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The Ultimate Guide to
Supply Chain Management

Let’s explore the fundamentals of supply chain management (SCM) and examine why a smart, agile SCM strategy is critical to business stability and longevity.

What is Supply Chain Management?

Supply chain management (SCM) is the execution, operation, and supervision of the procurement and movement of products and services. Supply chain management encompasses many areas of the business, including sourcing, procurement, production, distribution, strategy and sustainability.

In a digital age shaped by an on-demand culture, effective supply chain management is key to scaling and maintaining a high-performing business.

Supply chain management must also incorporate up-to-date transparency best practices. From where and how raw materials are sourced, to the labor conditions involved in production, to the carbon footprint of the operation as a whole. Consumers and compliance demand a deeper view into every product movement across the supply chain.

Supply chain management includes a broad landscape of business stakeholders and players. These players include suppliers, manufacturers, carriers, warehouse pickers, warehouse stockers, and relevant retail chains and eCommerce platforms.

Across the supply chain, these business players are interconnected in supporting partnerships, accelerating global business expansion, and fueling agile business growth.

The Goal of Supply Chain Management

Supply chain management’s potential to add value that improves the bottom line has gained awareness throughout the business world in recent years. Due in large part to the COVID-19 pandemic, more board members and business leaders outside of the supply chain understand its significance than ever before.

The optimization of supply chain operations is a key goal of supply chain management. Streamlining business operations to maximize agility, resilience, customer value, and return on investment (ROI) is mission-critical in a disruptive marketplace that demands a decisive competitive edge.

The end goal of any modern SCM system should be to build an efficient and resilient supply chain. A supply chain that is capable of weathering crises and remaining functional in the face of major disruptions.

Managing the Supply Chain End-To-End

From sourcing, manufacturing, and producing goods to delivering them on time with appropriate invoicing and product SKUs in place — every node of the supply chain is interconnected.

Supply chain partners must empower collaboration with active communications and deeper visibility to achieve the goal of building an efficient, agile, and accurate supply chain from production to delivery.

Achieving a seamless, agile supply chain that responds proactively to shifts in consumer demand, climate events, and other outside factors is a modern must for supply chain management leaders.

To achieve supply chain management goals, suppliers, manufacturers, distributors, and all other collaborators across the chain must work collaboratively and transparently.

Successful supply chain management requires constant communication between business parties across the chain. The best SCM strategies offer a clear and transparent plan of action and clarity on contingency plans, including alternate distribution centers and paths to the customer.

Importance of Supply Chain Management

An organization’s approach to SCM can make or break its business.

Relentless competition, on-demand consumer culture, and spontaneous disruptions, make having a solid supply chain management strategy more important each year.

SCM Is More Than Cost Management

Supply chain management is sometimes thought of as a method for organizations to save internal resources by managing supply chain costs.

These costs can include:

  • Supplier Management overhead costs
  • Quality Management Resolution
  • Logistics expenses
  • Incorrect inventory levels
  • Lost revenue via late deliveries
  • Longer lead times
  • Supply chain complications

While cutting costs and empowering a better bottom line is always important — and a welcome benefit of smart supply chain management — the value of SCM expands far beyond cost management.

Supply Chain Management Enables Growth

Implementing a robust SCM strategy backed by the right information technology, industrial engineering, systems engineering, and operations management can give your supply chain a ruthless competitive advantage.

A supply chain management approach that integrates collaboration technologies offers a deeper view into the product journey — and into the market trends affecting demand levels.

Supply chain management can be much more than a cost-control lever for organizations. The best SCM strategies can increase supply chain agility to result in higher revenues, greater customer satisfaction and loyalty, and the ability for any organization to scale faster.

SCM Helps Businesses Navigate Disruptions

Supply chain management is also key to navigating the smartest product journey direct to consumers and retailers alike in the event of a disruption.

With active healthcare crises, climate events and other disruptions, businesses need a resilient, proactive approach to SCM. An approach that is powered by information sharing and deep insights to outpace competitors and thrive in uncertain markets.

Components of Supply Chain Management

Supply chain management includes a broad scope of capabilities driven by market trends and evolving business requirements. These include:

  1. Supply Chain Visibility
  2. Supply Chain Risk Management
  3. Supply Chain Sustainability
  4. Supply Chain Resilience
  5. Supply Chain Transparency

1. Supply Chain Visibility (SCV)

Supply chain visibility (SCV) is the ability to actively view and track assets in real time. These include product parts, partial assemblies, and fully-assembled products as they move from suppliers to manufacturers and, ultimately, to the consumer.

SCV data builds a stronger approach to supply chain management, enabling businesses to quickly navigate hurtles inherent to the logistics landscape.

Supply chain visibility supports organizations in responding to shortages in inventory, mounting bottlenecks, and shifting demand levels in a smart, deliberate way.

SCV is fueled by supply chain technologies that use automation, AI, and machine learning algorithms. These technologies allow company leaders to anticipate disruptions and market shifts – before they can create obstacles or issues for the business.

With deeper visibility between players across the supply chain, organizations can drive a more agile and profitable path to consumers.

2. Supply Chain Risk Management

Supply chain management professionals assess and mitigate end-to-end supply chain risks strategically via supply chain risk management (SCRM). The process involves managing and mitigating a growing number of risk factors across all aspects of the supply chain.

Supply chain risk management is key to helping organizations conserve critical resources and reduce waste, all while building contingencies across the chain — from ports to suppliers to alternative locations, and everywhere else.

3. Supply Chain Sustainability

Supply chain sustainability is the direct impact a business can make in empowering greater environmental protections, fair labor practices, and other ethical areas impacting local and global communities.

In recent years, supply chain sustainability catapulted from a buzzword to a growing priority for most businesses embracing a millennial-dominated market and workforce.

Supply chain sustainability reflects the changes in consumer values, the call for greater transparency, and the ongoing global warming climate crisis that has escalated alarmingly over the last decade. These factors are encouraging businesses to integrate more sustainable approaches into their SCM strategy.

The supply chain sustainability scope is quickly growing. Common areas currently include limiting plastics in raw goods and packing to slimming carbon footprints with different transportation methods.

4. Supply Chain Resilience

Supply chain resilience is a supply chain’s ability to adapt and persevere through unforeseen market fluctuations or disruptions.

A resilient supply chain is characterized by its ability to resist and protect itself from supply chain disruption or initiate a swift, smart recovery when necessary. Supply chain resilience combats the abundance of underlying risks and volatility that apply constant pressure across the supply chain.

Supply chain resilience protects organizations in a proactive way—a sharp departure from using dated, reactive SCM tactics. Implementing a resilient supply chain can significantly limit risk while supporting more stable logistics and operations management.

5. Supply Chain Transparency

Supply chain transparency gives businesses an unobstructed view into product origins and every step of the product journey. That means knowing exactly what’s in movement upstream in the supply chain with the ability to share this knowledge across internal stakeholders and external partners.

To generate supply chain transparency, companies must be focused on deeper visibility across supply chain integrations. Companies must also prioritize investing in meaningful partnerships because supply chain transparency mandates constant connection, communication, and collaboration with third-party suppliers, distributors, and other supply chain vendors.

Examples of Supply Chain Management by Industry

Each industry and business has a supply chain, though they can vary greatly. Supply chains are different based on product type, user audience, regulations, and other compliance restrictions. From direct-to-consumer (DTC) brands to healthcare and other rigorously monitored industries, every example looks different.

Consumer Packaged Goods

Consumer Packaged Goods (CPG) SCM encompasses the manufacturing, production, and distribution of merchandise for regular use and replacement including food, beverage, cleaning, beauty, and hygiene products.

For wholesale, it’s important for a CPG supply chain to maintain and track a regular flow of essentials routed to retailers.

On the D2C side, digitization-fueled disruption is challenging CPG SCM leaders to navigate changing consumer expectations that warrant greater service levels and customization. Regular customization means constantly changing and increasing product SKU portfolios — making the category much more complex.

With FourKites Visibility Platform CPG companies can lower operating costs, drive agility, and increase customer satisfaction with accurate, complete, and on-time deliveries. Learn More.

Pharmaceutical Supply Chain

Highly-regulated healthcare and pharmaceutical supply chains are tasked with delivering often life-saving medications, vaccines, and gene therapies to global patient communities. The healthcare and Life Sciences supply chains are continually growing more complex, with cold chain products often required to stay in a narrow temperature range without any interruption. Exposure can mean wasted product and thousands in lost revenue.

FourKites protects your bottom line and patient communities by preventing wasted pharmaceuticals through end-to-end visibility. FourKites Visibility Platform offers Pharmaceutical companies the ability to intervene in real-time when shipments risk falling out of compliance. Learn more.

Chemical, Oil, & Gas

Chemical, oil, and gas supply chains require navigating a fast-changing industry and environmental compliance regulations. Oil-field service and equipment (OFSE) companies have been facing devastating crude prices with cutbacks on supply chain spending. The chemical, oil, and gas supply chain is increasingly competitive and in pursuit of sustainable cost savings and long-term profitability.

With FourKites you can lower operating costs, streamline digital workflows, and deliver superior service. All through a single real-time visibility solution that chemical, oil and gas companies need to fuel their supply chain management. Learn more.

Food & Beverage Supply Chain

The fresh supply chain plays a huge role in supporting both the grocery supply chain and the food industry. Perishables including fruits, vegetables, fish, meats, and other time-sensitive consumer goods rely on an unbroken cold chain (without gaps in refrigeration).

The growing popularity of subscription-based meal-kitting services is driving greater complexity in the food and beverage supply chain. The meal-kit supply chain is focused on the details—staging micro-fulfillment centers between urban areas and local food suppliers to accelerate delivery speeds and maintain maximum freshness.

In addition to financial loss, spoilage across the food and beverage supply chain can create lasting damage to brand reputation.

Reduce operating costs and food waste while conserving critical staff bandwidth and increasing customer satisfaction with FourKites Visibility Platform. Learn more.

Retail Supply Chain

Retail supply chain management offers unique challenges because of the speed and volume of supply that the retail industry demands. The digitized, on-demand, consumer culture is constantly raising the stakes for retailers. Product delivery speed, convenience (including return and pick-up options), pricing and promotions fuel everyday purchasing decisions.

With consumer expectations and needs fluctuating fast, retailers need to be able to quickly respond to industry disruptions and the changing demand levels for a more agile, profitable supply chain.

Increase product revenue by fueling customer loyalty, optimize inventory levels, and lower operating costs by responding faster to market changes with a 360-degree view into your retail supply chain with FourKites Real-Time Visibility. Learn more.

Igniting More Effective Supply Chain Management Through Real-Time Visibility

Real-time transportation visibility platforms are unleashing a competitive edge for SCM leaders across categories by increasing transparency and resilience by accelerating response times to market disruptions and other changes.

To stay on top, organizations must quickly adjust their production and distribution strategies in response to shifts in increasingly volatile markets — supply chain visibility software makes this possible.

An end-to-end view across the supply chain with actionable data and insights empowers a more accurate, agile supply chain that supports profits and a better customer experience.

Today’s disruptive, digital age demands powerful insights and innovative strategies that stretch far and beyond “reaction mode”. Discover a smarter approach to Supply Chain Management with FourKites. Request a demo.

See it in Action

Set up a personal demo and see how real-time visibility will transform your supply chain.