The Association of Operations Management (APICS) Dictionary describes SCM as “the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.”
In other words, keeping track of an organization’s processes and making sure everything flows properly to ensure profit is achieved.
Here’s a working of example of a supply chain in action for a banana bread bakery:
- Procure suppliers for ingredients of raw materials (bananas, flour, sugar, and other ingredients)
- Purchase materials and equipment (baking pans, appliances and packaging materials)
- Manufacture and assembly; start baking and assembling the finished product in its packages
- Distribute; get competitive pricing for shipping and move product to retailers as fast as possible
- Grow customer base
These are just five steps of movement in a supply chain. While these steps are taking place, an SCM strategy is moving in the background.
Typically, supply chain management involves certain software programs and data collection used in conjunction with one another in order to help keep track of everything going on in the product life cycle (overall costs, inventory, materials/supplies, shipping, and customer orders among others). Each movement that goes on in the supply chain is recorded. These recordings can then be measured against past data to help make future business decisions within the organization.
Information garnered from this data also helps supply chain managers decipher whether they will need to cut back in certain areas or ramp up in others. It can also let them know how one move made at a certain part in the supply chain can affect another process further down the chain. This of course is just a small example in a world full of infinite supply chain management possibilities. Thanks to a huge advancement in technology, improvements are on the way to how businesses can access and manage their supply chain – it’s called The Cloud.
Supply Chain Management + The Cloud = A Recipe for Success
If you aren’t exactly sure what the cloud is, think of it as you would an actual cloud floating in the sky. Instead of it containing water droplets, this cloud holds databases, software, storage drives and applications that are easily accessible through a web browser. At its core, the cloud can hold just about any kind of data you can think of, while being accessible by any device connected to the Internet.
So what will this mean for the supply chain management industry? A lot! The cloud is being touted as the future for supply chain management across all industries.
But there’s a hitch. Most successful companies that already have an established supply chain management strategy are using software and databases built specifically for their company’s purposes. By moving to cloud-based services, businesses will be using established companies who offer their software for purchase and this leaves some executives wary as to who else will be privy to their business’ precious data.
Those who are against moving cloud-based SCM also share the belief of “If it’s not broke, why fix it?” Most opponents are looking at the bigger picture involving how this move would affect the business’ bottom line regarding time and money, because implementation of a new SCM strategy costs more than just the software to run it. There will be costs associated with training at multiple levels within the organization and the need for additional employees (trained IT Analysts and Information Assurance professionals) who will be able to maintain and protect the newly gathered data.
Paving the way into “the cloud” are organizations such as Cisco. They not only moved into the cloud to improve their SCM strategy, but wanted to improve their bottom line by streamlining processes, as well. Perhaps keeping up with the latest technology was a partial reason for the move, but the benefits are paying off greatly for Cisco who boasts an average volume of 1.1 million transactions per week since moving to the cloud.
Supply Chain Management for Professionals
According to the U.S. Bureau of Labor Statistics, Logistics (one of many areas within SCM) is projected to grow 26% from now through 2020, and the median annual income for Logisticians, who analyze and coordinate an organization’s supply chain, is reported to be just over $70,000. So, whether you are experienced in project management, negotiations, fulfillment or supply chain management processes, this rapidly growing industry needs highly trained professionals and is looking to employ those who stand out from the crowd, which is one reason why education is so important.
Whether your role within the organization’s structure is responsible for managing the supply chain (logistics), degrees such as a Master of Science in Supply Chain Management will help keep your skills fine-tuned.