Supply Chain Management (SCM) is a more ubiquitous process than one might think. From Software as a Service (SaaS) to Business to Consumer (B2C) or Business to Business (B2B), SCM is an integral part of the delivery of all products and services from point of origin to point of delivery. Depending on the industry, SCM will take different forms but, generally, the principles of supply chain management are steady and understanding them is integral to the management of any business.
Principles of Supply Chain Management Explained
The principles of supply chain management concern the adaptation of the supply chain to suit a specific goal. Every supply chain is unique and every stakeholder occupies a different position.
For example, an automotive parts supply chain concerns the sourcing of raw materials, the production of the parts within a factory, the shipping of those parts to a destination market, and the sale of those parts. Therefore, supply chain management is all about the careful and efficient planning of each link along the chain to create the most value for all stakeholders, from the factories in which parts are produced to the producer trying to get their product to market.
The principles of supply chain management are rooted in efforts to tailor each supply chain to its stakeholders.
First, customers and vendors along the supply chain must be segmented into groups and the supply chain tailored appropriately. From these groups, managers can customize the logistics of the supply chain to serve each group profitably. These two tasks are ongoing processes which require frequent revision. This is because the management of such logistics is constantly shifting and in flux due to everything from the number of orders for a given product to a sudden storm delaying a shipment.
Supply chain management, then, is primarily concerned with the mediation of these processes to ensure there are no snags or delays in the chain which would cost stakeholders and sink profitability.
SCM has changed rapidly over the last several decades as technologies like the internet made it possible to more closely track and estimate production, shipping, and delivery times. As a profession, it is decidedly process-oriented and, therefore, efficiencies are found primarily in the course of those processes; this is why SCM is often concerned with shortening shipping times, integrating production assembly lines, and AI-led strategies like bin packing. Luckily, new tech makes these efficiencies well within reach.
The Future of Supply Chain Management
Professions which are process-driven, like supply chain management, derive great value from finding efficiencies within those processes and, in SCM especially, time is money. As such, recent years have seen a vigorous implementation of artificial intelligence technology, cloud computing, and other new tools designed to keep the entire supply chain visible to stakeholders. This visibility allows for greater collaboration and facilitates stakeholders’ abilities to make decisions on the fly with up to date data. You can read about other ways technology is revolutionizing the supply chain here.1
Embracing automation, artificial intelligence, cloud computing, and real time data manipulation has yielded another interesting trend in the supply chain realm: collaboration. One might think that collaboration has always been inherent in a process-driven field, but it hasn’t—at least not like this. The tools available to supply chain management professionals bring stakeholders together across industry, time zones, and geography to create the most efficient chains that have ever existed; this is incredibly important in the globalizing economy.
Proof of the efficacy of such tools is proved time and again; for example, Canadian Pacific Railway reported its best ever year, quarter, and December in 2020 for the transportation of grains and Joan Hardy, CP VP Sales and Marketing for Grains and Fertilizers, chalked this success up to an efficient supply chain.
“Hard-won achievements like these require commitment and focus across the supply chain, but special credit must go to CP’s customers and their dedicated employees,” said Hardy. “Their work to create a safe, efficient supply chain is an essential ingredient in our ability to deliver Canada’s crops to consumers at home and around the world.”2
Another site where SCM is seeing a renewed demand for collaboration via technology is the crucial arena in which Canada’s COVID-19 virus vaccines are distributed. The task of importing, distributing, delivering, and tracking the vaccinations of millions of people is a challenge never before faced by this country and it’s quickly becoming clear where Canada’s shortcomings lie.
“The biggest challenge in rolling out coronavirus vaccines to Canadians,” Amina Zafar and Christine Birak wrote for CBC, “may be the last leg of the race, medical and logistics experts say.”3 In Canada, no such database, nor communicative tracking system exists to sufficiently gather, record, and transmit data between healthcare systems, provinces, or territories. This is a huge problem for Canada’s vaccine supply chain and, by extension, a huge problem for Canadians.3
The answer? New information tech for the supply chain can facilitate the necessary collaboration to both deliver the vaccines and gather the data we need to better understand, and beat, the virus.
The principles of supply chain management will only become more efficient and nimble as new trends in supply chain technologies take off It’s fair to wager these technologies will become more prevalent in the years to come.