supply chain in business plan

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 discuss the meaning of supply chain management plan 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.

What is Supply Chain Management Planning?

Supply chain management planning is defined as the process of coordinating and optimizing the flow of goods, services, and information across the supply chain. It involves forecasting demand, sourcing materials, scheduling production, managing inventory, and ensuring efficient distribution. The goal is to enhance efficiency, reduce costs, and meet customer needs effectively while mitigating risks and adapting to changes in the market.

Key Components of Supply Chain Planning:

Here are the essential components of supply chain planning:

Demand Planning : Forecasting customer demand to ensure adequate stock and minimize excess inventory through data analysis.

Supply Planning : Balancing supply capabilities with demand forecasts to optimize inventory levels, production, and distribution.

Production Planning : Scheduling manufacturing processes to meet demand efficiently while considering resources, capacities, and timelines.

Inventory Planning : Determining optimal inventory levels across the supply chain to balance costs, service levels, and demand fluctuations.

Transportation Planning : Optimizing the movement of goods from suppliers to customers, considering cost, time, and mode of transportation.

Distribution Planning : Designing efficient distribution networks to deliver products to customers promptly while minimizing costs and maximizing service levels.

Sales and Operations Planning (S&OP) : Aligning business objectives with operational capabilities to ensure a cohesive strategy across all supply chain functions.

Risk Management : Identifying and mitigating potential disruptions or uncertainties within the supply chain to maintain continuity and resilience.

Collaboration and Communication : Facilitating effective communication and collaboration among supply chain partners to enhance efficiency and responsiveness.

Performance Measurement and KPIs : Monitoring key performance indicators (KPIs) to evaluate supply chain performance and drive continuous improvement efforts.

• Demand Planning: Forecasting customer demand to ensure adequate stock and minimize excess inventory through data analysis.
• Supply Planning: Balancing supply capabilities with demand forecasts to optimize inventory levels, production, and distribution.
• Production Planning: Scheduling manufacturing processes to meet demand efficiently while considering resources, capacities, and timelines.
• Inventory Planning: Determining optimal inventory levels across the supply chain to balance costs, service levels, and demand fluctuations.
• Transportation Planning: Optimizing the movement of goods from suppliers to customers, considering cost, time, and mode of transportation.
• Distribution Planning: Designing efficient distribution networks to deliver products to customers promptly while minimizing costs and maximizing service levels.
• Sales and Operations Planning (S&OP): Aligning business objectives with operational capabilities to ensure a cohesive strategy across all supply chain functions.
• Risk Management: Identifying and mitigating potential disruptions or uncertainties within the supply chain to maintain continuity and resilience.
• Collaboration and Communication: Facilitating effective communication and collaboration among supply chain partners to enhance efficiency and responsiveness.
• Performance Measurement and KPIs: Monitoring key performance indicators (KPIs) to evaluate supply chain performance and drive continuous improvement efforts.

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.

Role of Planning in Supply Chain Management

The importance of supply chain planning are:

• Forecasting Accuracy: Planning ensures accurate demand forecasts, minimizing inventory costs and optimizing production schedules.
• Efficient Resource Allocation: It allocates resources effectively, balancing demand fluctuations and reducing lead times.
• Risk Management: Planning identifies and mitigates risks in the supply chain, enhancing resilience to disruptions.
• Cost Efficiency: It minimizes costs through strategic sourcing, transportation optimization, and inventory management.
• Customer Service: Effective planning improves service levels by ensuring product availability and on-time delivery.
• Continuous Improvement: Planning fosters continuous improvement by analyzing data, implementing feedback, and adapting strategies.

How to Develop a Detailed Supply Chain Management Plan? 6 Steps

Here are the key supply planning process steps 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 in the supply chain management planning stage 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 in the supply chain management planning process is to design 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.

According to Grand View Research, the worldwide market for supply chain management was valued at USD 23,265.4 million in 2023 and is anticipated to achieve a compound annual growth rate (CAGR) of 11.2% from 2024 to 2030.

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.

Strategic Supply Chain Management Ensures Sustainability & Transparency: A Case Study

The importance of a supply chain management plan is manifested in the way Nike developed and implemented it to resolve its sustainability issues. Nike faced significant challenges in its supply chain management, particularly concerning labor conditions in overseas factories and the sustainability of raw materials. These issues were compounded by increasing consumer demand for transparency and ethical sourcing. To address these challenges, Nike implemented a comprehensive supply chain management plan. They established rigorous supplier standards, conducted regular audits, and enforced corrective actions to improve labor conditions. Additionally, Nike invested in sustainable innovation, partnering with suppliers to reduce environmental impact and promote responsible sourcing of materials like cotton and rubber. Through these initiatives, Nike not only enhanced supply chain transparency and efficiency but also strengthened brand reputation and customer loyalty. (Source: Linkedin )

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.

A Simple Supply Chain Management Plan Template:

Here is a simple supply chain template for business to improve efficiency:

• Introduction: Brief overview of your company and its products/services.
• Supply Chain Objectives: Clear goals such as cost reduction, efficiency improvement, or sustainability targets.
• Supply Chain Strategy: Outline strategies for procurement, production, logistics, and distribution.
• Inventory Management: Approach to managing inventory levels, including optimization techniques.
• Supplier Relationships: Strategies for fostering strong relationships with suppliers and managing risks.
• Logistics and Distribution: Details on transportation modes, warehousing, and order fulfillment.
• Technology and Innovation: Integration of technology (e.g., ERP systems, AI) and innovation in supply chain processes.
• Performance Measurement: Metrics to track performance and evaluate success against objectives.
• Risk Management: Plans for mitigating risks such as supply disruptions or market changes.
• Sustainability: Initiatives to promote environmental and social sustainability throughout the supply chain.

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 .

Frequently Asked Questions

1. How do you write a supply chain management plan?

To write a supply chain management plan, define objectives, analyze current processes, and identify key stakeholders. Map out the supply chain, assess risks, and develop strategies for sourcing, production, and distribution. Implement technology for tracking, establish performance metrics, and create contingency plans. Regularly review and update the plan.

2. What is supply chain management planning?

Supply chain management planning involves designing and managing the flow of goods, services, and information from suppliers to customers. It includes forecasting demand, sourcing materials, production scheduling, inventory management, and logistics. The goal is to optimize efficiency, reduce costs, and ensure timely delivery while maintaining quality and meeting customer requirements.

3. What are the 5 basic steps of supply chain management?

The five basic steps of supply chain management are:

• Planning : Forecast demand, plan inventory levels, and develop strategies to balance supply and demand effectively.
• Sourcing : Identify and evaluate suppliers, negotiate contracts, and establish procurement processes to obtain necessary materials and services.
• Manufacturing : Schedule production, manage operations, and ensure quality control to produce goods efficiently.
• Delivery : Manage logistics, including warehousing, transportation, and distribution, to ensure timely and accurate delivery of products to customers.
• Returns : Handle returns, manage reverse logistics, and process defective or excess products to recover value and maintain customer satisfaction.

4. What are the 7 R's of supply chain management?

The 7 R's of supply chain management are:

• Right Product : Ensuring the correct product is available to meet customer needs.
• Right Quantity : Providing the exact quantity required to meet demand without overstocking or stockouts.
• Right Condition : Delivering products in the proper condition, ensuring quality and functionality.
• Right Place : Ensuring products are delivered to the correct location.
• Right Time : Delivering products at the precise time they are needed.
• Right Customer : Ensuring that the products reach the intended customer or end-user.
• Right Cost : Managing costs to ensure the products are delivered efficiently and economically.

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 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 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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What is supply chain 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.

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 behaviors.

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

It goes without saying that improving demand forecasting and demand management are key to better integrated business planning. Companies rely upon accurate demand predictions to manage their entire range of supply chain operations, from raw materials sourcing to last mile delivery and fulfillment.

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.

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.

3. 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

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Perspectives on supply chain planning

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

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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.

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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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How To Do Strategic Supply-Chain Planning

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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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Supply Planning: Definition, Process, and Best Practices

Supply planning is a business management tool that impacts supply, demand, and inventory levels. Retailers use supply chain planning systems to provide projected demand for products and materials needed to support those demands. 

The process is designed to balance plans for future demand with the availability of goods in inventory. Supply planning helps companies determine how much product they need to keep in stock. Order entry, review and release of orders with suppliers, and inventory management within warehouses and distribution channels are all factors that inform the supply planning function. 

The lead times for supplier products to be received, the complexity of managing multiple vendors, the need for material handling equipment, and the availability of labor complicate the process. Let’s take an in-depth look at the supply chain planning process and its best practices.

What Is Supply Planning?

Supply planning is a process that involves analyzing demand forecasts, comparing the forecasted demand to existing inventory, and coordinating the supply chain activities needed to meet that demand. It determines the production level of goods or services, the materials that are required, and when they must be acquired. 

Supply planning, also known as raw material or material planning, is often the cornerstone of optimized supply chain management . A supply chain planning strategy is designed to ensure that the right product is available at the right place and time while minimizing costs and risks associated with the supply chain. Inventory levels are intended to meet projected sales volume. 

Inventory management is vital to sales and operations planning because it affects sales volume and product pricing. The inventory levels are adjusted as demand volumes change. When there is a change in demand, there must be a production adjustment to align with the change, which may require companies to adjust inventory levels. 

Changes in sales volume directly affect inventory levels. Stores must control their inventories to meet customer demand. Doing these processes well can result in higher sales because inventory is available for customers when they want to make a purchase. They can support their companies by increasing sales and reducing costs by having the right amount of products on hand. 

The Supply Planning Process

The supply chain planning process involves coordinating the movement of goods, from raw materials to finished products, in a supply chain. Here are the steps in the supply planning process.

Forecast Demand

Forecasting demand for products is the first step in the process. It involves analyzing historical sales data and market trends to predict the level of product demand in the future. It is important to develop these forecasts regularly because there are many external factors – such as inflation or the inability to get raw materials due to trade sanctions – that could impact sales of your products. These potential disruptions must be considered when planning for future inventory requirements to support an efficient supply chain.

Demand can be determined by analyzing sales levels, historical data, customer surveys, and past trends. The forecast relies on sales forecasts because they show how market demand will change over the product’s life. 

Depending on the type of product you are selling, you must also project custom orders. You can project the custom order from various sources, and each custom order should be considered a separate demand element rather than a single lump sum for each item in the sale. It’s more efficient to handle your customers as individual buyers.

Determine Sources of Supply

Once the forecast demand is known, the next step is identifying the sources required to meet that demand. This process includes identifying suppliers, negotiating contracts, and establishing inventory levels.

For retail stores, this step involves identifying the supplier’s location and establishing a contract to buy products. For consumer goods producers, this step would include finding suppliers to provide raw materials for their production process. 

With this step, you may also identify changes in payment terms, such as requiring immediate payment or accepting open account credit terms with your suppliers. Your objective is to set up a supply plan that supports your business strategy while managing cash flow and working within your company’s budget allocations.

Schedule Production

Based on the forecast demand and the sources of supply, the company creates a production schedule based on the availability of goods necessary for production. Scheduling production affects the order of the usage of raw materials and the manufacture of finished products. 

It involves setting up production schedules to meet demand and coordinating with suppliers to schedule plant production runs. For example, a manufacturer may set up a production schedule based on raw material and labor availability, known as manufacturing resource planning (MRP) . MRP is a computerized system that schedules resources to meet demand.

Plan Transportation

Plan the transportation of goods from the supplier to the manufacturer and from the manufacturer to the customer. This requires selecting carriers, coordinating with multiple carriers, and determining the most efficient modes and routes to get the product where it needs to be when it needs to be there.

Manage Inventory

Inventory management involves allocating space and other containers required for storing materials in a distribution center. It determines the optimal inventory levels to maintain for production schedules’

A key component of inventory planning is understanding what drives demand for an item. Inventory monitoring is automated to identify trends in the market, order patterns, and sales history. This information determines how much product should be acquired to have sufficient supplies before selling at the optimum price.

Monitor and Adjust the Plan

The supply chain management planning process is ongoing, and the plan may need to be adjusted as market conditions change or new information becomes available. Regularly review and update the supply plan to ensure that it remains effective.

Why Supply Planning Matters

Supply planning is a vital function to ensure a company has enough raw materials to meet production demands. If a company lacks enough raw materials, it can lead to production delays, which can be costly and disrupt the smooth operation of the business. 

On the other hand, if a company has too much raw materials inventory, it can tie up valuable financial resources that can boost other sectors elsewhere in the business. Proper supply planning is, therefore, essential for maintaining an efficient and cost-effective production process.

An adequate supply plan helps a company strike the right balance between these extremes. It ensures enough inventory to meet customer demand while minimizing excess inventory and associated costs. 

A supply plan is the foundation of a company’s entire supply chain, including coordinating the procurement of raw materials and scheduling production. The effectiveness of the supply chain can impact a company’s profitability and its level of customer service.

Supply Planning Best Practices

Through continuous improvement efforts, supply chain planners work to improve sales and operations planning performance. Here are a few best practices to consider when planning your global supply chains.

Collaborate With Suppliers

Establish strong relationships with your suppliers and work with them to ensure a consistent and reliable flow of goods. To communicate with suppliers effectively, you should use a single system to request, track, and manage all customer requests.

Use Technology to Improve Supply Planning

Use technology to support and improve the supply plan. You can use various software applications, such as inventory management systems or sales forecasting software, to track inventory levels, delivery schedules, and other key performance metrics .

Implement Demand Forecasting

Demand forecasting involves assessing market trends to determine the anticipated level of demand for your product. It helps set production volumes, track product introduction schedules, and plan for future on-hand inventory levels. Use real-time data and analytics to anticipate demand and plan accordingly to help avoid shortages or overstocking.

Build Flexibility Into Your Supply Chain

While the supply chain is your customer’s lifeline to product availability, you must ensure it is flexible enough to meet changing needs. The components of your supply chain should include various elements that enable production in different quantities at different locations. 

You also need the flexibility to adjust production timing or manufacturing schedules when conditions warrant. Consider implementing multiple sources of supply and incorporating flexible manufacturing approaches to reduce the impact of disruptions.

Here are frequently asked questions regarding supply planning and supply chain processes.

What is the purpose of supply planning?

Supply planning provides a framework for managing supply and demand in your company. The supply plan is designed to identify the most cost-effective and efficient methods for acquiring, stocking, and distributing raw materials, components, and finished goods. You may experience shortages or overstock and incur excess costs without proper supply planning.

What is demand planning vs. supply planning? 

Demand planning is forecasting the future demand for a company’s products or services and determining how much of those products or services the company will need to produce to meet that demand. Supply planning involves how to source, manufacture, and distribute the necessary products to meet the demand forecasted by the demand planning process.

Final Thoughts

The supply planning process is a critical component of effective logistics. Supply chain planning involves anticipating future demand and planning the most efficient methods of acquiring and distributing raw materials or finished goods. It ensures a timely supply of materials and finished goods.

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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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Supply chain management (SCM) is the coordination of a business’ entire production flow, from sourcing raw materials to delivering a finished item.

The global supply chain is a complex network of suppliers, manufacturers, distributors, retailers, wholesalers and customers. Effective SCM is about optimizing this network to ensure that everything gets where it needs to be, when it needs to be there—and as smoothly as possible. It includes obtaining the necessary components, manufacturing the product, storing it, transporting it and getting it to customers.

SCM also involves the coordination of external partners and both internal resources and operations management. According to the Council of Supply Chain Management Professionals (CSCMP), “in essence, supply chain management integrates supply and demand management within and across companies.” 1

This guide explores ways to help businesses increase visibility, intelligence and agility in their supply chain.

Effective supply chain management minimizes costs, waste and time in the production cycle. It directly impacts profitability and allows businesses to gain a competitive advantage in today's global marketplace. One study found that organizations with advanced SCM capabilities were 23% more profitable than their peers. 2

Supply chain management also helps companies anticipate and mitigate risks (such as supply chain disruptions) and track compliance with regulations and standards. By helping products arrive on time and in good condition, supply chain management can improve customer satisfaction and loyalty.

The importance of supply chain management is also evident amid growing awareness about climate change . Sustainable supply chain management can help companies reduce their carbon footprint and impact on the environment by optimizing logistics and energy management , and reducing waste .

Supply chain management consists of several main components, including:

Planning involves forecasting demand , arranging production and managing inventory levels to ensure that the right products are ready to meet customer demand. It also involves setting an overall SCM strategy by determining metrics to measure whether the supply chain is efficient, effective and meets company goals. And it includes adapting to new product needs.

Sourcing involves identifying which providers to work with, negotiating contracts and managing supplier relationships to ensure a reliable supply of raw materials and components. The work includes ordering, receiving, managing inventory and authorizing supplier payments.

Manufacturing involves organizing the supply chain operations required to accept raw materials, design and produce the product, and handle quality control.

Delivery involves the transportation and distribution of finished products to meet customer needs. It includes managing distribution centers, warehousing, order fulfillment and logistics .

Handling returns involves creating a network or process to take back defective, excess or end-of-lifecycle products. It includes managing reverse logistics and customer satisfaction, in addition to final product disposal.

There are several strategic approaches to SCM. Companies can pursue different strategies based on their needs, budgets, capabilities and long-term goals and priorities.

This approach focuses on eliminating waste in all forms, including excess inventory, unnecessary transportation and inefficient processes. The goal is to create a streamlined, cost-effective supply chain.

This approach emphasizes quick response to changes in customer demand and market conditions. It often involves practices such as quick batch production, rapid replenishment and flexible supplier contracts.

This approach is data-driven and aims to eliminate defects and reduce variability in supply chain processes. It uses statistical methods to identify and remove the causes of errors and minimize variability in manufacturing and business processes.

This approach focuses on improving quality throughout the supply chain, with the goal of increasing customer satisfaction. It involves continuous improvement efforts and often includes practices such as supplier quality management and process standardization.

This approach focuses on building a supply chain that can withstand disruptions and adapt to changing conditions. It focuses on identifying potential risks in the supply chain and developing strategies to mitigate them. These strategies might include diversifying suppliers, creating contingency plans and investing in supply chain visibility tools .

This approach focuses on minimizing the environmental impact of the supply chain and promoting social responsibility. It can involve practices such as sustainable procurement and participation in the circular economy .

This approach uses technologies such as  artificial intelligence (AI), machine learning (ML), Internet of Things (IoT) and advanced analytics to enhance various aspects of supply chain management, including demand forecasting, inventory management and logistics.

Supply chain managers play a critical role in maintaining the smooth operation of the supply chain. They are responsible for planning, implementing and controlling the efficient and effective flow of goods, services and information from the point of origin to the point of consumption.

Professionals in this type of management work tend to deal with various challenges, including the growing complexity of global supply chain networks and an increasing number of risks and disruptions. People in this career path might also align the company’s supply chain strategy to meet sustainability goals.

Many companies face an SCM talent shortage as demand for skilled workers grows. For example, the US Bureau of Labor Statistics expects the need for logisticians to increase 18% by 2032—more than five times the anticipated growth rate for all occupations. 3

Supply chain managers must have a deep understanding of all parts of the supply chain and strong analytical and problem-solving skills. They might gain this expertise in SCM through university degrees (including master’s of business administration or bachelor’s degrees), certificate programs and experience in the industry. Areas for skilled knowledge include project management, logistics management, procurement, strategic sourcing, inventory management and demand planning or forecasting, along with operations management, analytics and supplier relationship management.

The concept of SCM emerged in the 1980s, but its roots go back to the creation of assembly lines in the early 20th century. Initially, SCM focused on improving manufacturing efficiency and reducing inventory levels. However, with globalization and advancements in information technology, today’s supply chains have evolved into complex networks spanning countries and continents.

The boom in e-commerce altered the dynamics of supply chain management. Over the years, the focus shifted from traditional retail-centric models to direct-to-consumer models. This shift requires more complex and agile supply chains to handle smaller, more frequent deliveries, often on a global scale.

Recent disruptions, such as the COVID-19 pandemic, highlight the importance of risk management and resilience. As a result, companies are diversifying their supplier base, increasing inventory buffers and investing in technologies to improve visibility and responsiveness. And while globalization has expanded supply chains across borders, there is also a shift toward localization in response to trade tensions, higher transportation costs and the need for faster delivery times.

The integration of new technologies is transforming the way that businesses manage their supply chains.

AI and ML revolutionized demand forecasting, allowing companies to predict sales with greater accuracy and adjust their production, inventory levels and pricing strategies accordingly. AI-powered chatbots and virtual assistants streamline interactions for improved customer experience. ML algorithms analyze collected data across the supply chain to identify bottlenecks, optimize routes and improve overall visibility.

IoT devices , such as sensors and radio-frequency identification (RFID) tags, collect real-time data on inventory levels, shipment tracking and asset performance. IoT-enabled smart warehouses are also becoming more common; they offer automated storage and retrieval systems, robotic picking and drones for inventory management.

IoT is also integral to the rise of Industry 4.0 , a term used to refer to the digital transformation of manufacturing . Industry 4.0 incorporates new technologies such as digital-physical systems, augmented reality , cloud computing and advanced data analysis. Robotics and 3D printing streamline production and warehousing processes, reducing lead times and costs. Industry 4.0 capabilities allow for faster decision making, automation and customization at new levels.

Blockchain technology is enhancing supply chain transparency, traceability and security. By creating an immutable, decentralized ledger of transactions, the blockchain can help prevent counterfeiting, improve product safety and streamline compliance processes.

Technologies such as 5G allow faster, more reliable data transmission, supporting the deployment of more advanced IoT devices and real-time monitoring systems. And autonomous vehicles, such as self-driving trucks and drones, will become more prevalent, reducing transportation costs and improving delivery times. Although still in early stages, quantum computing is shaping the future of SCM by solving complex problems and enabling more accurate simulations and scenario planning.

A range of SCM software products are emerging to support supply chain professionals. These software options include:

• Inventory management software
• Order management systems (OMS)
• Warehouse management systems (WMS)
• Transportation management systems (TMS)
• Demand planning software
• Supplier relationship management (SRM) software
• Enterprise resource planning (ERP) systems
• Supply chain analytics software
• Supply chain visibility software

These tools streamline and automate processes such as procurement, production, logistics and sales, which in turn improves efficiency and reduces costs. For example, ERP systems provide real-time visibility into supply chain processes, enabling quick decision-making and optimization. Similarly, WMS and TMS help manage and control warehouse and transportation operations.

IBM Planning Analytics helps organizations achieve end-to-end supply chain visibility for optimal profitability.

Traditional transformation is not enough to solve your supply chain disruptions. Apply the power of AI and the speed of automation to improve supply chain management, resiliency and sustainability.

IBM supply chain consulting services use market-leading technologies and AI capabilities to prepare your business for the future of work.

A supply chain control tower is traditionally defined as a connected, personalized dashboard of data, key business metrics and events across the supply chain.

Order management is the tracking of orders from inception to fulfillment, and the management of the people, processes and data connected to the order as it moves through its lifecycle.

Inventory management, a critical element of the supply chain, is tracking inventory from manufacturers to warehouses and from these facilities to the point of sale.

Sustainable supply chain management aims to minimize any negative impacts of business operations on the environment and society while ensuring efficiency and reliability.

Supply chain analytics helps to make sense of the massive amounts of data a supply chain generates by uncovering patterns and generating insights.

Supply chain optimization makes use of technology and resources like blockchain, AI and IoT to maximize efficiency and performance in a supply network.

Build AI-enabled, sustainable supply chains that prepare your business for the future of work, create greater transparency and improve employee and customer experiences.

All links reside outside ibm.com

1  " CSCMP Supply Chain Management Definitions and Glossary ", Council of Supply Chain Management Professionals, July 2024.

2  " Next stop, next-gen ", Accenture, July 2024.

3  " Occupational Outlook Handbook: Logisticians ", US Bureau of Labor Statistics, 17 April 2024.

A Simpler Way to Modernize Your Supply Chain

How to spend less and accomplish more by David Simchi-Levi and Kris Timmermans

Summary .   

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.

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.

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An Introduction to Supply Chain Management (SCM)

Table of Contents

What is supply chain management, what is a supply chain, supply chain management process, parts of a supply chain model, benefits of supply chain management, supply chain management faq.

Supply chain management (SCM) is the discipline that manages the flow of supplies through all of the stages of a production cycle. SCM applies to any organization that executes projects, produces goods or provides services, as those activities require a supply chain to maintain a steady flow of resources.  That’s where supply chain management comes in.

Supply chain management is very important in the business administration field because it affects other key business areas such as operations management, inventory control and quality management. But what really makes SCM so important is that it can also become an important competitive advantage for businesses.

The main goal of supply chain management is to make the most of the resources involved in a supply chain and be as productive as possible. People are managed and supplies require management as well . Whether those supplies are goods or services, they must be accounted for and carried through from start to finish with deliberate control. To better understand SCM, let’s define what a supply chain is.

A supply chain is a network that connects a company to suppliers of raw materials. It is also used to deliver a product to customers. The better the supply chain management, the more of a competitive advantage the company has.

Supply chains are steps that are required to get raw materials, products or services from the original state to the customer and improve customer relations. Large companies and projects usually have more than one supply chain, which is known as a supply network. Having supply chain managers and supply chain management is key to delivering customer value and maximizing the efficiency of your supply network.

Project management software can help you manage your supply chain and supply network. ProjectManager is a cloud-based work and project management software that has visual workflow features, such as kanban boards, that help keep your teams working at capacity without excess raw materials that need storage space. Get started with ProjectManager today for free!

The supply chain process is fundamental to good supply chain management. It is used by companies to make their supply chain as efficient and cost-effective as possible and deliver customer value and give them a competitive advantage. There are five steps to the supply chain process. They are as follows.

1. Planning

In order to control inventory and the manufacturing process companies must plan to match demand with supply, which is known as supply chain planning . This prevents overspending on warehouse space or not having raw materials needed for your manufacturing and slowing down delivery of product.

2. Sourcing

This step involves finding those vendors who can get the goods and services you need when you need them. Sourcing is how you get supplies when you need them and meet the demand of your customers .

Here is where those raw materials you procured are made into the products that meet your customers’ demand. This is where assembling, testing and packing occurs. Getting customer feedback is key to delivering customer value.

4. Delivering

Getting your finished product to the customer is the next crucial step in the SCM process. If you’re not able to get what you make to your customers all the previous steps are for naught. This makes delivering key to supply chain performance.

5. Returning

Returning or reverse logistics is part of what’s called post-delivery customer support process. It is important to have a clear channel for returns or risk tarnishing your brand. The company can then take these low quality, defective or expired materials and return them to their suppliers.

Related: 10 Free Manufacturing Excel Templates

To get the most out of SCM requires looking at the big picture in terms of an organization’s management. No longer is managing an individual company function enough. The integration of all activities involved in the supply chain is necessary: that means integration between different departments, such as purchasing and marketing.

Supply chain management also needs integration and collaboration between buyers and suppliers, joint product development, common systems and shared information. Here are the most important parts of any SCM system or model.

• Customer-Relations Management: There must be a managed approach to interacting with the company’s current and potential customers in order to understand what they want and expect.
• Customer-Service Management: This differs from customer-relations management in that it focuses on the interactions between the customer and the company instead of a more strategic management process. It helps facilitate a mutually satisfying goal for both customer and the company, as well as eliciting customer feedback and maintaining communications between the two parties, so there are positive feelings from both parties.
• Demand-Management Style: A methodology to forecast, plan for and manage the demand for products and services. This can address both macro-levels, as in global economics, but also micro-levels within the company.
• Order Fulfillment: The order fulfillment process that encompasses everything from point-of-sale interest to delivery of that product or service to the customer. It is the way a company responds to customer orders.
• Manufacturing-Flow Management: Manufacturing is a process, and supplies feed that process based on historic data surrounding how it has been done and what was needed historically. But that process needs flexibility as quantities change. Therefore, one must manage all activities related to planning, scheduling and managing the manufacturing process.
• Supplier Relationship Management (SRM): Supplies likely are coming from a third party, and those interactions must be strategically planned for. SRM is key to a healthy supply chain.
• Product Development and Commercialization: To reduce time to market, customers and suppliers are integrated into product vision and the product development process. Shortening the product life cycle keeps the company competitive. This process includes coordinating with customer relationship management to know customer needs, selecting materials and suppliers with procurement and developing a production technology in the flow of manufacturing to integrate the best supply chain flow for the product and market. When successful, this has a positive impact on cost, quality, delivery and market share.
• Returns Management: There will always be returns and the better they’re managed, the more productive and competitive the SCM process. Management of this aspect of the SCM means fast and easy returns management, automation and deciding how to process returned materials. Make sure information is visible to capture early in the process. Then control the flow of product, including receipts and reconciliation, noting if there are any quality issues.

Supply chain management is a hefty task with hefty rewards. Here are a few ways that well-executed SCM can benefit your business or project.

Keeps Businesses Competitive & Paces with Technology

The simple answer to why SCM is important to any business is that it helps them remain competitive. Markets change, and as the marketplace becomes increasingly global, the need for better efficiency is crucial. As management goals change, too, there is a move away from the past traditional relationships to incorporate and organize all business processes throughout a value chain of multiple companies.

Advances in information technology and the increasing use of outsourcing has also added to the expansion of the supply chain. This has created a need for a more collaborative network, so different enterprises can work harmoniously together.

Creates Productive Environments

These changes in how businesses are managed have led to the development of supply chain environments. Multinational companies, joint ventures, strategic alliances and other partnerships, as well as technological advancements, have contributed to more cooperation among those in the supply chain network. As supply chains become more holistic and cooperative, companies must adapt.

Proactive Strategy

But supply chain management is not merely reactive, it also helps to stimulate innovation and productivity by assisting companies with organizational learning. The more extended a company is in terms of its supply chain, the more adaptive it has to be. That leads to creative thinking, which results in innovation and increased productivity.

Satisfies Customers While Reducing Operating Costs

Customer service also benefits. Customers demand quality and they expect products to be available where and when they want them or delivered when on time. Supply chain management will also help with sale support after they’ve made the purchase.

But it’s not just the customer who benefits. As noted, SCM is instrumental in cutting operation costs. When smartly applied it can decrease purchasing, production and total supply change costs. This improves a company’s financial position by adding to profit leverage, reducing fixed assets and increasing cash flow.

SCM is a complex topic and you might have even more questions about it. Here are some quick answers about supply chain management topics.

What are the Components of Supply Chain Management (SCM)?

The 5 components of the supply chain management process are planning, sourcing, making, delivering and returning.

What Is Supply Chain Analysis?

Supply chain analysis is the process of auditing all the different steps of the supply chain to identify any possible areas of improvement.

What Is a Supply Chain Strategy?

A supply chain strategy is a roadmap that a company uses to source information, materials and equipment from its suppliers to create products and deliver them to its customers.

Supply chain management is just one more screw that can be tightened on the ship of business to help it sail better through the turbulent waters of industry. But it’s a complicated process, one that benefits from having robust project management tools to plan, monitor and report on the many aspects of the supply chain that need control. ProjectManager is a cloud-based software that has the tools to make you manage more efficiently and effectively. See what it can do by taking this free 30-day trial.

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What Is a Supply Chain?

Understanding a supply chain.

• Main Supply Chain Models
• Best Practices
• Supply Chain vs. and Logistics
• Flow of Manufacturing Costs

Reliable Suppliers Are Key

• Supply Chain and Deflation
• COVID-19 and the Supply Chain

The Bottom Line

• Supply Chain

The Supply Chain: From Raw Materials to Order Fulfillment

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

A supply chain is a network of individuals and companies that are involved in creating a product and delivering it to the consumer. Links on the chain begin with the producers of the raw materials and they end when the van delivers the finished product to the user.

Supply chain management is a crucial process because an optimized supply chain results in lower costs and a more efficient production cycle. Companies seek to improve their supply chains so they can reduce their costs and remain competitive.

Key Takeaways

• A supply chain is a network of companies and people that are involved in the production and delivery of a product or service.
• The components of a supply chain include producers, vendors, warehouses, transportation companies, distribution centers, and retailers.
• The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service.
• Many supply chains are global in scale.
• Effective supply chain management results in lower costs and faster production cycles.

Investopedia / Michela Buttignol

A supply chain includes every step that's involved in getting a finished product or service to the customer. The steps may include sourcing raw materials, moving them to production, then transporting the finished products to a distribution center or retail store where they can be delivered to consumers.

The entities involved in the supply chain include producers, vendors, warehouses, transportation companies, distribution centers, and retailers.

The supply chain begins operating when a business receives an order from a customer. Its essential functions include product development, marketing, operations, distribution networks, finance, and customer service.

It can lower a company's overall costs and boost its profitability when supply chain management is effective. It can affect the rest of the chain and can be costly if one link breaks.

What Are the Main Supply Chain Models?

The supply chain model that a company selects will depend on how the company is structured and its specific needs.

• Continuous Flow Model: This traditional supply chain model works well for companies that produce the same products with little variation. The products should be in high demand and require little to no redesign. This lack of fluctuation means managers can streamline production times and keep tight control over inventory. Managers must regularly replenish raw materials to prevent production bottlenecks in a continuous flow model.
• Fast Chain Model: This model works best for companies that sell products based on the latest trends. Businesses that use this model must get their products to market quickly to take advantage of the prevailing trend. They must rapidly move from idea to prototype to production to consumer. Fast fashion is an example of an industry that uses this supply chain model.
• Flexible Model: Companies that manufacture seasonal or holiday merchandise often use the flexible model. They experience surges in demand for their products followed by long periods of little to no demand. Using the flexible model ensures that they're able to gear up quickly to begin production and shut down efficiently as soon as demand tapers off. Profit depends on being accurate in forecasting their need for raw materials, inventory, and labor.

What Are Supply Chain Management Best Practices?

Successful supply chain management systems benefit from several practices:

• They support continuous improvement.
• They aim for increased velocity.
• They encourage collaboration among the individual businesses in the supply chain.
• They seek new technologies that improve their processes.
• They have metrics in place that allow employees to measure the success or failure of each step in the supply chain.

Supply Chain Management vs. Business Logistics Management?

The terms supply chain management (SCM) and business logistics management or simply logistics are often used interchangeably but logistics is one link in the supply chain.

Logistics deals with the planning and control of the movement and storage of goods and services from their point of origin to their final destination.

Successful logistics management ensures that there's no delay in delivery at any point in the chain and that products and services are delivered in good condition. This helps keep the company's costs down.

What Is the Flow of Manufacturing Costs?

Efficient supply chain systems can get each piece of the product to the location where it's needed when it's needed. This requires control of the flow of manufacturing costs.

The flow of manufacturing costs is most relevant to businesses that produce products that require many parts from several vendors. A clothing manufacturer might need deliveries of fabric, zippers, trim, and thread that must all arrive at the same time. They must be stored at the business' expense if some supplies arrive too early and the machines stand idle while they wait if some arrive late.

An efficient supply chain management process requires reliable suppliers that produce a product that meets the manufacturer’s specifications and deliver it on time.

Assume that XYZ Furniture manufactures high-end furniture and that a supplier provides metal handles and other attachments. The metal components must be durable so they last for many years. They must meet the design and quality specified by the manufacturer and they must work as intended.

A reliable supplier will fill the manufacturer’s order and ship the parts on time.

Does the Supply Chain Cause Deflation?

The increased efficiencies of supply chains have played a significant role in curbing inflation . Costs decrease as efficiencies in moving products from point A to point B increase. This reduces the final cost to the consumer. Deflation is often regarded as a negative but supply chain efficiencies are one of the few examples in which it's a good thing.

Supply chain efficiencies become more optimized as globalization increases and this keeps the pressure on input prices.

How Did COVID-19 Affect the Supply Chain?

One of the most severe economic problems caused by the COVID-19 pandemic was damage to the supply chain. Its effects touched nearly every sector of the economy.

Supplies of products of all kinds were delayed due to ever-changing restrictions at national borders and long backups in ports.

Demand for products changed abruptly. Shortages developed as consumers hoarded essentials like toilet paper and baby formula. Masks, cleaning wipes, and hand sanitizers were suddenly in demand.

Shortages of computer chips delayed the delivery of a wide range of products from electronics to toys and cars.

Shifting Priorities

A survey by Ernst & Young of 200 senior-level supply chain executives points to three essential findings:

• The pandemic had a deep negative effect as cited by 72% of supply chain executives. Automotive and industrial supplies companies were hit the worst.
• Visibility was the top priority. Executives wanted to focus on adding technology such as sensors that gave them a better view of their orders throughout the process.
• The pandemic accelerated the transition to digitization. Most of those surveyed said that digital transformation combined with increased automation would accelerate going forward.

What Is Supply Chain Management?

Supply chain management (SCM) is the oversight and control of all the activities required for a company to convert raw materials into finished products that are then sold to users. It provides centralized control for the planning, design, manufacturing, inventory, and distribution phases required to produce and sell a company's products.

A goal of supply chain management is to improve efficiency by coordinating the efforts of the various entities in the supply chain. This can result in a company achieving a competitive advantage over its rivals and enhancing the quality of the products it produces. Both can lead to increased sales and revenue.

What Are the Steps in a Supply Chain?

The key steps in a supply chain include:

• Planning the inventory and manufacturing processes to ensure that supply and demand are adequately balanced
• Manufacturing or sourcing the materials needed to create the final product
• Assembling parts and testing the product
• Packaging the product for shipment or holding it in inventory until a later date
• Transporting and delivering the finished product to the distributor, retailer, or consumer.
• Providing customer service support for returned items

What Is an Example of a Supply Chain?

A supply chain begins with the sourcing of raw materials. The raw materials are then hauled to a wholesaler that sells them in batches to manufacturers. The manufacturer uses the materials to create a product which is then delivered to a retailer. Finally, it's sold to a consumer.

A supply chain is what lets you plug in your new television or bite down on that hamburger you’ve made at home. It’s a network made up of producers and manufacturers, vendors, warehouses, transportation companies, and retailers. The process begins when a product is created and it ends when you purchase it. Many supply chains are global in scale.

Each step in the process is complicated by the need to create, prepare, package, ship, and unpack the product at each of its successive destinations but it can result in lower costs when it's done effectively. This benefit can be passed on to consumers.

The White House. " Why the Pandemic Has Disrupted Supply Chains ."

International Monetary Fund (IMF). " Supply Chains and Port Congestion Around the World ." Pages 9-13.

National Library of Medicine. " Product Availability and Stockpiling in Times of Pandemic: Causes of Supply Chain Disruptions and Preventive Measures in Retailing ."

S&P Global. " The Semiconductor Shortage Is – Mostly – Over for the Auto Industry ."

Ernst & Young. " How COVID-19 Impacted Supply Chains and What Comes Next ."

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Industry Talk

Writing a supply management plan for your business in 6 steps.

By Diana Nadim (pictured) Freelance Writer & Editor

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 will want to ensure that a supply management plan is in effect. You’ll need some extra free time to do that, but don’t worry, because you have an opportunity to get coursework writing help online and continue completing truly important tasks.

If you are not dealing with the real business but only studying, you might get a similar academic assignment. Just like a business plan, it’s meant to prepare future specialists for real challenges. In fact, you can get help from an essay service and prepare better. Nothing like an expert’s review and tips can get you a high grade.

According to Learn G2 , only 22% of companies take an active approach to their supply management design, while 63% don’t monitor supply chain performance whatsoever. Additionally, Forbes reported that while 94% of supply chain leaders favor digital transformation, only 44% had a strategy ready to back those claims. These numbers leave a lot of room for you to elevate your business through careful supply management and procurement of materials needed for optimal performance

Drafting a supply management plan takes effort and panache for small details due to legalities and mutual obligations which will require careful listing and formatting. With that said, let’s take a look at how you can benefit from supply management plan writing and the steps necessary for its successful drafting and approval by all parties included.                                                                                                                                                                                                 

Why a Supply Management Plan is Beneficial

Before we dive into drafting a supply management plan, let’s discuss its importance in the grand scheme of things. Depending on the industry you operate in, you might require special parts, raw materials, or unprocessed goods on a regular basis for refinement and distribution.

However, in order to keep the production process running, a steady supply of the said items will be necessary at any given moment. Thus, it can be highly beneficial for your company if you opt to standardize your supply management documentation for quick and easy procurement of goods.

By utilizing tools such as Trust My Paper, Evernote, and Grab My Essay in your supply management plan writing, you will effectively streamline your operations. Doing so can bring about several important benefits for your company going forward, including but not limited to:

• Dramatically lowered downtime between supply shipments
• Flattened margin of error or mismanagement due to standardized documentation
• Streamlined performance analytics and long-term data management
• Improved B2B and B2C stakeholder experience with your company
• Rise in overall productivity, production performance, and overall ROI

Supply Management Plan Writing Guidelines                                                                                                                                                                                                                                                                                                                                               

1. Supply Management Plan Overview

In order to get the most out of your supply management plan, it’s important to note that it doesn’t require a set length or complexity. Drafting a supply management plan for long-term use is all about auditing your current operations and understanding the pain points of your company. You want to introduce your supply requirements to the recipient of the said document at first glance without requiring them to read through endless pages.

As such, the introduction to your supply procurement document should be reserved for a standardized table with your company’s information within. Data about your recipient, listed products, or services you require, as well as a quick look at your timetable, should be on the first page. This will enable anyone to quickly glance at the procurement request and have an idea of how realistic it is without analyzing the entire document.

2. Supply Procurement Policies Outline

Assuming that your company has procured goods or raw materials from vendors before, you are bound to have certain policies and requirements in place. Information on your storage unit types and capacities, safety requirements, special handling requests, etc. should be placed here.

Writing platforms such as Studicus and Hemingway Editor can be utilized to write and format your supply policy items prior to procurement. In order to make the procurement process simple and efficient for both parties, you should aim to include said policies in the supply management plan.

3. State your Quality Assurance Standards

Safety and health hazards should always be a top priority when it comes to continued protection of your employees. Introducing a special section on quality assurance (QA) to your supply management plan will effectively communicate your risk management requirements to the supplier.

While such rigorous QA might not be necessary in the instance of IT components, for example, medical and chemical supplies most assuredly do. Don’t take the chance and be proactive about your QA – outline your standards in case of poor supply quality to provide suppliers with enough information.

4. International/State Laws Breakdown

Working with international suppliers is both good and bad when it comes to procurement of necessary goods for further production and processing. On one hand, you will effectively multiply your choice of suppliers and shipping methods from the local area.

However, international and state laws come into play due to taxing of imported goods, as well as customs regulations. It can be disastrous for both parties if shipping is stopped dead in its tracks at the borders only for your supply to deteriorate gradually. Make sure that your suppliers are aware of local laws and requirements through the supply management plan you submit for their consideration.

5. List your Supply Requirements

Once you’ve outlined the necessary governmental, safety, and company regulations, you should proceed to draft the list of goods you require. This list can take the form of an Excel spreadsheet, a specialized table created for the supply management plan, or a bulleted list depending on complexity.

Writing platforms such as Wow Grade, Readable and Supreme Dissertations can be used to edit and format your list of supply requirements prior to submission. The more legible and objective your procurement requirements are the faster and more efficiently they will be processed for your benefit. It’s good practice to include contact information in this section to allow for quick referencing and outreach from your supplier for clarification and confirmation.

6. Detail the Logistics Timeline

The last piece of the proverbial supply management puzzle concerns your procurement timeline. Mainly, when do you require the supplies you’ve outlined? Do you need them in bulk or can the supplier send them in segments? Likewise, does the entire order go to one location, or is it to be distributed across multiple storefronts or warehouses?

Your distribution timeline and logistics details are just as important as the supply outline itself. You can also add any long-term contract requests or recommendations for further B2B cooperation in the distribution timeline section of the supply management plan.

In Conclusion (coupled with a relevant CTA)

When the process of writing a supply management plan is broken down, it may seem challenging to draft such a document for your company. It’s worth pointing out that once you’ve created a template for procurement, it will be easier and more efficient to manage your supply going forward.

Leave the door open for additional refinement and improvements in your supply management plan based on peer and supplier feedback. Once you settle into a routine of filling and submitting procurement requests based on the outlined supply management plan, your company’s performance will drastically improve.

Diana Nadim is a writer and editor who has a Master degree in Marketing. She combines her passion for writing with her interest in research and creates thought-provoking content in various fields. Besides working as a contributor writer for   WowGrade  and TrustMyPaper , Diana also does some editing work at GrabMyEssay .

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There is an acute labor shortage in many industries around the world, making it a strategic necessity to attract and keep the very best employees.

Value Creation

Whether you are transacting or transforming, you need to ensure you are capturing all the value you can from your assets and investments.

Many organizations are under pressure to do things better, more efficiently, more effectively, at a lower cost, at a higher quality, using fewer resources and at a faster pace. 

Featured insights

Ai in financial reporting and audit: navigating the new era.

Anchoring ESG in governance

Venture Pulse Q2 2024

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