Understand how Supply Chain Management (SCM) has evolved from a mere transactional function to a strategic imperative that significantly impacts your company's bottom line.
We have witnessed a lot of supply chain disruptions in the recent past such as the COVID-19 pandemic and the resulting crisis that clogged the ports and affected the manufacturing of computer chips or the Russia-Ukraine conflict that disrupted energy markets. All these events have highlighted the fragility of global supply chains, making it more critical for them to be resilient.
Think about it.
A supply chain is essentially a network of interconnected systems that co-exist and coordinate to create value. To ensure these systems function seamlessly, well-oiled machinery like supply chain management is much needed.
But first, what is supply chain management?
Supply chain management (SCM) involves monitoring and optimizing the entire production and distribution process (such as manufacturers who produce raw materials, suppliers or distributors, retailers, and transportation companies that deliver the finished products to customers).
In short, SCM is all about ensuring that everything gets where it needs to be, when it needs to be there — and as smoothly as possible. Be it coordination of internal resources, external partners, or operations management.
“In essence, supply chain management integrates supply and demand management within and across companies” - Council of Supply Chain Management Professionals (CSCMP)
SCM in the modern day is filled with several components that make it different from legacy methods. Here’s our focus on some of the most important ones, to help you understand the basics of SCM better.
Certain red flags can indicate that a provider is running a subpar performance. You can watch out for the following ones while selecting and evaluating a partner:
| Components | Modern supply chain management |
| Planning | Advanced analytics, real-time data, predictive modeling, etc. to identify the valuable metrics required and ensure your supply chain is equipped to deal with issues proactively. |
| Sourcing | Global sourcing, e-procurement, strategic partnerships, etc. to regularly update sourcing strategies to meet your organization’s requirements. |
| Manufacturing | Lean manufacturing, automation, customization, Just-In-Time (JIT) inventory, etc. to match dynamic consumer demands. |
| Delivery | Integrated logistics, real-time tracking, omnichannel fulfillment, etc. to seamlessly cover both inbound (raw materials, etc) and outbound (finished goods dispatch) |
Now that we’re familiar with the basics, let’s get to the beyond - understanding how SCM has evolved over the years and recognizing its importance in today's global economy.
In the recent past, SCM has endured a major transformation by adapting to factors such as globalization, technological advancements, and increasing consumer expectations.
While the work put in to adapt to these changes might have been a tad too much, this evolution has made SCM a critical function for any business. After all, the benefits of SCM far outweigh the risk of not having a proper supply chain strategy in the first place.
When disruptions crippled businesses, they found the necessity to leverage the interconnectedness of the global supply chains, to open doors with new suppliers, manufacturers, and customers spread across different continents.
According to Statista, the expansion of international trade has triggered the importance of SCM even more. For instance, the global supply chain management market was worth roughly 16 billion U.S. dollars in 2020. Over the last decade, the supply chain management software and procurement market expanded more than twice.
Apple Inc. is a prime example of a market leader, who has effectively leveraged globalization into the supply chain. By sourcing components globally, manufacturing efficiently in China, and distributing products worldwide, Apple has offered high-quality products at competitive prices while maintaining strong margins.
Today's consumers demand faster delivery times, higher product quality, and greater transparency in the supply chain. SCM plays a crucial role in meeting these expectations by optimizing processes, improving efficiency, and ensuring product traceability.
According to Gartner, 83% of surveyed supply chain leaders say that they are being asked to improve customer experience (CX) as part of their organization’s supply chain strategy and 50% of them have already started implementing practices to meet them.
Spanish fast-fashion retailer, Zara, has a highly responsive supply chain that allows it to rapidly introduce new trends to its stores. By maintaining a small inventory and frequently replenishing stock with new designs, Zara can adapt to changing consumer preferences and reduce the risk of stockouts.
Technological advancement has played a pivotal role in transforming supply chain management. The Internet of Things (IoT), Artificial Intelligence (AI), and Blockchain have revolutionized the way businesses manage their supply chains by:
Ultimately, technological advancements help businesses make more informed decisions, improve operational efficiency, and enhance their overall supply chain performance.
Through 2024, 50% of large global companies will invest in AI, advanced analytics, and IoT in supply chain operations to optimize their supply chains. Also, 81% of supply chain professionals believe that analytics will be important for reducing landed costs and improving overall supply chain efficiency.
Known for its efficient and customer-centric supply chain, Amazon utilizes advanced technologies such as robotics, data analytics, and predictive supply chain modeling to optimize operations. Its vast network of fulfillment centers and rapid delivery capabilities have made it a leader in e-commerce.
It’s clear - by leveraging technology, optimizing processes, and building strong relationships with suppliers, you too can improve customer satisfaction and achieve a competitive advantage in the marketplace. Now, It's time to consider effective measures to implement SCM into your existing practices and witness the results for yourself.
Over the years, SCM has evolved from a mere transactional function to a strategic imperative that significantly impacts your company's bottom line. To stay and thrive in the competition, you need to optimize your supply chains and enjoy the fruits of success such as:
Modern Supply Chain Management (SCM) offers a powerful toolbox to navigate supply chain challenges and logistics, as an integral module of SCM, plays a critical role in it. This is where a logistics solution like Pando helps you get end-to-end visibility and data-driven insights while delivering finished goods to distribution centers.
Pando.AI goes beyond being just a logistics solution. It acts as a strategic partner, providing a comprehensive platform that unifies data, people, and processes.
Here's how Pando.AI empowers your business:
You can also experience the Pando advantage and streamline your supply chain management with an effective logistics process. Book a demo today.