened visibility, unparalleled efficiency, and enhanced sustainability within the SCM landscape.

Nonetheless, these advancements also bring forth novel challenges, encompassing cybersecurity vulnerabilities, apprehensions regarding data privacy, and the essential task of upskilling the workforce. Hence, to adeptly navigate this intricate terrain, forging partnerships with industry authorities emerges as an imperative strategy. 

At Invensis , we bring specialized insights and a wealth of experience to optimize supply chain operations, identify and mitigate risks, and harness emerging technologies. Reach out to us to stay ahead of the curve and safeguard your operations against evolving threats and challenges with our supply chain and logistics BPO services .

Mark Anderson is an esteemed supply chain and logistics partner with a wealth of experience spanning more than a decade. His mastery in optimizing supply chain operations across diverse industries has made him a trusted resource for businesses seeking efficiency and cost-effectiveness. Mark excels at translating intricate logistical challenges into pragmatic strategies that drive collaboration among departments. As a prolific writer, Mark delivers clear and concise insights, empowering businesses to navigate the complex world of supply chain management with confidence.

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Supply Chain Strategic Planning: A 5-Step Process + Template

If you're a supply chain manager, you're probably feeling the pressure of staying ahead of the competition, juggling multiple initiatives, and navigating through constant supply chain disruptions. 

Don't worry, you're not alone! A recent survey of 1,000 supply chain leaders by Gartner found that 42% of them are struggling to find the right balance between profitability and other important factors like sustainability, speed, and innovation.

But don't lose hope just yet! It's time to shake things up and take a new approach to supply chain strategic planning that will drive successful on-the-ground execution. The next decade will be make-or-break for supply chains. 

It's up to you to determine whether your supply chain will be a winner or a loser. So, let's dive in and find out what it takes to achieve supply chain strategic planning excellence and come out on top!

Here’s what we’re going to cover in this article:

The Supply Chain Strategic Planning Process: Unpacking The Right Approach

The 5 steps of highly effective supply chain strategic planning, 5 pitfalls to avoid during your supply chain planning process (and how to avoid them), upgrade your strategic supply chain management with cascade 🚀.

Supply chain strategic planning can be a challenging task, especially when it requires a focus on the overarching strategy rather than just day-to-day execution. 

But the times are changing, and so is the approach to strategic planning. Gone are the days of a yearly, set-it-and-forget-it exercise.

The shift from linear strategic planning to shorter strategy execution cycles. Source: Cascade

Supply chain managers must now be ready for the unexpected and be able to pivot quickly as things change. 

In order to build a resilient and operationally excellent supply chain, companies must focus on strategic alignment between the overarching supply chain strategy and operational planning . In other words, strategic plans need to be connected with execution. This means providing teams with the context and tools they need to act quickly when necessary. 

As a result, your organization can be more prepared for the unexpected and adapt faster to changes, improving its supply chain strategy and operations , and securing a competitive advantage.  

So how do you achieve this? An effective supply chain strategic planning process can act as a missing puzzle piece if approached wisely.

In this section, we will cover the five essential steps to creating a successful supply chain strategy . From setting goals to keeping an eye on how things are going, these steps will make sure that your strategy works and is efficient. So, sit back, grab a cup of coffee, and let’s dive into each step.

Step 1: Lay the groundwork for a winning supply chain strategy

• Align with the Big Picture: Time to get on the same page as the rest of the biz! Start by aligning your supply chain strategy with the overarching business strategy and objectives. For example, if the business goal is to reduce costs, supply chain strategies should focus on optimization and cost-cutting initiatives.
• Identify your supply chain drivers: What's driving your supply chain? Think about factors like technology, regulations, customer demands, and global supply chain events. Understanding the key drivers will help you make informed decisions and steer your supply chain in the right direction. These drivers include:  1. Sourcing : The procurement of raw materials and other inputs is crucial to the success of the supply chain. 2. Inventory : Efficient inventory management is key to meeting customer demand while avoiding excessive stock levels. 3. Logistics and warehousing : Effective warehouse management processes and logistics management can reduce lead times, improve service levels, and increase efficiency. 4. Information and data : By forecasting demand, demand planning helps to align the supply chain with customer needs and minimize the risk of shortages.  For example, do you have enough inventory or safety stock to meet customer needs? Is your production concentrated in one country, or should you consider diversifying or changing your logistics and transport methods? 
• Include your rockstar suppliers and stakeholders : Who's who in your supply chain? Make a list of your MVPs (most valuable players) and prioritize them. Don't forget about customers, logistics providers, regulators, and even your competitors—they all play a role in your supply chain success. Different perspectives will help you understand operational constraints, gaps to fill , and the importance of potential improvements or investments. 
• ‍ Assess the current state of your supply chain: Give your supply chain a check-up! Assess your logistics, supplier reliability, and ability to bounce back from disruptions. Analyze your organizational structure and operating systems. Get input from different perspectives to identify opportunities for improvement and get buy-in from key stakeholders. For example, does your manufacturing plant in the United States outsource some of its work to China? What contingencies have you put in place to ensure consistent quality and supply?
• Conduct a SWOT analysis of your supply chain: The strengths and weaknesses of your supply chain and the resulting opportunities and threats will be critical for planning, forecasts, and strategic risk management .

Step  2: Design your supply chain strategy

With a solid foundation in place, it's time to start designing your supply chain strategy. This is where you'll put the pieces together. 

Make sure to set some strategic priorities to help guide your strategic planning and decision-making process. 

Strategic focus areas are the key pillars to focus on. These may include optimizing production planning, increasing profit margins, or diversifying supply and production.  

Some examples of supply chain strategies include:

• Invest in technology : Use cutting-edge technology and digital tools to improve your supply chain operations and gain a competitive edge.
• Foster collaboration and build strategic relationships : Work closely with your suppliers and stakeholders to develop a supply chain that's built on trust, communication, and collaboration. For example, let’s take a look at IKEA . They have strategically placed distribution centers worldwide and trading offices near suppliers to minimize transportation costs. On top of that, the close proximity of IKEA's trading service offices to its suppliers' facilities allows the company to monitor production, negotiate prices, and check the quality of the goods and materials it purchases. 
• Enhance resilience : Prepare your supply chain for unexpected disruptions by investing in end-to-end visibility, supply chain risk management, and contingency planning.

With this in mind, a strategic plan needs to be clear-cut and concise so your teams won't need a week to go through it. Remember, simple is always better. 

📚 Recommended reading: Strategy study: How IKEA became a household name

Step 3: Develop the strategic plan for your supply chain

Now it's time to get into the nitty-gritty and put together a detailed plan that outlines all the specific steps needed to execute your supply chain strategy. 

This plan should cover focus areas, clear goals, timelines, budgets, resources, owners, and potential risks. And let's not forget about the all-important KPIs (Key Performance Indicators). KPIs are critical to measure the success of your supply chain strategy, so it's important to set them early on.

👉 Here’s how Cascade can help you: 

In Cascade , you can easily build your strategic plan, including all the key elements mentioned above. With our structured approach to strategic planning and user-friendly UI, building your plan and setting KPIs has never been easier. You can also monitor performance and make adjustments as needed.

👉 With Cascade’s Supply Chain Strategy Template , you can get started right away and execute your plan with confidence.

Step 4: Time to execute your plan! 

It's go time, folks! You've laid the foundation, designed your strategy, and developed a solid plan—now it's time to execute and bring it all to life. Here's what you need to do:

• Get the Word Out : Communication is key when it comes to executing your supply chain strategy. Make sure everyone who needs to know is in the loop, from employees to suppliers to customers. Ensure everyone understands their role in the process and the end goal.
• Align with Operations: Your supply chain strategy is only as good as the day-to-day execution that supports it. That's why it's important to create alignment with your operations teams to ensure they have the tools and resources they need to bring the strategy to life. Integrated business planning is a good way to approach this. 
• Support Cross-Collaboration: To promote cross-collaboration and ensure everyone is working towards the same goal, create joined KPIs, and track progress in real-time. And that's where Cascade comes in - our platform offers integrations and live dashboards so everyone has access to the same information and can work together towards a common goal.

Now that you know the steps, it's time to put your plan into action! 

👉 Get started by using Cascade's Supply Chain Strategy Template to build your plan and start executing right away.

Step 5: Monitor and review progress - keep an eye on the prize!

As the old saying goes, "what gets measured gets done." And that's why step 5 is all about keeping your eye on the prize and making sure you're on track to hit your goals. 

Set up regular progress reviews: Regularly monitor and review progress against the plan, and make adjustments as needed. According to Cascade’s Strategy Report , only 18% of team members review progress on a weekly basis. This is crucial for employee engagement, accountability, and fast adaptability.

Rethink Your Tools: Remember the days of manual reporting? Let's ditch that and move into the modern age of automation and data-driven decision-making. 

With the right tools in place, you'll be able to make faster, more informed decisions, and track your progress in real-time. And that's where Cascade can help you—with its powerful reporting capabilities , you'll have all the data you need at your fingertips.

👉If you’re a Cascade user : Use the Report feature to get real-time insights from multiple data sources across various departments in your organization. With it, you'll be able to make and update progress reports quickly, so your team and management board will always have the most up-to-date information. 

Here’s an example of the supply chain management report in Cascade that will help you demonstrate the ROI of your initiatives and progress against set targets.

🔥 Want to see how Cascade helps team leaders save hours on making useful reports for meetings in real life? Learn how Kreg Tools uses Cascade to execute its strategy. Click here to watch the video.

There are several challenges that organizations may face when it comes to effective supply chain management and supply chain strategic planning:

Navigating complexity

⛔ Problem: Supply chains are multi-faceted, with several stages and stakeholders. In a McKinsey survey of senior supply chain managers, more than half of them stated they didn’t understand where their Tier 1 suppliers were located or what their key risks were. Because of this, it can be hard to come up with a strategy that takes into account all the important factors and can adapt to changes. 

💡 Solution: Maintain regular communication with suppliers and other stakeholders to have a clear understanding of the supply chain and all the different elements involved.

Managing uncertainty and disruptions

⛔ Problem: The business environment is continually evolving, making it hard to predict future consumer demand, price fluctuations, and other uncertainties like material shortages that may impact the supply chain. 

💡 Solution: To mitigate the impact of uncertainty, it's important to have a flexible and adaptable supply chain strategy that can quickly respond to changes. Focus on execution over planning, and adapt the plan as you go. With Cascade, you can easily update the supply chain strategic plan and notify your teams with just one click.

Breaking down silos

⛔ Problem: Organizations that work in silos are more likely to be disrupted, waste resources, and change too slowly. Supply chain, manufacturing operations, and sales teams need to share information in real-time to work effectively and create a coordinated response to changes. 

💡 Solution: With Cascade, you can create a single source of truth with shared KPIs. This makes it easy to track progress and ensure alignment across cross-functional teams.

Managing limited resources

⛔ Problem: Organizations often have limited resources, such as time, money, and personnel. This can make planning and executing a supply chain strategy challenging. 

💡 Solution: Support cost optimization by allocating resources in alignment with strategic priorities and avoid initiatives that increase supply chain costs. With Cascade, you can quickly identify underperforming areas and kill misaligned initiatives. It’s like having a personal advisor; you can see where your resources are being spent, analyze what’s working and what’s not, and make adjustments to maximize efficiency.

Improving visibility

⛔Problem: Outdated operating processes and tools can make it hard and time-consuming to track strategy progress and supply chain KPIs. This problem can compound if your teams rely on multiple disconnected tools, including your company’s ERP, spreadsheets, and other planning tools. 

💡 Solution: You should have one place where you can connect all the necessary data, track the progress of your strategy, and assess its impact on business and supply chain KPIs. With features like Dashboards and Reports , Cascade makes monitoring and reporting simple.

It's important to remember that supply chain strategic planning is a continuous process, not a one-time event. Regular monitoring and reviewing progress against the plan can help you make necessary adjustments and fine-tune your strategy for optimal results. 

Whether you're starting from scratch or revamping an existing plan, Cascade offers a comprehensive solution to help you every step of the way. With our structured approach to strategic planning and powerful features like integrations, live dashboards, and reports, you'll be well on your way to a successful and thriving supply chain in no time. 

Don't wait, sign up today for free and start executing your plan with confidence!

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How To Do Strategic Supply-Chain Planning

• Supply Chains & Logistics

Any company that has a global supply chain should consider introducing its strategic left hand to its operational right hand. Strategic supply-chain planning that combines aspects of business-strategy formulation with aspects of tactical supply-chain planning can make each far more valuable to the planning effort than either would be alone. Strategic supply-chain planning is the Pegasus of strategy: It can soar, but it also needs to keep its feet on the ground. Although companies routinely weigh long-term supply-chain-related decisions in light of alternative sources of supply, new geographic markets or new products, various levels of management use different approaches, often in isolation. Senior managers make such decisions as part of formulating business strategy; supply-chain planners, as an extension of their tactical supply-chain planning.

How should companies ensure that relevant supply-chain details inform the business-strategy formulation and that strategic direction and the supply chain are in alignment? They can do so through early communication between senior managers and supply-chain planners, which shortens strategy-implementation time while letting each group pursue its forte: senior managers formulating strategy to maximize shareholder value; supply-chain planners running optimization models to minimize total supply-chain costs.

One Company’s Story

Consider a strategic supply-chain planning exercise at a polyvinyl chloride (PVC) manufacturer that we’ll call Acme Vinyl Co. Acme’s North American revenues came from PVC for building (55%), packaging (15%), consumer goods (10%), the electronic industry (10%), the automotive industry (4%) and from non-PVC products (6%). At the end of the 1990s about 4% of those revenues came from Asia. Acme had been seeing revenue growth for several years, mostly as a result of acquiring other PVC manufacturers.

With fragmented spare capacity around North America, a falling stock price and a need to rationalize the postacquisition supply chain, Acme’s leaders considered their options. Some favored consolidating manufacturing into one or two new mega-plants; others suggested closing existing plants or lines. Management chose to do a strategic supply-chain planning exercise to assist decision making.

The Planning Spectrum

Strategic supply-chain planning falls in the middle of a decision-making spectrum that has business-strategy formulation at one end and tactical supply-chain planning at the other. (See “Strategic Supply-Chain Planning and the Planning Spectrum.”) With a focus on fundamental changes in manufacturing and distribution capacity, it is long-term in scope and impact but can benefit from detailed optimization models and advanced planning-and-scheduling (APS) technology that is more often associated with medium- and short-term planning.

About the Author

ManMohan S. Sodhi is an associate professor of supply-chain management at Cass Business School in London. Contact him at [email protected] .

1. Suppliers of APS technologies include SAP, i2 Technologies, Manugistics and Logility.

2. R.L. Breitman and J.M. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

3. Optimization models can be built into spreadsheets by using the Solver feature within Excel, for instance, or by using add-on software, but these models are not comprehensive enough to take into account the scope and detail needed for a global supply-chain model. For such optimization, the cost of APS software, including implementation, may exceed $1 million.

4. A.M. Geoffrion and R.F. Powers, “Twenty Years of Strategic Distribution System Design: An Evolutionary Perspective,” Interfaces 25 (September–October 1995): 105–127.

5. M.A.. Cohen and H.L. Lee, “Strategic Analysis of Integrated Production-Distribution Systems: Models and Methods,” Operations Research 36, no. 2 (1988): 216–228; and M. Cohen and H. Lee, “Resource Deployment Analysis of Global Manufacturing and Distribution Networks,” Journal of Manufacturing and Operations Management 2, no. 2 (1989): 81–104.

6. R. Breitman and J. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

7. B. Arntzen, G. Brown, T. P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93.

8. A. Macdonald and D. Beavis, “Seize the Moment — Radical Supply Chain Integration as a Means of Increasing Shareholder Value and Enabling Acquisitions To Deliver on Their Promises,” Manufacturing Engineer 80, no. 4 (2001): 175–178; C. Farrell and R. Melcher, “The Lofty Price of Getting Hitched,” Business Week, Dec. 7, 1997; and D. Henry, “Mergers: Why Most Big Deals Don’t Pay Off,” Business Week, Oct. 14, 2002, 72–78.

9. B. Arntzen, G. Brown, T.P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93; J. Muller, “Compaq Will Buy Digital in a Record $9.6b Deal,” Boston Globe, Jan. 27, 1998, p. A1; and “Compaq To Acquire Digital for $9.6 Billion,” Compaq press release, Jan. 26, 1998, New York, http://h18020.www1.hp.com/newsroom/pr/1998/pr260198c.html.

10. D.J. Frayer and R.M. Monczka, “Enhanced Strategic Competitiveness Through Global Supply Chain Management,” Annual Conference Proceedings of the Council of Logistics Management (Oak Brook, Illinois: Council of Logistics Management, October 1997): 433–441.

11. J. Greenbaum, “SCM Is Dead, Long Live SCM,” July 16, 2002, http://itmanagement.earthweb.com/columns/entad/article.php/1407831.

12. A.P. de Geus, “The Living Company” (Harvard Business School Press: Boston, 1997), 69.

13. H. Mintzberg, “The Rise and Fall of Strategic Planning” (New York: Free Press, 1994).

14. See M. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance” (Free Press: New York, 1985); B. Melzer, “The Uncertainty Principle,” CIO Insight, June 1, 2001, www.cioinsight.com; and H. Kahn, “Thinking About the Unthinkable” (New York: Horizon Press, 1962).

15. E. Larsen, “What Is Scenario Planning?” teaching note, Cass Business School, London, 2000; P. Schwarz, “The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company” (New York: Doubleday, 1991); P.J.H. Schoemaker, “Multiple Scenario Development: Its Conceptual and Behavioral Foundation,” Strategic Management Journal 14 (March 1993): 193–213; and P.J.H. Schoemaker, “Scenario Planning: A Tool for Strategic Thinking,” Sloan Management Review 36 (winter 1995): 25–40.

16. T.F. Mandel and I. Wilson, “How Companies Use Scenarios: Practices and Prescriptions,” SRI International, Menlo Park, California, report no. 822, spring 1993.

17. H. Mintzberg, “Planning on the Left Side and Managing on the Right,” Harvard Business Review 54 (July–August 1976): 49–59. Also published as H. Mintzberg, “Planning on the Left Side, Managing on the Right,” in “Mintzberg on Management: Inside Our Strange World of Organizations” (New York, Free Press, 1989), pp. 43–55.

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In today’s complex global business environment, effective supply chain management (SCM) is crucial for maintaining a competitive advantage. The pandemic and its aftermath highlighted the importance of having a robust supply chain strategy , with many companies facing disruptions due to shortages in raw materials and fluctuations in customer demand. The challenges continue: one 2023 survey found 44% of companies had to make changes in the past year due to issues with their supply chain footprint, and 49% said supply chain disruptions had caused planning problems.

But with the right tools and priorities, each step in the process can run smoothly. Here’s how companies are using different strategies to address supply chain management and meet their business goals.

Why supply chain management matters

Supply chain management involves coordinating and managing all the activities involved in sourcing , procurement, conversion and logistics . It includes everything from product development and strategic decision-making to information systems and new technologies. But perhaps most relevant today are the capabilities within SCM to help mitigate disruption.

Supply chain disruptions are caused by a variety of factors, from pandemics, natural disasters and political instability to supplier bankruptcy and IT failures. To mitigate these risks , companies need the resources and technology to develop robust contingency plans.

On top of disruption, companies with global supply chains must also deal with different regulatory environments, cultural norms and market conditions. They need strong SCM practices to help work out the logistics of transporting goods across long distances and through multiple countries without creating longer lead times or delays.

Effective SCM initiatives offer several benefits:

• Lower operational costs : By optimizing inventory levels , improving warehousing efficiency and streamlining order fulfillment processes, companies can save on storage, labor and transportation expenses.
• Better customer satisfaction : An optimized supply chain allows businesses to make sure products are available when and where people want them—which can improve relationships and loyalty with customers.
• Fewer disruptions : A healthy supply chain mitigates risks and protects against inevitable disruption. By developing contingency plans and resilient supply chains, companies can continue to operate even when unexpected events occur.

Key strategies for effective supply chain management

There are a number of ways that companies can better optimize and manage their supply chains. Here are the areas some businesses are focusing on as they refine their overall approach:

Forecasting and demand planning

Companies can reduce storage costs and avoid stockouts or overstock with help from accurate demand forecasting , which uses historical sales data, market research and economic trends to predict future market demand for products or services.

Big data and predictive analytics are increasingly being used to improve forecasting accuracy, allowing businesses to respond more effectively to changes in customer needs. Advanced software tools can automate some parts of forecasting, providing real-time updates and alerts when inventory levels are too high or low.

Automation can streamline supply chain operations, from order fulfillment to inventory tracking. It can take many forms, from automated warehouse systems that pick and pack orders, to blockchain-based smart contracts to software that automates purchasing and invoicing processes . These technologies can significantly reduce manual labor, minimize errors and speed up processes, leading to increased efficiency and cost savings.

Technology-driven visibility

AI and machine learning can be used to analyze large amounts of data quickly and accurately, providing insights that can improve forecasting, inventory management, and customer service. A 2023 survey found that a third of businesses are using artificial intelligence (AI) to improve resource and supply chain planning, and more than a third said using digital tools for inventory management was the most effective strategy in cutting overall supply chain costs.

Real-time tracking systems, often enabled by Internet of Things (IoT) devices, help companies monitor their supply chain accurately and immediately. Having visibility into the status and location of goods as they move through the supply chain helps companies monitor supplier performance, identify bottlenecks and respond quickly to disruptions. A supply chain control tower can connect many sources of data-driven information and improve end-to-end visibility.

Moreover, enterprise resource planning (ERP) software can integrate different aspects of a business into one system, providing a holistic view of operations and the metrics needed to streamline supply chain processes. Integrated supply chain analytics software, such as IBM Planning Analytics , connect complex data sets for more insightful analytics and scenario analysis that can help avoid demand-and-supply mismatches or fulfillment delays.

Sustainable and ethical sourcing

Companies are trying to ensure that every stage of their supply chains is adhering to responsible practices. This not only helps satisfy customer desire for sustainability and ethical products but also helps mitigate risks, such as regulatory penalties or reputational damage.

Ethical sourcing involves ensuring that the products and services a company procures are produced under fair, safe and environmentally friendly conditions. This may involve conducting audits of suppliers, implementing codes of conduct and using certification schemes to verify compliance. Sustainable sourcing, meanwhile, focuses on minimizing the environmental impact of the supply chain. This might involve partnering with suppliers who use renewable energy , reducing packaging or implementing recycling programs.

Blockchain technologies can increase transparency and traceability in the supply chain, helping to prevent fraud and ensure product authenticity. For example, IBM Food Trust® , a collaborative network of growers, processors, wholesalers, distributors, manufacturers, retailers and others, uses blockchain technology to improve visibility and accountability across the food supply chain.

Building strong partnerships

Strong relationships are a key part of any business strategy. When it comes to supply chains, strong connections with providers, distributors and other key stakeholders in the supply network can help companies improve resilience. Partnerships can facilitate better communication, collaboration and responsiveness, particularly in times of disruption. They can also provide access to new markets, technologies, and expertise, offering a competitive advantage.

Because finding the right suppliers can be challenging, some businesses turn to technology to help. For example, IBM® Trust Your Supplier , a supply chain risk management software solution, helps ensure suppliers and other partners in the supply chain meet global and industry standards, provides continuous monitoring and risk assessment and uses blockchain-based information management to ensure transparency and traceability.

Effective supply chain strategy for the future

Whether it’s through forecasting, automation, sustainable sourcing, strong partnerships or new technologies, there are numerous strategies companies can employ to optimize supply chain planning and execution. By doing so, they can improve profitability, meet customer demand and ensure their business is resilient in the face of disruptions.

To learn more about how a technology-enabled supply chain can support your business goals, explore the IBM Sterling® Supply Chain Intelligence Suite.

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A Simpler Way to Modernize Your Supply Chain

• David Simchi-Levi
• Kris Timmermans

Conventional wisdom says it takes three to five years and tens of millions of dollars to digitize a corporation’s supply chain. However, a few companies have reaped major benefits—including higher revenue and customer retention—with a faster, cheaper approach. It involves assembling available data; using analytics to understand and predict customers’ and suppliers’ behavior and optimize inventory, production, and procurement; and adding automation to revamp or introduce processes. The transformation requires three main initiatives: replacing consensus forecasts with one unified view of demand, changing one-size-fits-all supply strategies to segmented ones, and creating a plan to continually balance supply and demand and manage deviations or disruptions.

How to spend less and accomplish more

Idea in Brief

The conventional wisdom.

Digitizing a company’s system for managing its supply chain is a megatransformation project that takes three to five years and costs tens of millions of dollars.

The Reality

There is an alternative: Substantial benefits can be reaped from a modernization effort that takes 12 to 24 months and costs a few million dollars.

What It Entails

Assembling readily available data; using advanced analytics to understand and predict customers’ and suppliers’ behavior and to optimize inventory, production, and procurement decision-making; and adding some automation to revamp existing processes and introduce new ones.

Most executives believe that digitizing a major corporation’s supply chain costs tens of millions of dollars. The assumption is that it will be a massive three- to five-year transformation effort—requiring major investments in cloud technology, the installation of RFID tags and readers on every product container and in every facility, the deployment of 3D-printing and robotics technologies, and new instruments on machines on the shop floor to monitor their performance and condition. All that is necessary, the thinking goes, to break down the walls between functional areas and create an integrated supply chain that provides a competitive advantage.

• David Simchi-Levi is a professor of engineering systems at Massachusetts Institute of Technology and the head of the MIT Data Science Lab.
• Kris Timmermans is a senior managing director at Accenture and the head of its supply chain and operations practice. Connect with him on LinkedIn .

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The Complete Guide to Supply Chain Planning in 2024

Effective supply chain planning is more vital than ever in today’s fast-paced business world. It plays a crucial role in streamlining the production and delivery of products, all while ensuring supply and demand are in equilibrium. 

With this comprehensive article, we’ll dive deep into the complexities of supply chain planning. We’ll also cover indispensable factors that supply chain experts must weigh carefully when helping companies prepare to compete globally.

Finally, we’ll show how you can understand supply chain planning holistically with a tool that helps global companies save money daily.

What is Supply Chain Planning?

Supply chain planning is a forward-looking process aiming to optimize the delivery of goods, services, and information from suppliers to customers while balancing supply and demand. The planning involves anticipating customer demand and planning materials, components, production, marketing, distribution, and sales accordingly. 

The overall goal of supply chain planning is to ensure that sales revenue opportunities are fully utilized on time and at the lowest possible cost. The process is essential for businesses to optimize operations, enhance efficiency, reduce costs, and create happy customers.

What is the First Step in Planning Supply Chain Operations?

The first step in planning supply chain operations is demand planning and forecasting. Demand planning is a supply chain management process organizations use to accurately project future demand and customize their output based on the plans. 

When matching demand planning with supply planning, organizations have more control over the output, meaning customer needs are better met. 

Demand planning typically involves forecasting demand based on historical data, market trends, and other factors that help make informed decisions about production levels, inventory management, and resource allocation.

What are the Benefits of Supply Chain Planning?

The benefits of supply chain planning are reduced costs, increased customer satisfaction, optimized supply chain operations, simplified inventory management, and increased revenue.

To be honest, there are numerous benefits of supply chain planning. Here’s the full list:

• Increased customer satisfaction ensures that products are delivered at the right time and place. Having satisfied customers builds brand loyalty and gives businesses a competitive edge.
• Simplified inventory management by aligning supply with demand to prevent stockouts or excess inventory.
• Improved quality control that ensures high-quality products and services by implementing quality control measures, monitoring supplier performance, and improving processes to meet customer expectations.
• Streamlined operations, enhanced efficiency, and reduced delays, all of which translate into lower operating costs.
• Optimized supply chain operations mean businesses can reduce costs, improve efficiency, and increase profits.
• Helping organizations identify and mitigate risks, developing contingency plans, and monitoring potential threats to business.
• Adaptability and responsiveness are another result of supply chain planning – it enables organizations to adapt to changing market conditions and customer demands and respond to disruptions.
• Fostering collaboration and integration among supply chain partners – suppliers, manufacturers, distributors, and customers. The results are more streamlined operations, improved communication, and enhanced overall supply chain performance.

What are the Key Elements of Effective Supply Chain Planning?

The key elements of demand planning are production planning, demand and supply planning, inventory management, logistics management, supplier management, risk management, and sales and operations planning.

The planning process needs to optimize the delivery of goods, services, and information from suppliers to customers. It involves coordinating the mentioned elements of the supply chain.

Production Planning

Production planning aligns production capacities with customer demand to ensure optimal efficiency and customer satisfaction.

There are several important points when it comes to production planning:

Aligning production capacities with customer demand

To ensure that the production capacities are in sync with the forecasted customer demand, companies must analyze historical data, observe market trends, and include customer feedback to predict future demand and accurately adjust production.

When this alignment of production and customer data is in place, companies avoid issues such as stockouts or excess inventory that often lead to financial losses and dissatisfaction in the market value chain.

Strategies for efficient production planning and scheduling

To optimize production planning, companies employ various strategies, such as implementing lean manufacturing principles, utilizing advanced scheduling tools, and adopting just-in-time (JIT) production techniques. The correct strategies result in minimizing waste, reducing lead times, and improving operational efficiency. 

Resource management and optimization in production planning

Resource management and optimization involve effectively allocating resources such as labour, machines, and materials to ensure smooth production processes.

With the correct resource utilization, operational efficiency meets customer demand within the desired time frame. As a result, companies minimize idle time, reduce production bottlenecks, and increase productivity. 

Demand and Supply Planning

Demand and supply planning are two essential processes in supply chain management. Including them in planning improves decision-making and enhances overall supply chain performance.

Demand planning

Demand planning is a supply chain management process organizations use to project future demand and customize their output accurately. 

Demand planning involves supply chain forecasting based on historical data, market trends, and other factors that help make informed decisions about production levels, inventory management, and resource allocation.

Supply planning

Supply planning works with demand planning – organizations must manufacture and supply enough products to meet the forecasted demand. 

Supply planning involves coordinating various aspects of the supply chain – procurement, production, distribution, and resource management and considering factors like the availability of raw materials and employee responsibilities. 

Coordination of demand and supply planning

Coordinating demand and supply planning involves integrating demand forecasts with supply planning processes to ensure that all parts of the organization work together. 

Once a well-executed sales and operations planning (S&OP) process comes into play, organizations balance supply and demand, improve decision-making, and enhance overall supply chain performance.

Inventory Management

Supply chain professionals always aim to maintain optimal inventory levels to meet demand while minimizing costs and risks associated with over or understocking.

Effective inventory management means meeting demand while reducing expenses and improving cash flow. Demand planning determines how much inventory is needed and when to order it. 

How does inventory management impact supply chain planning?

Your supply chain is optimized when the right products are available at the right time, in the right quantities, and at the suitable locations.

Proper inventory management means the companies can:

• Reduce stockouts and ensure high customer satisfaction.
• Minimize holding costs and optimize working capital.
• Enhance operational efficiency and reduce lead times.
• Improve forecasting accuracy and demand planning.

Inventory optimization strategies and techniques

Inventory optimization needs to balance inventory levels and customer service levels. Analyzing demand patterns, lead times, and other factors to determine the optimal inventory levels.

Some common inventory optimization strategies and techniques include:

• ABC analysis to classify items based on their value and prioritize inventory management efforts
• Just-in-Time (JIT) inventory management to minimize holding costs and reduce inventory levels
• Economic Order Quantity (EOQ) model to calculate the optimal order quantity to minimize ordering and carrying costs
• Vendor-managed inventory (VMI) to allow suppliers to monitor and replenish inventory levels directly

Inventory control methods and best practices

Inventory control methods help maintain optimal inventory levels through proper monitoring, tracking, and replenishment. Some of the best practices include:

• Regular inventory audits to identify discrepancies and prevent stockouts or excess inventory
• Implementing safety stock to buffer against demand fluctuations or supplier delays
• Using serialization and barcoding to track and trace inventory accurately
• Applying advanced inventory management software to automate processes and enable real-time visibility

Logistics Management

Logistics management is a crucial link that ensures the smooth flow of products from suppliers to customers.

Coordinating the movement of goods, materials, and information in the supply chain

One of the primary responsibilities of logistics management is to ensure the timely and cost-effective movement of goods, materials, and information throughout the supply chain. It involves coordinating various activities, such as transportation, warehousing, inventory management, and order processing.

Transportation:

• Choosing the most suitable mode of transportation
• Optimizing routes for efficient delivery
• Tracking and monitoring shipments

Warehousing:

• Strategically locating warehouses for optimal inventory positioning
• Implementing efficient storage and retrieval systems
• Ensuring proper handling and security of goods

Inventory Management:

• Optimizing inventory levels to meet demand while minimizing holding costs
• Implementing effective replenishment strategies
• Utilizing technologies like RFID and barcode scanning for accurate tracking

Order Processing:

• Efficiently managing the order fulfillment process.
• Ensuring accuracy and timeliness in the process
• Streamlining communication between suppliers, manufacturers, and customers

Key concepts and principles of logistics management

• Supply Chain Integration: Collaboration and coordination among all supply chain partners to facilitate seamless information flow and decision-making.
• Lean Logistics: Eliminating waste and non-value-added activities to optimize efficiency and reduce costs.
• Reverse Logistics: Managing the return, disposal, and recycling of products to minimize environmental impact and maximize value recovery.
• Third-Party Logistics (3PL): Outsourcing logistics operations to specialized service providers to leverage their expertise and resources.

Optimizing transportation, warehousing, and distribution activities

Logistics management aims to optimize various activities involved in the movement of goods, including transportation, warehousing, and distribution:

• Transportation optimization with efficient route planning, load consolidation, and carrier selection strategies to minimize transportation costs and improve delivery speed.
• Optimizing warehouse layout, storage systems, and picking processes to increase throughput, reduce handling time, and improve inventory accuracy.
• Distribution Optimization by designing an effective distribution network that ensures the right products are delivered to the suitable locations at the right time while minimizing costs.

Supplier Management

Without proper supplier management, businesses can face various challenges that may hinder their success in meeting customer demands. Establish strong relationships with suppliers and develop strategies for collaboration.

What’s the importance of supplier management in supply chain planning?

Proper supplier management helps businesses to strategically align their supply chain operations with their overall business goals. Supplier management directly impacts the availability and quality of materials and services required for production and distribution. By ensuring that suppliers are reliable and capable of meeting the organization’s demands, businesses can minimize disruptions and maintain a seamless flow of goods and services.

What’s the supplier selection criteria in supply chains?

Organizations must consider factors like reliability, quality, capacity, cost, and responsiveness when selecting suppliers. Best practices in supplier selection involve conducting thorough research and due diligence. Suppliers’ financial stability, reputation, and previous performance must be included in the study. 

Collaborative strategies for building strong supplier relationships

Collaboration and cooperation between businesses and suppliers can improve efficiency, flexibility, and innovation. To build strong supplier relationships, organizations can implement collaborative strategies such as:

• Maintaining open and transparent communication channels with suppliers to share information, address issues, and align goals.
• Involving suppliers in decision-making and jointly developing plans to optimize supply chain performance.
• Investing in supplier development programs enhances suppliers’ capabilities and ensures continuous improvement.
• Establishing clear performance metrics to evaluate supplier performance and provide feedback for improvement.
•  Collaborating with suppliers to assess and mitigate potential risks in the supply chain to minimize disruptions.

Risk Management

Businesses must identify and mitigate potential risks to ensure a smooth supply chain. Companies can minimize disruptions and enhance their supply chain resilience by implementing effective risk management strategies.

Identifying and mitigating risks in supply chain planning

In supply chain planning, it is essential to identify the various risks that may impact the flow of goods and services. These risks include natural disasters, political instability, supplier bankruptcies, and transportation delays. Once these risks are identified, businesses can develop strategies to mitigate them.

• Diversify the supplier base to mitigate the risk of supplier bankruptcies or disruptions. Thus, avoid the complete halt of the supply chain by having multiple suppliers in case one supplier cannot deliver.
• Companies can also purchase insurance policies that cover supply chain disruptions. Additionally, developing contingency plans for potential risks can help companies react swiftly and minimize the impact of disorders.
• Data analytics helps enterprises identify potential risks and make informed decisions. Companies can proactively mitigate risks and optimize their supply chain planning by analyzing historical data and market trends.

Strategies for enhancing supply chain resilience

An effective risk management plan also involves strategies to enhance supply chain resilience. These strategies include:

• Building solid relationships with suppliers and key partners improves supply chain resilience while enabling businesses to address risks promptly.
• Maintaining buffer stocks, implementing agile production processes, and having alternate transportation routes ensure supply chain flexibility.
• Monitoring the supply chain performance and identifying potential risks is crucial for enhancing resilience. Monitor the performance by leveraging real-time tracking systems, performing regular audits, and communicating with all stakeholders.

Tools and frameworks for effective risk management

These tools and frameworks facilitate effective risk management in supply chain planning:

• Performing risk assessments to understand and prioritize potential risks. Analyze the impact and likelihood of risks and develop mitigation plans accordingly.
• Conducting scenario planning exercises to simulate risk scenarios and evaluate their preparedness. Companies can identify gaps and improve before an actual risk event occurs by testing various scenarios.
• Implementing supply chain visibility technologies enables tracking goods’ movement and identifying bottlenecks or disruptions. This real-time visibility helps in proactive risk management.

Sales and Operations Planning (S&OP)

Sales and Operations Planning (S&OP) allows businesses to effectively manage their demand and supply to ensure smooth operations and customer satisfaction.

Integrating of sales and operations data enables companies to make informed decisions and align their resources to meet customer demands. This integrated approach helps optimize production, inventory levels, and distribution, resulting in improved customer service, reduced costs, and increased profitability.

The key elements and steps involved in the S&OP process are:

• Collaborative forecasting between sales and marketing teams collaborate with other functional areas to develop a demand forecast. This forecast serves as a basis for the supply planning process.
• Supply review assesses the company’s capacity and capability to meet the forecasted demand. It considers factors like production capacity, inventory levels, and supplier capabilities.
• Consensus planning of the production and inventory plans by the sales and operations teams to reconcile discrepancies between the demand forecast and supply capabilities. 
• The executive review by senior management to review and approve the production and inventory plans to ensure alignment with the company’s strategic objectives.
• Performance Measurement of the results against the planned objectives to identify deviations and take corrective actions.

What is an Example of Supply Chain Planning?

Prime examples of supply chain planning are Amazon and Orkla Food. Here’s additional context behind their demand planning success:

Orkla Food is a leading branded consumer products company in the Nordics and one of Norway’s largest companies. The organization has more than 25,000 direct suppliers globally and many sub-suppliers, such as farmers.

Orkla Food faced challenges in coordinating its planning activities due to the large number of SKUs in its portfolio and the complexities of its supply chain.

Orkla Food implemented supply chain planning to optimize its operations and enhance efficiency.

The effective management of demand planning, supply planning, and inventory management, along with other aspects of the supply chain enabled Orkla Food to streamline operations, enhance efficiency, avoid delays, and reduce operating costs.

This approach also help the company adapt to changing market conditions, manage disruptions, and improve customer satisfaction.

Amazon’s supply chain strategy is a prime example of how a company can optimize its operations and enhance efficiency. 

Some key components of Amazon’s supply chain planning include:

• Warehousing: Amazon has a vast network of fulfillment centers and warehouses strategically located near metropolitan areas to ensure efficient storage and management of inventory.
• Inventory Management: The company uses advanced technologies and algorithms to manage and replenish inventory, aligning supply with demand and preventing stock outs or excess inventory.
• Delivery: Amazon has developed a robust delivery network, including partnerships with USPS and UPS, its fleet of trucks, vans, bikes, and even robots in some cases, to optimize delivery times and costs.
• Technology: Amazon embraces technology in its supply chain management, utilizing automation, robotics, and data-driven solutions to streamline operations and improve efficiency.

By effectively managing these aspects of its supply chain, Amazon can streamline operations, enhance efficiency, avoid delays, and reduce operating costs. 

What are Supply Chain Technologies?

Supply chain technologies are software, tools and systems that streamline supply chain processes, increase efficiency, and reduce costs. Some of the most popular supply chain technologies include:

• Supply Chain Planning Software for managing and replenishing inventory through sales and demand forecasting. It enables companies to balance supply and demand, improve decision-making, and enhance overall supply chain performance.
• Warehouse Management Software (WMS) for managing warehouse operations, including inventory tracking, order processing, and shipping. These systems improve warehouse efficiency, reduce errors, and lower operational costs.
• Transportation Management Systems (TMS) for transportation and logistics operations, including carrier selection, route optimization, and shipment tracking. These systems reduce transportation costs, improve delivery times, and enhance customer service.
• Artificial Intelligence (AI) and Machine Learning are revolutionizing supply chain management by automating tasks, analyzing large amounts of data, and providing guidance on forecasting supply and demand.
• Internet of Things (IoT) devices enable real-time tracking and authentication of products and shipments using GPS and other technologies. They monitor storage conditions, ensure quality management throughout the supply chain, and provide real-time visibility and tracking of goods and products from production to distribution to end consumers.
• Blockchain technology can improve supply chains by enabling faster and more cost-efficient delivery of products, enhancing traceability, improving coordination between partners, and aiding access to financing. Blockchain can track inventory levels, optimize inventory management processes, and facilitate supply chain finance by providing secure and transparent records of transactions between suppliers, manufacturers, and distributors.

What is a Supply Distribution Network Design?

The supply distribution network design is a framework that determines the flow of goods, the locations of warehouses and distribution centers, and transportation routes.  

An effective distribution network design ensures that goods are transported from the point of production to the end of consumption most efficiently and cost-effectively.

What to Consider in Designing an Efficient Supply Distribution Network?

• Geographical coverage of the distribution network should reach a wide geographical area to ensure products can get customers efficiently.
• Customer demand patterns must be understood to determine the number and location of distribution centers to optimize product availability.
• Transportation costs must be considered in the distribution network design, including shipping, fuel, and maintenance, to minimize overall supply chain expenses.
• Lead time requirements of different products
• Inventory positioning within the distribution network must ensure that products are available when and where needed, reducing stockouts and excess inventory.

Techniques for Optimizing Warehouse Locations and Transportation Routes

There are several techniques used for optimizing warehouse locations and transportation routes:

• Network optimization modeling uses mathematical models to evaluate scenarios and identify the optimal locations for warehouses and distribution centers.
• Transportation route optimization uses algorithms that analyze transportation routes, considering factors such as distance, cost, and delivery time to identify the most efficient ways.
• Simulation models test different distribution network designs in a virtual environment, allowing businesses to assess their performance and make data-driven decisions.

The Power of AI-driven Supply Chain Planning

With IoT and artificial intelligence (AI) led technologies rapidly gaining momentum especially in the global logistics and supply chain management industries, supply and demand planners stand to benefit from these in several ways.

The powerful evolution in artificial intelligence, machine learning, and data science has the potential to bring in massive disruption and meaningful innovation across these industries.

With specific reference to supply chain planning, AI can help to a great extent in reducing supply chain costs , managing inventory, and eliminating potential bottlenecks. AI in supply chain can help obtain new insights into several areas to boost productivity and optimize resources as well.

As a result, floor operators and planners are able to create more agile, flexible, and profitable supply chain plans to deliver goods and services as per customer expectations.

One such important application of AI in supply chain planning is the process of eliminating bottlenecks across the supply value chain to ensure supply chain planners and managers can meet their revenue targets easily.

Safer, Smarter and Better Supply Chain Planning with ThroughPut

ThroughPut’s Demand-driven supply chain planning software is a fully automated, scalable, enterprise-ready Kaizen Artificial Intelligence product based on digitalizing the world’s leading continuous improvement operations principles.

It enables your operations managers in effective supply chain planning to achieve unprecedented productivity and operational excellence.

ThroughPut analyzes existing industrial data in real-time to detect, identify, prescribe and prevent potential bottlenecks saving millions in delays and lost revenue.

It helps meet your supply chain goals by nailing down bottlenecks and eliminating inventory waste to achieve end-to-end efficiencies. You ultimately benefit from an efficient and optimal smart supply chain plan along with time, money, and resource savings.

If you wish to learn more about our supply chain planning and optmization software to help you in creating your supply chain plans, click here for a demo .

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Supply Chain Planning for New Businesses: 5 Steps to Get Started

Table of Contents

Starting a new business can be overwhelming, especially when you delve into the complexities of running a successful supply chain. Fortunately, this guide to supply chain planning has everything you need to create a winning supply chain plan for your new business. 

What is Supply Chain Planning

Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services, and information from supplier to customer, while balancing supply and demand. 

Often included with the mention of supply chain planning is supply chain management (SCM) , which encompasses the broad range of activities required to control and execute a supply chain plan in the most economical, and efficient way possible. You will need both SCM and SCP to meet customer demand in the most efficient way possible. 

Supply Chain Planning Strategies and Methods for New Businesses

Supply chain planning for new businesses is an immense subject, with dozens of complexities and applications. Though it seems confusing, you can tackle this complex field by breaking it down into a series of simple steps. 

Define Your Supply Chain Goals and Key Results

Start by considering your business model, as well as that of your competitors. List your key goals and results you wish to achieve. A typical example might look like:

• Maintain On Time Delivery Performance greater than or equal to 95%.
• Reduce Lead Time of 70% of products you sell by 25%.
• Improve Supplier On Time Delivery to greater than or equal to 85%.
• Improve ERP Planning Parameters to achieve On Time Delivery Performance 95% level.
• Manage Working Capital – $3.8M < 68 DOH (Days on Hand) as Inventory Target.
• Reduce total logistic cost as percentage of sale by 6% from previous year.

Define Key Tactics and Initiatives To Achieve Supply Chain Goals

The next phase explores the individual aspects of your framework, i.e., your supply chain tactics. Think of your supply chain tactics as a set of short term initiatives you utilize to achieve your short term goals, and enable your long term strategy. A typical example of initiative could look like:

• Conduct ABC analysis with all strategic suppliers (Min/Max stocks, Lead-time reduction).
• Implement Direct Line Feed (DLF) with high running manufacturing cells.
• Deliver Cost Out projects committed in freight & warehousing spend.
• Support Part Transitions via ramp up/ramp down to support cost out.
• Develop Individual Personal Development Plans for each Supply Chain team member.
• Develop advanced project management skills.
• 2 x CPIM & 1 x MCIPS certifications to support the Supply Chain team in 2021.

Outline Your Supply Chain Strategy

Every item you sell requires supply chain planning at every phase of its life cycle. This phase is where you outline the supply chain strategy for each item. Supply chain strategy outlines typically include:

• Demand planning and management – Supply chain forecasting for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without the need to store surpluses.
• Supply management – Supply management involves sourcing and procuring trusted sources of raw materials, components, software, and other goods that go into making your product or service.
• Production management – Production management, a.k.a. capacity planning is when you address production issues in terms of machinery, staff, and efficiency. The key question in this phase is “How much can we realistically produce during the planning period?” .
• Inventory management – Inventory management is how to manage inventory levels with supply chain partners, and keep stock on hand at an optimal level while ensuring reliable customer service.
• Pricing strategy – Pricing strategy is how you set an optimal price for your goods and manage the balance between supply and demand. One example of pricing strategy is a price cut designed to stimulate sales during periods of low demand.
• Crisis management – Event management in regards to your supply chain involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain, and developing contingency plans to stay in business should you lose a supplier. 
• Integrated business planning (IBP) – Integrated business planning is how you link supply chain planning with the rest of their business, like sales, operations, and finance. Because IBP gathers information from across the enterprise, it also helps companies perform better predictive analysis.

Combine Goals, Tactics and Strategy into Your Supply Chain Plan

This phase of supply chain planning is where you combine everything, and decide on how your supply chain plan is going to be effective. Here’s where the process gets tricky, as you will have to corral your managers to agree on short term and long term actions, due dates and expected results. 

When working on this stage of your supply chain plan, it’s a good idea to decide on a figure that you’re willing to spend to achieve your goal. Keeping that figure in mind will make it easier to select the tactics that provide the most advantage.

Find a Fulfillment Partner

The last and final step in the supply chain planning process for new business is to invest in supply chain fulfillment . Flowspace is the fulfillment partner that handles everything after a consumer clicks buy. With a flexible, distributed network of fulfillment centers, the Flowspace platform makes it easy for businesses to enable fast, affordable fulfillment, from anywhere to anyone.

Contact us today to get started!

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Written By:

Allison Champion

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.

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Supply Chain Management Business Plan Sample

NOV.28, 2014

Do you want to start Supply Chain Management Business?

Do you want to start a supply chain management business? Well that can be an amazing idea if you want to quickly start a business. One of the main reasons is that this supply chain business plan will not need you to have any specific technical knowledge or degree. You can start this business with just a few contacts and grit.

Even though it is relatively easier to start a career in supply chain management, it still doesn’t mean you should go in unprepared. The best thing you can do is go through a business plan for supply chain management. You can get a business chain management plan supply from anywhere on the internet. And if you want, this document is also a great place to look for help supply chain business plan .

Executive Summary

2.1 the business.

Clark’s Management will be a supply chain management startup owned by Clark Bridgers. The main objective of the supply chain business plan is to guide and assist companies in streamlining their supply chains in Oakland. It will offer versatile resources and services for the best supply chains.

2.2 Management of Supply Chain Management Company

To ensure that your company is well managed, you need to develop a supply chain management business plan as the first step.

In this supply chain strategy model, we will including all the important aspects of a business for buy side due diligence .

In order to make your supply chain business plan , you can study a sample pdf of supply chain management like this one. You can also use the internet to go through a plan for supply chain management filetype pdf. These will give you a good idea of what you should include in your supply chain business plan . And this will apply even if you are developing a business plan for video production .

2.3 Customers of Supply Chain Management

Our clients will be from all industrial and professional domains since supply chain is a part of the lifecycle of any product or service. Keeping that in mind, our recurring customers will include:

• Product Businesses
• Service Businesses
• Hybrid Large/Small Businesses
• Manufacturing Units

2.4 Business Target

The primary goal of our supply chain business plan is to become the most reliable and trusted option for our clients whenever they want to improve their supply chains.

The financial targets that we aim to achieve in the first two years are shown below:

Company Summary of Supply Chain Management

3.1 company owner.

Clark Bridgers will own Clark’s Management. Clark completed his Bachelor’s in Management about 3 years back. After his studies, he pursued a job in a corporation as a business management consultant. But he left job in pursuit of starting his own supply chain business plan .

3.2 Why the Supply Chain Management Company is being started

Clark observed that a lot of businesses are looking for ways to reduce their production costs. But there are very few businesses that offer any help in the area. He quickly realized that he could use his innovative ideas and knowledge to improve supply chain management for these companies.

3.3 How the Supply Chain Management company will be started

Step1: Plan Everything

Before you look into things like what is supply chain strategy definition, you need to consult supply chain business plan experts. They will guide you in development of supply chain organization models.

Clark decided to offer his services to both service and product based companies. So, you can use this or any related supply chain management project report pdf to get started with your own supply chain business plan . These documents will help you understand the role of supply chain management in business plan.

Step2: Define the Brand

A crucial step in starting a new supply chain business plan is to get noticed. You will have to identify and highlight your core values and market those to your potential customers to gain attention.

Step3: Establish a Web Presence

The most important part of any business in the digital age is online promotion. For this, Clark decided to establish social media presences for his supply chain business plan . He also decided to outsource a simple website through which people can book appointments and reach out.

Step4: Promote and Market

As the final step, you need to create and follow a marketing plan to promote your supply chain business plan .

Services of Supply Chain Management

When you are starting supply chain business , one of the major things you need to figure out the services you will be providing to your customer base. You can refer to a sample business plan supply chain management for an idea.

The requirements of supply chain management in a business plan is different as compared to other plans such as aerial tourism business plan .

But since Clark decided to provide a whole array of services so this example of supply chain strategy can also be used for other ventures like internet radio business plan . You can gain a lot of insight from this plan for operations and supply strategy.

• Identifying and Dealing with Logistics Problems

Our company will offer solutions to all basic problems that may occur in the supply chain. If, for instance, a customer complains about service quality, it can reflect poorly on the supply chain business plan . But our company ensures that most problems are identified beforehand through data analysis.

• Price Optimization

Many businesses offer products or services that are seasonal. Since seasonal offers are not needed throughout the year, businesses have to find a way to reduce their prices and sell them. Our company will help businesses set these marketable prices through analytical software. This will ensure that:

• Products are sold, and
• Business is still profitable
• Dynamic Resource Management

Businesses have limited resources. Our company will help businesses organize and allocate their resources such as equipment and workforce in a way that optimizes performance.

• Supply Chain Consultation

Our company will also provide consultation experts that can help businesses with supply chains reduce their costs and improve their performance.

Marketing Analysis of Supply Chain Management Company

When you are describing your company for supply chain management in a business plan, you will need to describe your customer base. Identifying your customers is one of the essential steps of starting a supply chain business plan . And you have to include this information in your plan even it is a business plan template for summer camp .

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You should have detailed information about your customer. And the best way to get these details is through a market analysis. The market analysis included in your supply chain development strategy, should have all information regarding past, present and future market trends.

The supply chain strategic management is used to analyze the market prices and to figure out the financial goals of your own supply chain reporting structure. You can use a supply chain management project pdf sample like this to see how the market analysis is presented.

5.1 Market Trends

According to ExploreWMS, the number of warehouse in US have grown by 6.8% in the last five years. This means that more and more companies need better supply chain management techniques and services. And due to the shift for efficiency, supply chain management positions are increasing faster than economic averages. So, there is no deficiency of demand in the market for a supply chain management or services.

5.2 Marketing Segmentation

The potential customers of Clark’s Management are divided into the following categories:

5.2.1 Product Businesses

Our main customers will be the product based businesses that rely on the sale of their products. Since the sale of a product is affected by a lot of factors in the supply chain so these businesses are more likely to regularly use our services.

5.2.2 Service Businesses

Our second target customers will be service providing businesses much like ours. Services are also provided as a result of a supply chain that involves ideation, planning and development as some of its parts. So service businesses are also expected to utilize our services quite often.

5.2.3 Hybrid Small/Large Businesses

Every supply chain business  works for an endpoint through a series of pre-defined steps. These steps form a supply chain even in hybrid (product and service) businesses. Since these businesses are usually big corporations with their own management departments so they are likely to use our services every so often.

5.2.4 Manufacturing Units

Manufacturing units on their own also require management tips to work more smoothly. They are expected to avail our services often to streamline their operations.

5.3 Business Target

• To become the best supply chain management company throughout Oakland
• To increase the range of our offered services over time
• To earn a net profit of around $30k per month by the end of the second year
• To achieve and maintain customer satisfaction above 90%.

5.4 Product Pricing

Our prices will be a little bit higher than the market average. But we will offer more services over a longer period of time as a compensation. This will help our customers more in the long run as compared to our competitors.

Marketing Strategy of Supply Chain Management

To gain attraction in a huge industry, you need to find areas where you have competitive advantage. For this, you need a solid marketing strategy and branding so that people can recognize your offers.

In the present supply chain management report template, we are describing the marketing strategy for Clark’s Management. You can also refer to an example such as business plan supply chain management to improve your business proposal. This is helpful even if you are just starting a paintball business .

6.1 Competitive Analysis

• We have amazing customer support available. We will deal with all customers patiently and also gain feedback for future improvement.
• Through our physical shops, website and social media, customers have different ways to contact us. And we will respond to them at the earliest.
• We will provide consultations and services in accordance with all the standard practices so that our customers can focus on their work without worry.

6.2 Sales Strategy

• We will advertise through word of mouth, Google Ads, Social Media, and billboards.
• We will provide long-term services in reasonable and market-competitive prices.
• We will also provide special discounts to first-time and long term customers.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan of Supply Chain Management

No business can run without the diligence of its workers. The success of any business actually depends a lot on the behavior of employees. Clark knew the importance of hardworking and patience workforce and so he developed a selection criterion for employees. This criterion will be a part of business plan for supply chain management.  You can also find examples of this in a sample business continuity plan supply chain management on the internet.

7.1 Company Staff

• 1 Co-Manager for overall assistance
• 2 Purchasing Agents
• 3 Logistics Analysts
• 1 Operations Manager
• 3 Planning and Expediting Clerks
• 2 Storage and Distribution Managers
• 3 Operations Consultants

7.2 Average Salary of Employees

Financial plan.

You can’t become successful by just selling products or services. To be profitable, you need to carry out a detailed financial analysis. Usually, like in this supply chain business plan sample, financial analysis is included. Every good supply chain management business plan has a thorough financial plan included.

In your financial plan, you need to show how you will cover your expenses with your sales and profits. You also need to identify ways to reduce your expenses and increase your efficiency.

We have provided a comprehensive financial plan for supply chain management business. But you can also refer it for business plan movie selection .

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

8.5 Projected Balance Sheet

8.6 business ratios.

• How do I write a business plan for supply chain management?

You can write a business plan for supply chain management by reading business plans like the one here or by consulting a business plan expert.

• What is supply chain in business plan?

Supply chain consists of processes that are involved in the production of a product or the provision of a service. And in reference to a supply chain business plan , it includes all the details needed to start a business in supply chain management.

• What are the examples of supply chain management?

Supply chain management is involved in all kinds of supply chains including product design, manufacturing, farming, packaging, and transportation etc.

Download Supply Chain Management Business Plan Sample in pdf

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• SAP Integrated Business Planning

What is supply chain planning?

• Demand-Driven Material Requirements Planning
• Demand Forecasting
• Inventory Optimization
• Response and Supply Planning
• Sales and Operations Planning

Supply chain planning: What it is and how it's used

Supply chain planning optimizes the manufacturing and delivery of goods – from raw materials to finished products, and from suppliers all the way to customers.  Essentially, it’s a demand-driven balancing act between shortage and surplus. 

Reduce risk when changing supply chains and drive sustainable growth, June 3-5.

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Supply chain planning overview

In the past few years, a big chunk of our small talk has shifted from “looks like rain” to “how about these supply chain problems?” Of course, the pandemic was the cause of much of that disruption…but not the only cause. With the rise of AI, the ubiquity of online and omnichannel shopping, and the generally supersonic pace of social and technological change – it’s no wonder that supply chain planning is today, one of the most deeply affected and vulnerable operational areas.

To compete, modern supply chain planners must be responsive, accurate, and agile if they want to keep up with fast-shifting customer demands, heightened competition, and unpredictable global events. 

People tend to focus mostly on inventory and logistics when they think of supply chain planning. But of course, it’s so much more than that. For physical products and manufacturing, it starts way back with managing the suppliers who grow and mine raw materials, and goes right up to the moment an item is delivered to a shelf or a front door – and even beyond, to returns, recycling, and reverse logistics. Supply chain planning is also informed by consumers at every level: their shopping habits, their reviews and feedback, and their ever-changing shopping behaviours. 

Components of the supply chain planning process

The best integrated solutions can help you optimize, coordinate, and centralize the core aspects of supply chain planning. Following are key functionalities that can be used as stand-alone solutions, but are more powerful when combined:

Demand forecasting

As a vital part of effective supply chain planning, demand forecasting helps businesses avoid costly surplus and anticipate customer needs to maximize profits.

Inventory management

Inventory management  allows you to meet service level targets without carrying or paying for more inventory than you actually need. To simplify a complex distribution network and respond to demand variability, organizations must first learn how to master these inventory challenges. Integrated, cloud-based planning solutions give you a single, unified view of inventory, using complementary data sets and advanced analytics to help give more precise predictive recommendations.

Response and supply planning

The best practices of  response and supply planning  help organizations meet their operational challenges through intelligence supplied by AI and machine learning. This creates a business supply chain that is more  resilient , efficient, and adaptable. 

Sales and operations planning (S&OP)

Sales and operations planning  offers you the opportunity to make better decisions that are informed by key supply chain drivers, such as sales, production, inventory, and marketing. Improving your S&OP process involves using better data, rigorously defining your performance metrics, and aligning goals and objectives company-wide to ensure that clear roles and expectations are developed, defined, and carried through. 

Demand-driven replenishment (DDMRP)

Materials procurement has traditionally been driven by analysis of past demand data – an approach that has obvious limitations in times of demand fluctuation and uncertainty. Today’s solutions, however, include predictive models. Demand-driven material requirements planning (DDMRP) – an extension of traditional MRP – helps organizations become more agile and adaptable without compromising the quality of their product. 

Supply chain monitoring

At the center of your supply chain lies a data dashboard known as the  supply chain control tower  that offers real-time end-to-end visibility of every component of your supply chain. With  AI ,  machine learning , and collaborative information sharing, today’s supply chain monitoring  provides insights that can improve every stage of your supply chain and manufacturing process. 

From supply chain planning to integrated business planning (IBP)

Traditional supply chain technologies and manual processes are simply no match for modern demands for speed, visibility, and agility. Business planning solutions had to evolve to meet these needs by incorporating powerful AI-driven optimization algorithms, advanced analytics, and real-time forecasting capabilities -- allowing businesses to adjust their plans dynamically and optimize their supply chain performance on demand. And just as importantly, planning solutions needed to become truly integrated, to take full advantage of each aspect of supply chain planning technology.

Cloud-based solutions offer scalability and flexibility, allowing organizations to accommodate business growth and seamlessly integrate with third-party systems. This delivers a holistic view of the supply chain, facilitating collaboration among different teams and stakeholders, and breaking down silos that hindered efficient planning processes in the past.

By streamlining supply chain planning processes, integrated planning solutions help businesses improve operational efficiency and navigate the complexities of today's supply chain landscape.

Successful supply chain planning examples

One of the best ways to see how incorporating new technology solutions can lead to better supply chain planning is by looking at companies that have already done it. Here are case studies of global businesses that have successfully integrated new technologies and approaches to optimize their supply chain strategies and planning. 

1. Deutsches Rotes Kreuz (DRK) / German Red Cross (of Saxony)

With only two weeks between the signing of the contract and the go-live, the  Deutsches Rotes Kreuz Landesverband Sachsen e.V  (German Red Cross State Association of Saxony) was given the monumental task of planning, launching, and running a state-wide COVID-19 vaccination program. This included complex and sensitive supply chain and logistical issues related to the procurement, transport, and storage of these essential vaccines. This local DRK association reacted quickly to various sets of changing circumstances, including supply chain shortages and delivery delays, all while maintaining strict safety and data protection standards.  To manage these challenges and get vaccines into Saxony’s four million arms on time, the DRK used SAP Vaccine Collaboration Hub, which is based around the key components of integrated business planning solutions. When run on cloud ERP and analytics solutions, it offered the coordination and planning team end-to-end visibility of the vaccine supply chain, allowing them to make more accurate plans based on resource availability.  From there, it integrated SAP Vaccine Collaboration Hub with existing third-party vaccine appointment management software to help citizens plan their visits based on real-time resource availability. The solution even allowed the association to prioritize first and second shots based on need, to ensure the most vulnerable were protected. 

2. Exact Sciences

Exact Sciences  — a company that provides cancer detection, treatment guidance and monitoring services — has helped people make informed and confident healthcare decisions since its inception in 1995. And the company’s goal of driving innovation combined with scientific rigor has contributed to its rapid growth and success. However, rapid growth through large scale acquisitions also created challenges – including consolidation and processing of information across legacy systems and manual coordination of 18 tools.

With the help of integrated business planning tools and SAP’s industry expertise, Exact Sciences was able to address these challenges, standardize their business processes, and gain visibility into its supply and demand planning. The integrated planning approach helped consolidate all legacy business units and improved the monthly reporting process, resulting in a significant reduction in time spent generating and reviewing reports – from 40-hours per month to only two. Exact Sciences is able to maximize its time and energy on continuous innovation in cancer treatment and less on manual tasks.

Through better forecasting models, businesses can achieve more responsive integrated business planning and, in turn, improve resilience and agility.

When a customer needs a new mattress, they don’t want it in weeks – they need it in days.  Zinus, Inc.  is a South Korean mattress manufacturer dedicated to offering customers in-home comforts faster than any competitors. The only way that it can make this happen is with a more resilient and transparent supply chain.  To help accelerate growth and keep the company agile while offering consumers the reliable customer service they expect, Zinus sought to improve visibility across its supply chain. This visibility would allow it to make improvements to the supply chain overall, leading to increased agility in response to customer demands and market trends.  The easiest way for Zinus to adopt these central tenets of integrated business planning was to take advantage of customized supply chain software applications. Their automation and integration capabilities allowed Zinus to reduce manual work and automate many aspects of demand forecasting, inventory planning, and even sales and operations. The solutions were natively integrated with a powerful ERP, allowing them to be quickly factored into company-wide decision-making.  After adjusting to the new applications, Zinus was able to harmonize their planning and execution, thanks to improved forecast accuracy and optimized planning results from responsive forecast algorithms. These powerful supply chain analytics empowered their team, allowing them to make more informed, proactive, and transparent decisions. 

4. Orkla Food Ingredients

If you’ve ever been to Europe and have enjoyed the taste of a fresh bakery bun or decadent ice cream, chances are you have experienced some of the products supplied by  Orkla Eesti AS . This Estonian confectionery company was established in 1806 and since then has developed a massive line of products manufactured out of its two Estonian factories.  To continue providing customers with high-quality products where and when they need them, Orkla sought to automate and standardize a wide range of its supply chain processes. To do this, it required flexible and responsive modern software solutions that could offer real-time supply chain insights. The goal of this new scalable solution was to provide company leadership with integrated business planning components that were easy to access and could be simultaneously rolled out across multiple countries.  Using integrated business planning tools, project leaders leveraged a standard solution for demand planning that offered comprehensive business process knowledge and expertise. The result was a 100% improvement in supply chain transparency, with a 7% increase in company-wide planning accuracy. Having reliable, transparent data has significantly reduced redundant work, made the decision-making process more consistent, and allowed for optimized costs, enabling the company to pass these savings on to its customers. 

Explore SAP Integrated Business Planning

Boost your supply chain resiliency, sustainability through integrated planning.

Perspectives on supply chain planning

Explore this collection of key insights on how supply chain planning can help improve operations and navigate complexities.

The Guide to Writing the Supply Management Plan

Supply management is one of the key components of a successful business, regardless of its niche or service portfolio.

Once you find a suitable supplier or B2B partner with the items or services you need to remain operational at peak capacity, you need to ensure that a supply management plan is in effect.

You cannot underestimate the importance of a supply management plan for your business because the gaps in it will lead to problems with logistics, poorer relationships with your customers, and a drop in revenue as a result.

Statistics prove this point. According to the report by InvespCRO :

• 57% of businesses have poor visibility across their supply chain
• 63% of companies don’t use proper technology to monitor their supply chain performance
• 7% of businesses also struggle with the financial costs of maintaining their supply chains

There is no doubt that the problems described by these stats come from a poor and ineffective supply management plan because a good one would contain the solution to each of them.

So, as you might have already guessed, drafting such a document takes effort and attention to the smallest details. This is due to legalities and mutual obligations, which will require careful listing and formatting.

With that said, let’s take a look at what you need to write an effective supply management plan that satisfied both parties involved in the supply chain.

1. Start with a Supply Management Plan Overview

The first thing that your supply management plan should include is the front page with all the essential information about the subject of this plan. This is a short overview that provides a brief sum-up of the main stipulations, including:

• Proposal – general details of the cooperation between the company and the supplier.
• The main recipient of the goods – the name and legal address of the company that receives goods from the supplier.
• The description of product categories – all products that the company will receive from the supplier and the proposed budget for the delivery of each of them.
• Contact details – should include the names and job titles of people responsible for the supply management plan from both sides involved.
• Date of submission – the date when both sides signed the plan.

This page should also include the general timeline of the cooperation and the delivery schedule for each product mentioned in the supply management plan.

Including the overview page to your supply management plan is essential because you can refer to it every time you and your supply partner have questions, without having to review the entire document.

2. Create a Supply Procurement Policies Outline

This is an essential part of your supply management plan because, in it, you will specify why you’ve chosen your supplier. But apart from that, there are quite a few other important stipulations that this section will include:

• Purchasing authority – the name of the company that buys products, which items it will purchase, the person who oversees the delivery of the products.
• Spending limitations – the maximum budget allocated to the purchase and delivery of the goods within a certain timeframe.
• Reason for choosing the supplier – product quality, delivery schedule, pricing, and other factors that influenced the choice of the supplier.
• Contract details – the description of the document that confirms the partnership between the company and the supplier.
• Ethical conduct – includes the confidentiality agreement, conflict resolution procedures, supply chain risk management , and other conditions that ensure the efficacy of the supply management plan.

This section needs special attention from both sides involved in the plan because the details described in it regulate the relationship between the company and the supplier while this plan is in effect.

3. List Quality Assurance Requirements

Under quality assurance (QA), you will include the quality characteristics set out by you as a customer, from the general performance of the product to separate product features.

The list of the QA requirements will depend on the specificity of the products, but here are a few examples just to give you an idea:

• Product defects – make the definition of a product defect, explain how it will be evaluated, and how it can impact the production process.
• Warranty period – the timeline, within which you are allowed to exchange the product for a new one.
• Product inspections – how often the quality of the products will be reviewed and what measures you will take if the supplier violates your QA agreement.

When it comes to listing QA requirements, the devil is in the detail. If you skip something, you might end up with the problems that we described in the introduction. So, make sure this section is well-edited and proofread. You can use online tools like BestEssaysEducation , SupremeDissertations , or Grammarly for extra proofreading help.

The main goal of this section is to make the exchange of goods easier and avoid repeated quality inspections. If you list all the quality requirements in this section, the document will oblige the supplier to observe them.

4. Include International and State Laws

Just as any document that defines the relationship between two businesses, the supply management plan should list legal provisions that regulate this relationship.

Legal documents defined in this section can include but are not limited to:

• Intellectual Property Rights
• Laws that regulate environmental factors, like the Restriction of Hazardous Substances (RoHS) and Waste from the Electrical and Electronic Equipment (WEE)
• General state laws created by the U.S. Securities and Exchange Commission

In addition, you also need to check your state laws to make sure that your supply chain won’t meet any obstacles on the local level.

5. Outline your Supply Selection

One of the most important parts of your supply management plan that requires your attention to detail is the list of goods you will receive from the supplier. This section will include a table that will describe the essential product details needed for supply chain optimization .

The table with product selection should include:

• information about each product category
• the generic name of each product
• number of products scheduled for delivery within a certain timeline

In this table, you can also include the information about the pricing for each product to make sure that the price is fixed on paper and cannot be changed if both sides don’t agree on it.

A proper supply management plan has a lot of advantages, from higher revenues to an improvement in the overall productivity of your company. However, its biggest advantage is that it standardizes and curates the relationships between you and your supplier.

But, as with any document that regulates business relationships, this one also needs attention to detail. Hopefully, our short guide will help you draft a detail-oriented supply management plan that helps you run your supply chain successfully.

About the author 

Kristin Savage nourishes, sparks and empowers using the magic of a word. Along with pursuing her degree in Creative Writing, Kristin was gaining experience in the publishing industry, with expertise in marketing strategy for publishers and authors. Now she works as a contributing writer at TrustMyPaper and GrabMyEssay . You can find her on Facebook .

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6 Steps to Write a Supply Chain Management Plan

The Value behind Writing a Supply Chain Management Plan

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By Daniela McVicker, 29 July, 2020

Supply chain standardization is a challenging yet beneficial process for all businesses regardless of their scale or target markets. With COVID-19 crisis underway, writing a reliable supply chain management plan for your company has become more than a welcome addition to its business model. 

However, drafting such a document without insight into typical supply management practices can be tricky. Businesses which deal with import/export, as well as those who require raw materials for processing, know what such documents should and shouldn’t contain. With that in mind, let’s discuss the steps to write a supply chain management plan in 2020 in order to better streamline your procurement pipeline.

Why should you pay attention to strategic supply chain management in your company? After all, you’ve handled procurement without such documents before, what is different now? As we’ve briefly mentioned, the current global crisis has put a wrench in the proverbial machine for numerous industries, physical shipping included. 

Whether you operate as a redistribution or packaging company for your local market or work in manufacture and require raw substances, proper supply management matters. Businesses in the B2B sector tend to work with long-time and reputable brands far more than they do with new players on the market. 

Here are some relevant facts in regards to supply chain management as published by Finances Online recently:

• 57% of companies believe that proper supply chain management gives them a competitive edge
• 62% of companies have limited visibility of their supply chain management
• 74% of companies utilize 4-5 transportation methods based on current situation
• 46% of businesses don’t track their inventory and have no automated method to track it

Despite the potential loss of revenue, industry reputation and public trust, many businesses still fail to use a supply chain management plan to their benefit. This opens the doors for your own and other companies who are willing to go forward and write such a plan to maximize future productivity. Doing so will also bring several crucial advantages into your corner, including:

• Increased net revenue
• Better B2B networking potential
• Improved in-house productivity
• Lowered margin for supply management errors
• Better analytics possibilities due to standardization

Steps to Write a Supply Management Plan

1.Assess your Current Supply Pipeline

The best place to start writing your supply chain management plan is through an internal audit of your company. More specifically, analyze the ways in which you have procured goods or services up to this point. What worked well and what caused you problems? Which companies were willing to work with you long-term and which ones turned out to be less than ideal for cooperation? 

Go through the available documentation and try to separate your current supply management pipeline into “good” and “bad”. Whatever is good, you can carry over into standardized procurement going forward, and vice versa. Don’t write a supply chain management plan without a clear idea of where your company currently stands on.

2.Define the Supply Management Outline

A supply chain management plan is a written document which serves to standardize your procurement processes. As such, you should start writing it with the goal of creating a long-term template which your sales department can use for the foreseeable future. Start by outlining your company’s basic information on the front page. You can use a thesis writing company in order to write or edit your supply management documentation in a reliable manner.

Data related to your legal and contact information should find their place on the aforementioned front page. Leave an empty table on the first page just below the legal information as you will copy the data in regards to your order here afterward. The purpose of the outline page is to give your recipient a clear idea of the procurement request without having to read through multiple pages.

3.Quality Assurance (QA) Overview

Depending on your warehousing units and available technology, your QA details should find their way into the supply chain management plan. This will give both your employees and procurement companies you work with ample information on what can and cannot be stored on your property. 

Certain items might require refrigeration or special storage due to their chemical properties, unlike electronics or paper products which are more durable. The information on your QA requirements in regards to transport and storage will let the supplier know exactly what logistical resources you have available. It will also proactively ensure that no goods arrive at your company without explicitly following the QA standards.

4.Break down your Supply Needs

The list of goods you require from a supplier should be highlighted in the supply chain management plan to allow for quick and easy access. Depending on the industry you operate in, this list can take the form of a spreadsheet, a bulleted list or a chart with visualized supply elements. 

You should account for any special requests you may have and clearly outline what those refer to in a separate section. If you require pipes of a specific diameter, length and material which is otherwise not standard for your supplier, make sure to annunciate that point. Make sure that there are no typos or spelling mistakes in this section as they can severely hinder your efforts at supply standardization. Proofread both your supply chain management plan’s template and any future supply procurement requests you file using said template.

5.Develop a Supply Timeline

Once you assemble a list of goods you require, you should proceed to outline the delivery timeline for your supplier’s benefit. Do you simply require these items to be packaged and ready for pickup by your company? Or, do you require different amounts of items to go to different warehouses or retail storefronts under your brand? 

The supply timeline is just as important as the breakdown of your required goods as short deadlines or wide distribution requirements may not be viable. The timeline will give your supplier enough information to make an objective decision on whether or not to proceed with your order. As such, this section should include contact information for your sales department representative which can be used to confirm or further discuss the procurement request.

6.Government Laws & Regulations

Lastly, international shipping will require you to list laws and regulations in regards to your government’s import standards. Whether you transport goods by international roads, water or air, government regulations should be made available to your supplier. The same can be said for state-to-state shipping in the US, as different states will have drastically different shipping standards. 

Including this section in your supply chain management plan will significantly speed up customs processes on both ends. Likewise, it will ensure that your supply arrives as was intended, which is important for goods which require special storage and handling (see QA standards). 

Follow Up and Reinvent (Conclusion)

While the goal of writing a supply chain management plan is to standardize your procurement process, you can build on the foundation through supplier feedback. Inquire about how legible, organized and informative your supply documentation is with companies. 

Ask for feedback on what works and doesn’t work, as well as what they would do differently in your place. The role of the supply chain management plan template is to help you, not hinder your productivity – be on the lookout for more development opportunities. Adopting such a mindset will ensure that your documentation becomes of higher quality and easier to manage over time.

Image source : https://unsplash.com/photos/oh0DITWoHi4  

Author’s bio. Daniela McVicker is a passionate digital marketer. Daniela is interested in everything related to SEO and blogging. She collaborates with Essayguard and other websites where she shares her experience and helps marketers make their names in the online world.

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Retail | What is

What Is Supply Chain Management? Small Business Guide

Published January 26, 2024

Published Jan 26, 2024

REVIEWED BY: Katie-Jay Simmons

WRITTEN BY: Karina Fabian

This article is part of a larger series on Retail Management .

• 1 How SCM Works in a Small Business
• 2 Why is SCM Important?
• 3 Advantages of SCM
• 4 10 Ways to Optimize Your SCM
• 6 Bottom Line

Supply chain management (SCM) is the process of overseeing your product from construction to delivery with an eye for creating the best product at the best price. For small businesses, this often involves:

• Sourcing products, parts, or materials, either domestically or overseas
• Using a third-party fulfillment service or performing fulfillment in-house
• Handling logistics and transportation
• Mitigating issues caused by natural disasters, trade wars, or other unexpected events
• Organizing, tracking, and replenishing inventory
• Preparing for seasonal upswings in demand

Post-COVID-19, businesses are still feeling the effects of supply chain issues, which many executives believe will continue beyond 2024. Small businesses are hard hit by disruptions in the supply chain but are also able to adapt more quickly than larger companies. Whether you’re starting a retail business or aiming to improve your existing one, it’s important to understand how to optimize supply chain management so you have fewer disruptions, more efficient production and delivery, and happier customers.

How Supply Chain Management Works in a Small Business

How supply chain management actually works will depend on your business. Some businesses do most everything themselves. For example, a beekeeper may produce honey and beeswax products from their own apiary, create their own labels (though they may have a supplier for paper and ink), sell via ecommerce, and pack and distribute their products themselves. In this case, they have a direct influence on every aspect of the supply chain.

Others choose to outsource. A dropshipper may only handle taking orders, connecting to another company for fulfillment and on-demand inventory. The dropshipper then relies on the other companies to handle the supply chain issues but should keep aware of changes in supply and have alternative suppliers in mind for popular products.

Most businesses, however, operate somewhere in between. For example, you may outsource raw materials, create your products, then send them to a fulfillment company to handle warehousing and delivery.

Regardless of where you lie on the spectrum, supply chain management involves finding suppliers, establishing relationships with the companies, negotiating for the best price and quality, and monitoring performance to ensure your customers are satisfied.

The Six Phases of Supply Chain Management in Small Business

The steps in the supply chain process vary by the type of industry you are in. For example, manufacturers need to source materials and produce, while retailers might only acquire finished products. Here’s one example of the steps involved in a business’ supply chain.

Let’s say you run a business making and selling candles:

• Sourcing raw materials: This would involve sourcing, ordering, and handling the logistics of the wax, wicks, scents, jars, packaging, and other basic materials that you use in production.
• Manufacturing products: This step revolves around creating your candles and/or labeling them.
• Inventory Management: This step would involve giving each of your candles a stock-keeping unit (SKU) number and a location, as well as entering those details into your inventory management software. Brick-and-mortar sellers typically shelve a portion of their stock or use it in merchandising, while ecommerce businesses may use in-house or third-party fulfillment warehouses.
• Take customer orders: As you take orders for your candles, this step heavily relies on tracking your supply to know when to order more products or raw materials.
• Fulfill the orders: For wholesalers or ecommerce businesses, this involves packaging orders, sending them, and managing logistics.
• Deliver the products: This final step is used to get your candles to your customers through a third-party logistics service, such as FedEx, UPS, or USPS.

Transportation logistics: Small businesses may use any number of methods to move their goods, including ocean or air freight. If you are transporting from overseas, then customs inspections may be considered part of your supply chain management.

Using Technology for SCM

Supply chain management can get complex, especially if you use multiple sources for materials or delivery. One way to more efficiently manage your supply chain is to use software, such as

• Supply chain management software (SCM) handles all elements of supply operations, including inventory tools, supplier management, order processing, demand forecasting, warehouse management, bid and spend tools, and more. However, it may be more than many small operations need, and typically comes at a hefty price.
• A point-of-sale (POS) software or inventory management software that tracks sales, includes low inventory alerts, and has invoicing capabilities might fill the need for most small businesses. The best systems also have automated invoicing or include catalogs that let you compare multiple vendors for the best prices. If you sell online, be sure your POS and ecommerce site tie together for inventory tracking.
• Fulfillment software lets you manage your warehouse and most often includes multiple delivery services for price comparison.
• Many delivery companies include software to track shipments . In some cases, fulfillment software uses them as well. Tracking not only gives customers reassurance but also lets you keep track of delivery times as well as any issues with drop-offs.
• At its simplest, accounting software or Excel can be used for tracking sales, inventory, expenses, and incident data.

Why Is Supply Chain Management Important?

A well-run supply chain means your products are being built better, shipped quickly and without damage, and aren’t costing you more than you should pay. That translates to more profits for you. In fact, a Deloitte study found that 79% of organizations with “superior supply chain capabilities” saw revenue growth well above average .

However, it’s not just the bottom line but the future of your company at stake. A widely cited survey from GEODIS found that 57% of companies believe supply chain management gives them a competitive edge . With small businesses often going head-to-head with large corporations and franchises that can cut costs because they order in such bulk, you need all the advantages you can get.

Read our article on supply chain management statistics .

Advantages of Supply Chain Management

Managing your supply chain will take time, effort, and perhaps an investment of money. However, the advantages are great. Here are a few benefits of proper supply chain management:

• Reduced costs: By identifying ineffective processes, ensuring they’re partnered with good suppliers and shipping companies, and tracking their inventory, companies have cut their average supply cost from 13.2% to 7.9% .
• Improved efficiency: Proper SCM reduces costs but speeds up delivery and improves customer satisfaction, helping sales. Some efficiency-enhancing techniques include automated invoicing for low stock, streamlined logistics planning, real-time inventory tracking, and predictive demand forecasting.
• Avoiding disruptions: By understanding the risk points in your supply chain, you can set contingency plans in place. For example, developing connections to local suppliers will ensure your customers continue to get their products even if embargoes or disasters affect your overseas partners.
• Quick pivots: One advantage a small business has over larger ones is that it can react more quickly to problems, whether in-house or in the world. A well-managed supply chain helps you recognize problems and enact solutions fast.
• Quality control: A grocer or restaurant may have relationships with several farms locally and across the nation to get seasonal food from where they grow best. Delivery also has quality control issues—the delivery service that leaves your products out in the rain will bring you unhappy customers.
• Ethical practices: Some 48% of companies face pressure to adopt eco-conscious practices in their supply chains. If that’s you, then knowing your suppliers follow green practices helps support your brand. Ditto for the ethical use of labor in manufacturing, particularly in textiles.

All of this boils down to increased profits through happy customers and efficient practices.

10 Ways to Optimize Your Supply Chain Management

Now, let’s look at some ideas for making SCM more effective for your small business. The better your processes are, the better your revenue.

Know Your Strengths & Weaknesses

Understanding the parts of a supply chain you can handle well yourself and where you are weak enables you to make decisions on where to invest in partners. Understanding your key customers also helps you prioritize. Finally, look at your competitors—what parts of the supply chain do they handle personally and what do they hire out? How can you do better?

Choose Your Suppliers Wisely

Whether it’s a fulfillment company, a supplier of raw materials, or a transportation provider, you want a partner who is reliable and honest, understands your company, and will value your partnership. That last thing is especially important for small businesses because it’s all too easy to value bigger contracts. In addition, you should ask if they have been having supply issues of their own that might affect you.

Global or local? Buying globally (such as importing products from China ) can seem like a cheaper option, but you need to consider other costs, like transportation, reliability, and quality of product. Local may be better in the long run. Plus, by eliminating overseas shipping, it’s more green, which people value more and more.

Develop Good Relationships With Suppliers

This is vital for small businesses that may not have the largest accounts with a supplier and would thus be a lower priority otherwise. Pay on time, provide feedback, and be a good customer. Also, consider partnering with another business for group contracts that give you more leverage.

Balance Cost & Risk

Some cheaper practices like outsourcing, offshoring, and lean manufacturing come with the risk of reduced quality and unreliable shipping times. Balance price with speed and quality. Understanding when the market is volatile and the rise and flow of demands can help you decide when to make a riskier choice.

Prepare for Disruptions

Bad weather, material shortages, or a pandemic can affect manufacturing and supply chains. COVID-19, for example, caused nearly 39% of small businesses to have supply chain delays . Keeping up with the news and understanding marketing trends can help, but also have a ready list of backup suppliers and alternative transportation avenues to pick up the slack when possible. Sites like Alibaba, GlobalSources, and DHGate have huge databases of reliable suppliers.

Learn more about product sourcing in our article, “How to Source Products in 4 Steps.”

Choose a Reliable Transportation Partner

Your transportation partner is your customer’s last contact, which can affect their impression of your brand. Thus, while cost-efficiency is important, greater value might be placed on speed of delivery as well as delivering the product intact and well-packed.

Consider Getting Insurance for Supply Chain Issues

This can be shipping insurance, but also contingent business interruption coverage that will cover disasters so you can get back on your feet quickly.

Invest in Software

You should have software that helps you manage your inventory throughout the process, from ordering to delivery, and even tracking the materials or components for a product’s creation. The best POS software offer inventory tracking and invoicing, but there are other more focused inventory tracking programs for manufacturing as well.

Use Data Well

Forty percent of businesses surveyed use technology to track disruptions in their supply chain. Track your inventory and supply management to stay on top of inventory, boost fulfillment rates, build better relationships with retailers/customers, and more. Many inventory tracking software programs also include forecasting to help you plan ahead of time for seasonal highs and lows.

Consider Outsourcing

Outsourcing your supply chain logistics operations lets you concentrate on your business while experts handle the fulfillment and delivery. You can outsource the entire process, such as with dropshipping, fulfillment, and delivery with warehouse and 3PL services , or even individual parts product packaging.

Frequently Asked Questions (FAQs)

These are some of the questions we often encounter around supply chain management.

Where can I learn more about supply chain management?

Trade groups such as the Association for Supply Chain Management and the Council of Supply Chain Management Professionals offer training to help you get started. Many colleges and universities with business or supply chain programs also offer courses and certifications, including online and other programs aimed at business owners.

What tools should small businesses use for supply chain management?

This depends on how much of the supply chain management you do yourself. Fulfillment companies that handle warehousing and delivery provide just about everything including software for tracking shipments and inventory. Otherwise, you might need a point-of-sale system with good invoicing and inventory tracking. Accounting or manufacturing software may have some of these tools.

Sales software lets you track and predict product sales, while customer relationship management software makes it easy to communicate with customers in case there’s trouble with fulfillment or delivery.

How do I set up a small business supply chain?

To set up a supply chain, you need to know exactly what products or materials you need, develop relationships with the best vendors, find warehousing, and secure reliable transportation.

Do small businesses need supply chain management?

Even if your business doesn’t deal in traditional physical goods, you likely have a supply chain that needs managing. Real estate companies, for example, have a supply of properties that go through different steps of acquisition, renovation, marketing, and sale. Meanwhile, a cleaning service needs to order and maintain an ample stock of supplies.

How can a small business optimize its supply chain?

We cover many ways in the article above, but it comes down to understanding your market–present and future, making relationships with valuable partners throughout the supply chain, and planning for contingencies. The use of third-party inventory trackers or fulfillment services can also streamline operations.

Bottom Line

Supply chain management is the overseeing of your products from raw materials to delivery to your customer. It includes sourcing materials, warehousing products, processing orders, and delivery. Well-managed supply chains can save you money, improve customer satisfaction, and help you deal with unexpected disruptions. All that means fewer expenses, more profits, and the potential to grow your business.

About the Author

Karina Fabian

Karina Fabian has more than seven years of experience writing on business topics and reviewing software. Before writing for Fit Small Business, she reviewed business software and services for other online websites. Karina has also worked as a marketing content specialist for Naviga. After her husband started a rocket company, Karina got a crash course on the ins and outs of starting a business and all the work that goes into launching a startup. In her free time, she writes science fiction and fantasy.

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Supply Chain Convergence: The Next-Gen Strategy for Delivering on Your Supply Chain Commitments

Over the past 20 years, various supply chain functions within organizations – such as procurement, planning, fulfillment, transportation management, and warehouse management – have grown into organizational silos, each with their own business software and processes.  As a result, these “point solutions” have left critical revenue driving processes, such as order-to-cash, load tender-to-invoice, or procure-to-pay, fragmented and missing the big picture entirely.  This lack of end-to-end supply chain orchestration also means that businesses are struggling to provide the necessary experience, or even meet specific mandates, with their external ecosystem of shippers, retailers, carriers, suppliers, and more. 

This is why so many supply chain leaders are taking a step back, to identify gaps within their network and digitization strategy, while looking to achieve true supply chain convergence.  The companies who operate at this level of visibility and control will have stronger ecosystem relationships and be able to optimize revenue streams with ease. 

Read this whitepaper to learn more about supply chain convergence and why it will allow your organization to deliver on critical supply chain commitments.  You’ll also learn: 

What an outside-in approach to supply chain integration truly looks like 

Why meeting customer expectations comes down to control and visibility 

Where traditional B2B integration providers fall short 

Please CLICK HERE to download the white paper.

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• Visichain University
• >> Supply Chain Management Plans

​Business owners understand the importance of keeping their supply chain moving forward as efficiently and quickly as possible. But do they truly understand the importance of having a supply chain management plan?

​Mark Cuban, one of the most famous sharks on ABC's "Shark Tank" often says that if you don't come in with a business plan, he can't help you.

He would add to that a working supply chain management plan, as well. Without it, it is difficult to be as efficient and forward thinking as you should be. It can also cost you.

​Supply Chain Planning vs. Execution

​Many times supply chain planning and supply chain execution are used synonymously. But they are not the same thing.

Supply chain planning is the process of planning how you will orchestrate the logistics of your supply system and integrate it with the demand, as well as using the appropriate technologies and SaaS products to keep it running smoothly.

Supply chain execution is the actual carrying out of the plan according to standards of your industry and your company values and goals.

​Efficiency and productivity are the keys to keeping up with the needs that your market requires so that you will keep things running smoothly and efficiently for the long term.

​Why You need a Supply Chain Management Plan

​There are many reasons as to why business owners need a working supply chain management plan.

Without it, you can experience increase waste from mistakes or oversights that are made within the company's order department or supplies inventory department. You may not know how much you are spending on certain supplies, especially if you have several people working on this at the same time.

Communications may be lacking. All of these factors can create problems for your business as a whole.  Below are some more reasons as to why you need a supply chain plan .

• ​Decreases out-of-stock situations and improves customer satisfaction rate
• Cuts down on waste due to failure to plan to spend on raw materials
• Helps increase the supply to meet the changing demand of your products without overspending
• Increases your ROI and revenue (bottom line)
• Enables you to stay on track with productivity goals and improved customer acquisition and order management

​Different Supply Chain Management Models/Methods

​When orchestrating your plan and implementing the strategies needed to fulfill the need of your customers and the market, you should consider the different supply chain managem ​ ent models that you can use to achieve this. 

Below are the most important ways to accomplish your goals with supply chain management.

​Data Gathering and Aggregation - The data gathering process must be concise and based on evidence, figures, and corroborating facts that justify the plan you are putting into place. This will keep your operations running smoothly while also satisfying investors as to the validity of your policy.

​Increased Visibility - You need to avoid waste and miscalculations when carrying out your supply chain operations. This cuts down on both productivity and overhead when needless mistakes are made that sacrifice the integrity of your operations. By increasing the level of operational visibility , you will be able to tell where you are at in terms of efficiency and production and make adjustments immediately before problems occur that can cost you money.

​Lean Principles  - The idea of "lean" principles means that you should decrease your inventory cost and only spend what is needed to meet the changing needs of the market and your customer base. Using SaaS solutions and other AI tools, you can keep abreast of what is needed to

​Standardization of Processes - Using ERP systems can help save money and time by creating an efficiency and growth plan that works automatically. This also cuts down on mistakes that could be made, especially if several people are working on this at once.

​The Planning Process

​To create an effective plan for your supply chain operations , it is essential to follow a set of steps to help you reach your goals. They are not complicated but must be considered to meet the needs of your demand and changing market.

• ​Start with a company overview.  ​ During this stage, you have to consider whether you want to utilize domestic suppliers only, use global sourcing, or a combination of the two to meet the need of your customers. You must compare prices and be specific in how you will carry out your plan.
• ​Perform in-depth research to determine need and performance. It is vital that you get all of the facts and aggregate the information together to determine the best plan. Cut corners but not quality and learn how it will work on a daily, weekly, and yearly basis. The cost of operation is what is essential here.
• ​Address all relevant areas. Think about which factors in the procurement, sourcing, and distribution process will most affect your outcome. Anything that decreases productivity or increases expense should be avoided unless it can be shown that it will increase your return.
• ​Develop high-tech options to execute the plan. There are many SaaS and AI or automated systems available to businesses today that will speed up production while curtailing extra expense and waste.

​In closing, business owners need more than a business plan. They need a carefully thought out plan for supply chain management, as well.

By keeping tracking of the production process from idea to manufacturing and distribution, business owners will always know what is going on with their costs and profits because they have their finger on the pulse of the entire process.

​Having a supply management plan is easier today than it has been in the past, thanks to the many automation tools and solutions that are available through innovative technologies and tools. 

So before you launch your supply chain, take the time to research the solutions that are best for you that will increase your ROI and help your business ramp up without losing your shirt.

​Don't Get Left Behind

​Schedule a free consultation with Visichain to ensure your supply chain and procurement operations continue to evolve and remain competitive in today's dynamic ​environment.

Richard McGirr

Do you need to create value and deliver change in your enterprise? With Visichain as your partner, you can leverage over 1 million hours of supply chain transformation experience from some of the largest companies in the world. Visichain drives visibility, productivity, and efficiency throughout your entire supply chain. Supply chain visibility at scale is essential to your business. Starting with the production of products all the way through free on board receiving, your business needs real-time data to help you minimize risk, drive efficiency, and make better decisions. Visichain designs, develops, and implements powerful yet easy to use software. Powerful solutions crafted to help your executives and supply chain managers leverage multiple data systems to partner with sourcing suppliers in real time. When you're ready to kick your procurement transformation strategy into high gear, send me a message through LinkedIn .

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EY Supply Chain and Operations consulting services addresses the complex issues and opportunities to grow and protect your operations. With an understanding of your overarching strategy, we‘ll help redefine your end-to-end supply chain and operations to support your enterprise objectives.

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Historically, companies sold products and services through linear value chains. With the supply chain of the future, digital ecosystems consisting of market networks will enable hybrid forms of cooperation and competition. At the same time, technology, demographics and government policies are shaping industries as never before. To improve performance and innovation in this Transformative Age, companies must radically restructure their supply chains and operations.

EY‘s Supply Chain Reinvention Framework  is a suite of asset-backed solutions enabled by advanced technologies such as data analytics, blockchain, machine learning, robotics and artificial intelligence. This suite of solutions extends from end-to-end supply chain strategy, strategic architecture, operational excellence, and supply chain resilience. We can help you harness the creativity and intelligence of your entire supplier ecosystem, increase collaboration, and ultimately help serve your customers better.

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EY‘s Integrated Digital Planning solution is enabled by the latest technologies, including artificial intelligence, machine learning, and cloud platforms, and is also supported by assets including VC Sync™, Working Capital Optimization, Cognitive Automation and “Lights Out” Planning. By taking advantage of our experience, assets and advanced technologies, the Integrated Digital Planning solution can help align your planning and decision-making at strategic, operational and tactical levels, and allow you to react faster to rapid changes in the marketplace.

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Supports clients in transforming their businesses through capability building. College football fan. Professional table tennis player. Proud father of a daughter aspiring to be a medical doctor.

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Supply Chain Digital Transformation: Improving Performance

Margaret Lindquist | Content Strategist | Nov 6, 2023

In This Article

What Is Digital Transformation?

What is supply chain digital transformation, supply chain digital transformation explained, supply chain digital transformation goals, how to plan a supply chain digital transformation, the evolution of supply chain technology, supply chain digital transformation example, oracle: digital transformation made easier, supply chain digital transformation faqs.

At almost every kind of business worldwide, the people responsible for managing the supply chain have stepped into the spotlight amid product shortages, economic uncertainty, shifting customer demands, and new government regulations concerning supply chain sustainability and human rights. It’s no longer enough for companies to have visibility into what their suppliers and customers are doing. They need an extended, real-time view into their suppliers’ suppliers and customers’ customers.

As CIOs look to upgrade, even overhaul, their companies’ supply chain management (SCM) systems in this dynamic environment, their top priorities are to increase access to data, use data analytics to improve the planning process, increase supply chain capacity, and speed the delivery of goods, according to a survey from analyst firms IDG and GEP.

Research from the MIT Center for Transportation and Logistics found that such supply chain digital transformation can cut process costs in half and increase revenue by 20%.

Digital transformation entails integrating digital technologies into every aspect of a business to improve how it operates and delivers value to customers. It includes adopting applications that automate hiring, accounting, and supply chain processes, advanced data analytics that uncover customer and supplier behaviors and trends, and cutting-edge technologies such as the Internet of Things (IoT), artificial intelligence, and robotics.

For example, a manufacturing company undergoing a digital transformation might start by moving away from Excel spreadsheets and manual data entry to a cloud-based finance system. Then they might begin to explore analytics systems that derive insights from data collected on the factory floor and throughout the supply chain to improve processes.

However, digital transformation isn’t just about acquiring and integrating new technologies. It also involves a cultural change that requires corporate leaders to assess every aspect of their business, including the people they hire, the markets they sell into, and their relationships with vendors and customers. 93% of organizations surveyed in 2023 by IDG’s Foundry unit said they had adopted or planned to adopt a “digital-first” strategy.

Supply chain digital transformation is the process of deploying digital tools, technologies, and strategies to enhance efficiency and optimize the entire supply chain ecosystem. The goal of supply chain management (SCM) is to manage the flow of assets, from the sourcing of raw materials all the way to the distribution of final products to customers, in the most efficient way possible. To digitally transform a supply chain, companies need to move away from the concept of a linear chain and adopt a networked approach.

Digital transformation allows manufacturers to collect, share, and analyze supply chain data at every stage—including demand planning, asset management, warehouse management, transportation and logistics management, procurement, and order fulfillment—to get real-time visibility. However, to reap the full benefits of their new technology, manufacturers must make sure their employees are comfortable with deploying and using the latest supply chain systems, which could mean both recruiting new talent and upskilling less digitally savvy team members.

Supply Chain Management Past and Present

Nearly every manufacturer has a mix of legacy and new systems and processes designed to automate and connect every part of a manufacturing operation. Whereas before manufacturers employed mostly manual processes (and had a constricted view into the activities of their suppliers, partners, customers, and employees), they’re now automating processes and replacing legacy systems with cloud-based solutions. These solutions integrate SCM, finance, manufacturing, and HR, and they gather data to connect every stakeholder. Here’s a look at what’s replacing old-school supply chains.

Key Takeaways

• Organizational leaders need to enthusiastically support the rollout of new supply chain technologies, setting clear goals that span departments and roles.
• Supply chain digital transformation goes beyond technology updates to include underlying process changes.
• Early supply chain transformation efforts aimed to connect finance data to data from planning, warehouse management, and decision-support systems. The goal now is to combine cross-functional data, such as inventory, order, and shipment data, to not only uncover the causes of problems but also predict issues that could disrupt the supply chain.

While conventional supply chains allow logistics managers to plan and react, digitally transformed supply chains make it easier to forecast demand, identify supply chain issues, reduce lead times, and take actions to avert slowdowns. The goal is to ensure on-time delivery, improve customer service, and reduce costs through better efficiency, visibility, and collaboration. Manufacturers that commit to supply chain digital transformation need to take a three-pronged approach: assessing and, if necessary, reorganizing the planning team; centralizing analytics capabilities; and hiring or reskilling talent for the new jobs created by the move to a digital supply chain.

The first priority for any digital transformation plan is increasing supply chain visibility. Doing so will reveal the elements of the existing supply chain that will benefit most from technology and process improvements. For example, implementation of real-time tracking and monitoring systems provides visibility into the movement of goods, while IoT devices collect data on inventory levels, temperature, and other relevant parameters. With demand forecasting and planning applications, planners can analyze historical and real-time sales data and align it with data on market trends, customer preferences, and other factors. Route optimization software helps shippers reduce transportation costs and improve delivery times.

Company leaders need to define their overall objectives for the transformation and prioritize the technologies and processes most relevant to those objectives. Starting with pilot projects reduces risk and provides opportunities for small-scale change management initiatives, letting employees learn and experience the new technologies that will eventually become a major part of their work lives.

Manufacturers looking to digitally transform their supply chains need to establish several goals at the start, then prioritize them based on which ones can be most easily met and which may need to wait until technology advances make achieving them more feasible. Cloud-based supply chain applications are constantly improving, so process changes that seem out of reach today may be achievable in a year or two. The following are the four most important goals:

• Enhance visibility so stakeholders can track products, assets, inventories, and resources across the entire supply chain and gain accurate, real-time data on customer demand.

• Improve efficiency by automating or eliminating manual processes and consolidating others.

• Reduce lead times by increasing production throughput.

• Enhance collaboration to reduce errors and increase the responsiveness of various stakeholders, including suppliers, distributors, manufacturers, and retailers.

As companies start their supply chain digital transformations, they’ll need a multiyear roadmap that encompasses physical infrastructure (warehouses, factories, means of transportation, and the like), technologies (SCM applications, the Internet of Things, data management and analytics, and so on), processes, and talent. Start with the following steps.

1. Create a plan based on business goals

Any digital transformation plan needs to lay out a clear vision tied to organizational goals. At a more tactical level, such a plan should also include an inventory of existing resources, including employees, real estate, and machinery, as well as applications and devices, an assessment of how data is collected and analyzed, and an evaluation of whether the organization has the right talent.

The plan should take into account external circumstances, including market trends, global economic predictions (such as increases in fuel prices and trade embargoes), and changes in the competitive landscape and brand reputation. Identify quick wins to show progress and build executive support.

For example, a company may want to improve its demand planning by enabling real-time responses to disruptions. One such disruption was the backlog at the Port of Los Angeles and Long Beach from October 2020 to November 2022, which affected both incoming orders from suppliers and outgoing orders to customers. For large organizations with thousands of products and complex bills of materials, getting visibility into the impact of each individual shipment delay was a huge challenge. The companies that were best able to weather this particular storm were the ones that could analyze massive amounts of logistics data in real time, including information about inventory levels, production capacity, lead times, and procurement processes, and act on notifications about alternative options.

2. Evaluate existing systems

Don’t build on a broken foundation. If there are deficiencies in your current supply chain, identify which stages or processes can be improved. Cloud-based SCM applications come with their own process best practices, honed and augmented every quarter based in part on feedback from customers. Consider adopting those best practices rather than trying to customize your own legacy—sometimes broken—ones. Also evaluate the supply chain data you’ve collected in the past, prior to the start of your digital transformation project. Does it need to be prepped and further cleaned before you can add new types of data and use new analytics methods?

3. Get stakeholder buy-in

Key stakeholders in a supply chain digital transformation include supply chain and warehouse managers, logistics planners, IT managers, finance pros, procurement managers, and executive leaders, all of whom need to be involved from the beginning of the initiative so it can benefit from their expertise and buy-in. Executive support is the most important, starting with the CEO. Employees need to understand the goals of the transformation program and feel comfortable taking risks and recovering from failure.

4. Unify data for supply chain visibility

Disconnected, siloed applications and data sets make it almost impossible for organizations to see across their supply chains from end to end. It’s why integrated, cloud-based suites of supply chain services running on the latest cloud infrastructure are so critical—they give organizations real-time visibility across their inventory management, warehouse management, demand forecasting, logistics, and other processes. Ideally, each partner across the supply chain regularly feeds systems with data on inventory levels, costs, timing, and other variables, factoring in information on weather, labor strikes, crop failures, and other events that can influence supply and demand.

5. Automate routine processes

The basic definition of supply chain automation is the use of technology to perform supply chain processes with minimal or no human intervention. Processes that can be automated include paying invoices, route planning, generating certain reports for management, and triggering reorders when inventory falls below set thresholds. More-advanced automation comes from data analytics software that lets supply chain managers identify patterns that suggest a coming shortage of key materials or shipping delays.

6. Take advantage of AI- and ML-powered analytics

Manufacturers are increasingly using artificial intelligence and machine learning to improve forecasting and identify patterns that make it possible to predict supply chain disruptions . In fact, 73% of 200 supply chain executives surveyed by consultancy EY said they were piloting or planning to use machine learning in 2022, and research from IDC indicates AI capabilities will be embedded into 90% of enterprise applications, including supply chain apps, by 2025—for good reason. AI-based demand forecasting tools, for example, help organizations adjust their inventory levels and prevent stockouts. Logistics managers can use AI-powered software to chart the best shipment routes, factoring in weather, traffic, construction, and other data as well as historical data.

7. Train teams on new technology

Effective supply chain management requires not only the latest technologies but also people with the latest technology skills. Those skills run the gamut and include expertise in manufacturing, order management, logistics, product lifecycle management, warehouse management, and project management applications as well as facility with the Internet of Things, data analytics, and augmented and virtual reality technologies. One benefit of the latest cloud-based services is that they’re generally easier to set up, learn, and use than legacy on-premises applications. Regardless, organizations need to make ongoing supply chain technology training a priority and offer it in a variety of formats—for example, in-person or via video or digital interactive media—to accommodate different learning styles.

All but the smallest manufacturers use technology for supply chain planning and execution, but in a surprising number of cases, logistics managers are still manually performing tasks, such as emailing spreadsheets and calling a vendor for delivery information. Early efforts to digitalize supply chain operations focused on connecting finance application data to data in planning, warehouse management, and decision-support systems, with the goal of just-in-time product delivery at the lowest possible cost. What those technologies lacked, though, was the ability to combine other cross-functional data, such as inventory, order, and shipment data, and the ability to uncover the causes of problems and predict supply chain disruptions. The supply chain management systems of the future will integrate data from across the entire extended enterprise, including finance, inventory, third-party suppliers, and customers, and use that data to make the supply chain more efficient and lower costs.

Mazda Motor Logistics , which distributes Mazda cars and parts in Europe, lacked real-time visibility into those shipments, making it difficult to ensure on-time deliveries. Their solution was to bring together two Oracle applications: Oracle Fusion Cloud Warehouse Management for the unloading, staging, and loading of goods and Oracle Fusion Cloud Transportation Management for transport management and container load planning.

Mazda Motor Logistics now has visibility from the ordering of cars and parts to their delivery, and export staff can see carrier bookings, invoicing, and billing in one place. They also eliminated spreadsheets from their processes. And by adding Oracle Product Hub, they’re able to centrally manage all their master product data, with an approval flow across departments. Ultimately, by automating parts of the ordering and delivery process, the company was able to move people to customer service roles.

Supply chain digital transformation starts with aligning all processes and data on one platform, automating key processes, and using technologies such as artificial intelligence, machine learning, and IoT to collect and analyze massive amounts of data to identify, predict, and prevent problems. Oracle Fusion Cloud Supply Chain & Manufacturing offers modules that address every stage of the supply chain lifecycle, including planning, manufacturing, inventory management, order fulfillment, and delivery. And because those modules are part of Oracle Cloud , they’re integrated, easy to learn, and simple to use. One interesting new capability is the addition of machine learning models to Oracle Transportation Management, which can use a manufacturer’s historical transportation data and real-time information about current risk factors—for example, if a major port is backed up or a canal is blocked—to provide alternative options for product delivery. Manufacturers can gain an order-by-order view of the impact of a slowdown and shift delivery plans.

Why does digital transformation matter in supply chain management? Supply chain management digital transformation is important because it lets manufacturers take advantage of AI, robotics, the Internet of Things, and other technology advances, helping them enhance their operations, reduce costs, and gain better visibility.

What is the biggest challenge in supply chain digital transformation? In a survey by Peerless Research Group, supply chain leaders identified their three biggest challenges as achieving excellent customer service, containing costs, and improving logistics to boost efficiency and productivity.

Who typically leads digital transformation in an organization? Successful digital transformation efforts are typically led by senior leadership teams, including the CEO, CFO, CTO, and CIO. Some organizations have enterprise wide digital transformation teams, including employees whose jobs will change as a result of these programs.

Learn how to improve the quality and speed of your supply chain decision-making and get ahead of tomorrow’s challenges in our ebook.

Nokia AIMS: Transforming Warehouse Inventory Management

E-commerce has grown in explosive fashion over the past few years, to the extent it is now projected to reach a market volume of US$5.3tn by 2028 – representing a CAGR of almost 10% from 2024. 

This spike in demand inevitably means the need for warehouse, supply chain and logistics operators to rapidly fulfil orders is at an all-time high. 

As a result, the importance of accurate and efficient inventory management cannot be overemphasised if companies are serious about achieving success in today’s ultra-competitive business environment. 

Firms trapped in cycle of inefficiency

The downside for e-commerce firms is that inventory management remains a major liability in warehouse operations, as Paul Heitlinger, General Manager of Nokia AIMS, explains.

“Traditional, manual inventory counting processes continue to be error prone,” says Paul.

“While cycle counting is a necessary chore to audit stock and resolve inventory errors, it’s inundated with inaccuracies as it often relies on manual, human labour.”

Paul highlights that, when inventory gets lost – otherwise known as shrinkage – the burden falls to human workers to take on the low-value task of conducting time-consuming investigations to find these misplaced items. 

Or, even worse, items stay lost until they are eventually found months later during another cycle count or a full wall-to-wall count.

“Imagine having to spend hours manually counting each item, bin by bin, instead of undertaking productive tasks,” Paul goes on.

“Many workers understandably find this role undesirable, leading to high staff turnover and additional training costs. Ultimately, this creates high OpEx costs that are further exacerbated by worker shortages, leaving businesses in a never-ending cycle of inefficiencies.”

Nokia AIMS provides seamless warehouse management

The tricky task of keeping track of inventory is exactly what Nokia’s new venture, Automated Inventory Management System (AIMS), seeks to solve. 

AIMS fuses cutting-edge, AI-enabled autonomous drones, computer vision-based localisation, barcode scanning and  data analytics  into one seamless warehouse management service. This automates the cycle-counting process, providing increased efficiency, accuracy and a substantial ROI. 

Once launched, a single AIMS drone can fully scan a 250,000 sq ft warehouse in approximately two to four weeks. They fly autonomously through warehouses, scanning inventory up to seven times faster than humans. 

What’s more, warehouse operators can schedule the drones to scan any time and any aisles – including overnight or during down times – resulting in minimal disruption to operations.

“AIMS provides one true picture that optimises inventory management processes without costly and error-prone human intervention,” Paul continues. “Imagine managers walking into their offices each morning to find a snapshot of their actual inventory ready to view. 

“This up-to-date data enables managers to quickly and accurately review inventory statuses or locations, identify mismatches and empty bin locations – all from the comfort of their office, or even while sitting on the beach.

“This saves valuable time and resources, which ultimately allows businesses to focus on doing what they do best – shipping products rather than being slowed down by tiresome tasks.”

Aiding business growth 

In truth, the performance of AIMS stretches far beyond efficiency and accuracy. 

It represents a strategic investment given it is projected to give organisations a substantial ROI of at least 40% over three years. 

Paul reveals that, during the first few months of operation at customer sites, AIMS has already proven its worth by uncovering tens of thousands of dollars worth of lost inventory. 

By incorporating an automated inventory management service and eliminating the need for extensive manual labour, businesses are experiencing significant declines in wage, shrinkage and equipment maintenance costs. 

OpEx is further lowered by a reduction in accidents and the fact workers can be redeployed to more productive, customer-facing tasks where they add strategic value. 

“Such recovered resources can now go towards business growth initiatives and financial gains,” Paul says. “This not only emphasises the immediate impact of this technology but also underscores the long-term benefits that businesses can accrue by embracing solutions like AIMS.”

He concludes: “Looking at the big picture, industry factors like rapid fulfilment demands, increasing property costs, labour shortages and high inflation will continue to impact warehouse operations. 

“AIMS won’t be able to solve all a warehouse’s cost drivers, but it can solve inventory management challenges, so they can focus on high-value priorities that maintain business growth and continuity.”

Check out the latest edition of Supply Chain Magazine and sign up to our global conference series – Procurement and SupplyChain LIVE 2024 . 

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