Table of Contents
The core Functions of Supply Chain Management aim to find the demand for a particular product. Then procure materials for its production, and manufacture it. Thereafter transport and distribution of the finished product. Finally to make the product available at the right time and place to the right customer at the appropriate price. Enjoying a great consumer experience t means that the Supply Chain Management of that product or service is very effective. We find the availability of Maggi, Amul Butter, Lays chips, Pepsi, and Kurkure, at remote places too. This is the result of a well-designed and executed Supply chain strategy of Nestle, AMUL and PepsiCo.
A Supply Chain involves all the steps from conception to the end customer. And Supply Chain Management is the optimization and coordination of these processes and activities of the Supply Chain network. Further, the Supply Chain Management(SCM) processes are not linear. But they work in tandem to streamline operations. These functions reduce costs, enhance efficiency, and ultimately, boost the profitability of the entire supply chain. So, let’s have a look at the Top 8 Functions of Supply Chain Management. Also, we will see some examples of top companies that have implemented SCM. As you read further, you will also get information on how you can get SCM skills.
Demand Forecasting and Planning
Accurate demand forecasting and planning are crucial to meet customer expectations and maintain optimal inventory levels. It will help in aligning production accordingly. By analyzing historical data and market trends, supply chain managers can anticipate fluctuations in demand and optimize resources.
The global sportswear giant, Nike, is at the Forefront in the application of these crucial functions of Supply Chain Management. It does this by leveraging sophisticated data analytics and market trends analysis. By accurately forecasting demand, Nike ensures that its stores are stocked with the right products at the right time. This leads to improved customer satisfaction and minimized holding costs.
Amazon, the world’s largest online retailer, excels in demand planning. Using sophisticated algorithms and customer behaviour analysis, Amazon accurately predicts demand for various products. It ensures that the products are readily available for customers, especially during peak shopping seasons.
Procurement and Supplier Management
This is one of the core functions of Supply Chain Management. Effective procurement strategies and good supplier management help in obtaining high-quality raw materials and components at the best possible prices. Walmart, the retail behemoth, has established strong relationships with suppliers and uses its immense purchasing power to negotiate favourable terms. This strategy enables Walmart to offer competitive prices to its customers while maintaining healthy profit margins.
Another example is Hindustan Unilever (HUL), ONE OF India’s largest FMCG Company. HUL prioritizes sustainable procurement. The company leverages AI, ML and Data Analytics for a successful SCM strategy.
Production and Manufacturing
In the Supply chain, the product or service demands have to be met efficiently. Therefore, streamlining the production and manufacturing processes is one of the vital Functions of Supply Chain Management. Toyota, the renowned automobile manufacturer, has revolutionized this function by implementing Lean principles.
Toyota’s production system focuses on waste reduction, continuous improvement, and employee involvement, resulting in enhanced productivity and cost savings.
Optimizing inventory levels is a delicate balancing act for any business. Efficient inventory management can reduce holding costs. It also ensures that products are available when customers need them.
Apple, the tech giant, has honed its inventory management function by adopting the Just-In-Time (JIT) inventory system. By keeping inventory levels low and relying on real-time demand data, Apple minimizes inventory carrying costs. Meanwhile ensuring products are available when customers want them.
Reliance Fresh, Reliance Smart stores etc. have deployed the perpetual Inventory management method. With this method, the inventory is continuously updated in real-time using technology like barcode scanners or RFID (Radio-Frequency Identification) systems. This allows for accurate tracking of stock levels and can be more efficient than periodic systems.
Distribution and Warehousing
Well-organized distribution and warehousing processes are essential for effective order fulfilment. Amazon, the world’s largest online retailer, has deployed state-of-the-art fulfilment centres and adopted innovative technologies like robotics and automation. Amazon’s strategic use of distribution centres ensures prompt deliveries and allows them to cater to a diverse customer base efficiently.
Logistics and Transportation
Efficient logistics and transportation are the crucial functions of Supply Chain Management . Ensuring timely delivery of goods to customers. FedEx, a global courier delivery services company, employs advanced tracking technologies and optimises delivery routes. These efforts enable FedEx to provide reliable and speedy delivery services, which have become essential in today’s e-commerce-driven landscape.
Zara, a renowned fashion retailer, has revolutionized logistics in the fashion industry. Zara’s “fast fashion” model relies on a tightly integrated logistics system. It enables ZARA to quickly replenish stores with the latest fashion trends, ensuring a competitive edge.
Risk Management and Resilience
Supply chains are susceptible to various risks, such as natural disasters, geopolitical uncertainties, and supplier disruptions. The Coca-Cola Company, a global beverage giant, demonstrates effective risk management by maintaining a diverse supplier base and implementing contingency plans. These practices help Coca-Cola mitigate potential disruptions and ensure a steady supply of its products worldwide.
After the Supply Chain Management strategy is in place, we come to the execution phase. The day-to-day operations of the supply chain are managed in the In execution” phase of SCM. Pricing decisions, such as setting product prices, discounts, and promotions, fall within this execution phase. Proper pricing strategies are crucial to ensure competitiveness, profitability, and alignment with market demands. The pricing decisions are often influenced by data from the previous phases, including demand forecasts, production costs, and market trends.
Performance Measurement and Analysis of Functions of Supply Chain Management
Continuous evaluation of supply chain performance is critical for identifying areas of improvement and implementing data-driven optimizations. Apple, the technology giant, emphasizes data-driven decision-making in its supply chain. By closely monitoring key performance indicators (KPIs) and conducting regular analyses, Apple identifies inefficiencies and takes proactive measures. This improves the Supply Chain.
Diverse Career Opportunities in Supply Chain Management
If you are interested in Logistics and SCM; Also if looking for a degree with great career potential, then choose SCM as the field. Opting for a career in Supply Chain Management (SCM) can be a rewarding and fulfilling choice for several compelling reasons. Here are some key factors that make SCM an attractive career option:
Dynamic and Essential Field: Supply chain management lies at the core of business operations. It’s a vital and ever-evolving field. The continuous global expansion of businesses has amplified the importance of SCM, ensuring a constant demand for skilled professionals.
SCM offers a diverse range of career paths across various industries and sectors. Whether it’s in manufacturing, retail, technology, healthcare, or logistics, SCM professionals play a crucial role in business success.
Impactful Decision-Making: As an SCM professional, you play a crucial role in optimizing processes, reducing costs, and enhancing efficiency. Your decisions directly influence a company’s ability to meet customer demands, improve profitability, and gain a competitive advantage.
Global Perspective of Supply Chain Management
In today’s interconnected world, SCM involves managing complex global supply networks. Pursuing a career in SCM opens doors to working on international projects, a global marketplace. The functions of Supply chain management come with a set of unique challenges, such as demand fluctuations, logistics complexities, and risk management. Tackling these challenges and finding innovative solutions can be intellectually stimulating and professionally gratifying.
Continuous Learning and Growth: The SCM field is dynamic and technology-driven. It offers constant opportunities to learn about new trends, tools, and best practices. This continual learning contributes to personal and professional growth, making it an exciting and forward-looking career choice.
High Demand and Competitive Salaries: Skilled SCM professionals are in high demand. This leads to highly competitive salary packages and excellent job stability. As businesses prioritize efficiency and cost-effectiveness, the value of SCM expertise continues to rise.
Contribution to Sustainability: SCM professionals have the chance to drive sustainable and socially responsible practices within organizations. By optimizing supply chains and promoting ethical sourcing, you can make a positive impact on the environment and society.
How and Where to Learn the Functions of Supply Chain Management?
A BBA degree or an MBA with an SCM module integrated is fine. If you already possess a Bachelor’s Degree or MBA, then you can opt for 3 month to 1-year course. Both online and offline courses are available. One of the popular Online Courses is provided by Henry Harvin Education.
The Professional Certificate Course in Supply Chain Management by Henry Harvin Education offers comprehensive training in techniques of SCM and strategies. Participants gain essential skills to optimize supply chains, reduce costs, and enhance efficiency. With industry-expert instructors and hands-on projects, the course ensures practical expertise and Mastery in SCM.
Here’s a short video on Supply Chain Management:
In conclusion, Supply Chain Management plays a vital role in determining the success of businesses across industries. The companies mentioned in the article demonstrate how each of the functions of Supply Chain Management contributes to their operational excellence. Also, it increases customer satisfaction. From demand forecasting and planning to risk management, optimizing the operations of the Supply Chain can lead to cost reductions. It gives enhanced efficiency and competitiveness. As businesses evolve, supply chain management will remain a critical aspect of their success. SCM allows them to adapt to market changes, meet customer expectations, and thrive in an ever-changing global landscape.
Ans: Supply Chain Management (SCM) plays a crucial role in the profitability of a company by optimizing operations, reducing costs, and ensuring efficient utilization of resources, leading to improved supply chain performance and increased overall profitability.
Ans. SCM is not inherently a technical subject, but it incorporates technical aspects like data analytics, supply chain software, and process automation. While its core principles focus on coordination, planning, and optimization, embracing technological advancements is crucial to maximizing SCM’s effectiveness in today’s complex business landscape.
Ans: The human resources requirements for SCM include skilled professionals in areas such as procurement, logistics, inventory management, demand forecasting, and supply chain analysis. Effective communication, problem-solving, and analytical skills are essential for SCM professionals to navigate the challenges and complexities of the supply chain ecosystem.
Ans. SCM challenges include demand forecasting accuracy, supplier reliability, transportation bottlenecks, and the need to adapt to dynamic market conditions, which can impact the smooth flow of goods and services within the supply chain.
Inventory management complexities, information-sharing barriers, and global supply chain disruptions are also common challenges faced by organizations in managing their supply chains effectively.
Ans: Supply Chain Manager’s average salaries are around Rs.14 lacs/per year. It can vary from Rs.9 Lac/p.a to 29 Lacs /p.a precisely in India.
Ans: Commodity Manager, Supply Chain Analyst, Global Supply Chain Analyst, Logistics Manager, Supply Chain Manager, and Operations Manager are some of the Job titles in the SCM field.