Supply Chain Management : what is it ?

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The generalization of outsourcing has reshuffled the cards in the supply chain: the supply chain is no longer a simple “means”, it has become the backbone of companies. In its new configuration, the supply chain is driven by strategic issues that go far beyond the mere levers of technology and transport.

Today, good supply chain management means being able to deliver the right product, to the right person, at the right time. While controlling costs and guaranteeing quality. This is the whole purpose of Supply Chain Management: to move from a jerky and static management to a dynamic and continuous management, based on information exchange. In order to gain in efficiency and cohesion to meet the challenges of a world that is turning faster and faster.

What is supply chain management

The entire route of a product is never handled by the same company. Many entities necessarily intervene along this route, most often operating as subcontractors for the company selling the product.

Under these conditions, continuity of supply can be jeopardized when these different entities fail to communicate with each other. With concrete consequences for customers. And also for the brand image of the company from which the purchases were made.

If the supply process is a chain, and each player is a link in the chain, it is understandable that a single weakness can jeopardize the integrity of the entire structure. It is therefore essential to ensure its solidity.

That’s where supply chain management (SCM) comes in. Supply Chain refers to the supply chain, or logistics chain. So it’s about effectively taking charge of a company’s supply chain management.

In this sense, SCM covers all the means, methods, resources and tools intended to optimize the management of the global supply chain from its origin (the first supplier) to its end (the customer).

This Supply Chain Management approach aims to guarantee the soundness of the supply chain by considering the process in its entirety, with the aim of serving the end customer in the best possible way. This is achieved by relying on three parameters :

  • the quality,
  • the time frame,
  • the cost.

Information exchange as the keystone of the supply chain

The lifeblood of logistics is information exchange.

Traditionally, logistics exchanges have come down to the most basic documents :

  • order form,
  • delivery,
  • invoice.

We don’t anticipate. We don’t communicate about possible manufacturing or shipping problems either. No indication that we are out of stock. The supplier knows he has to supply X number of products. But they don’t worry about what happens to them once they leave the factory. The carrier doesn’t check the conformity of the products and just takes them from point A to point B; etc.

Each person organizes himself according to what he knows and what he can, without being aware that he is an essential cog in a larger machine.

The result is a supply chain whose consistency can be questioned at any time. With, at the end of the day, dissatisfied customers due to :

  • a quality problem,
  • delay,
  • reactivity,
  • or cost.

In Supply Chain Management, all the stakeholders are in communication with the company that manages the supply chain. And thus ensures the satisfaction of the end customer. The process is driven from end to end. This helps guarantee quality, rationalize inventory, and meet buyers’ needs in the shortest possible time. The result is maximum satisfaction.

That’s why supply chain management is primarily for companies with long supply chains and multiple subcontractors.

Tools to take charge of supply chain management

To consolidate this chain by making communications more fluid, Supply Chain Management relies first on tools. The good tools. These are used to :

  • Collect information throughout the supply chain.
  • Process this information efficiently (using forecasting, scheduling, extended planning, supply management…).
  • Share information with internal and external stakeholders involved in the supply chain.
  • Measure performance to aim for continuous process optimization.

Tools used in Supply Chain Management are, for example :

  • a TMS shipper,
  • the collaborative platform dedicated to transportation,
  • the supply chain import or Freight Forwarding tool,
  • an international purchasing software,
  • etc…

Supply Chain Management: a global optimization of the process

It would be wrong to summarize Supply Chain Management to a simple material approach. Even if this dimension is fundamental! Just like digitalization, the implementation of supply chain management is not limited to the implementation of software tools, their use by employees and stakeholders, and the technical management of flows.

Beyond the tools, supply chain management is characterized by a desire to optimize all supply chain management processes, including its human, competitive, quality and communication dimensions.

For example, SCM is all about competitive advantage for companies that value innovation and responsiveness to their customers’ needs, rather than relying on price alone. Buyer satisfaction is far from being based on cost alone – that’s why Supply Chain Management is so crucial.

Supply Chain Management is above all about changing the logistics approach. To globalize the vision of the process. So that production, once siloed and product-oriented, becomes open, flexible and customer-oriented.

To this end, each link in the supply chain must serve the same global project, be in phase with the business objectives and the means to be implemented to achieve them.

In short, the entire value chain model must be revisited in the light of Supply Chain Management. Are you ready to change everything to gain efficiency and boost your customer satisfaction rate ?