Most of us do not reflect on the impact that global supply networks have on our daily lives. That is, until something happens which interrupts the way we live or work.
Take the Covid-19 pandemic. Causing ‘snags’ for companies across the world – and subsequent shipping and transportation bottlenecks as economies restarted once more – suddenly, the raw-material-to-consumer-good conveyor belt was facing issues on a colossal scale. And, what an everyday consumer witnesses – department stores with Christmas stock shortages, car production lines stilled due to scarcity of parts, issues obtaining necessary medicines – only scratches the surface.
Worldwide, the manufacturing and delivery of goods is incredibly complex, multi-faceted and, evidently, not invulnerable. How can organisations best prepare themselves to weather change and adversity in the modern world?
Supply chain management
The Chartered Institute of Procurement and Supply (CIPS) defines supply chain management (SCM) as the handling of the flow of goods and services from the raw manufacturing of products through to the consumption by the end user. The name is derived from the network of supplier relationships – that serve as links in a chain – to move the products through each stage.
Supply chains are generally comprised of six main stages: planning; sourcing; demand and inventory management; production and manufacturing; warehousing and transportation; and return of goods.
Why is supply chain important?
As the life-blood of any organisation, supply chains are big business.
Career and job specialists, Zippia, underscore the importance and scale of the global supply chain:
- The global supply chain market size value is $15.85billion, and is set to experience a compound annual growth rate of 11.2% from 2020 to 2027.
- 70% of companies believe supply chains are a key driver for quality customer service, and 57% believe it gives them a competitive edge.
- Disruptions to supply chains can cause a 62% loss in finances.
- Reducing supply chain costs from 9% to 4% can double profitability.
- As a result of the Covid-19 pandemic, the estimated value of out-of-stock items was $1.14 trillion.
An ever-important cog in the gears, it’s clear that effective supply chain strategies and management improves the financial health of businesses and underscores enterprise resource planning (ERP). They help deliver value, play a critical role in meeting customer demand and satisfaction, uphold corporate strategy, and reduce operating costs – from procurement to operations to logistics. Fundamentally, particularly for large organisations, scale of profitability is directly linked and relative to supply chain management. Business aside, supply management fulfils a simpler role: ensuring that basic necessities that society depends on – including food, medicine, energy and infrastructure – are readily available and consistent.
It’s no surprise that many organisations are now seeking professionals with specific knowledge and skills in supply management processes. It’s why accredited programmes, such as those offered by The Chartered Institute of Logistics and Transport (CILT), are in high demand. Tuition fees for specialist programmes may be covered by employers, with part-time or full-time study options available depending on preference and availability.
How has supply chain management evolved?
While ever-evolving, supply chain ecosystems have witnessed transformative change over the past five years alone.
Growth and continuous improvement across supply chain and logistics operations have impacted how products are manufactured, packaged, stored, transported and, ultimately, consumed. While they necessitate innovation and adaptation within businesses, such changes have the potential to optimise – and revolutionise – how manufacturers and operations management professionals work together. The benefits speak for themselves: progress brings customised solutions, quicker and more-efficacious decisions, and preparation for the business environments of the future.
The past few years have seen specific change for supply chains:
- Growth of e-commerce – with more customers purchasing online than ever before, expectations are shifting to quicker delivery turnarounds – such as next-day or even same-day – leading companies to rely on others to provide the logistics infrastructure while taking a hit to profit margins.
- Return to regional demand – consumers are increasingly aware of the realities tied up in capitalism and globalisation, from impacts on climate change to human rights issues. Many companies are making efforts to transition to on-shoring or near-shoring in a bid to increase quality and technicality standards, support sustainability and corporate social responsibility initiatives, and deliver the ethical standards demanded by consumers.
- Technological advances – one of the fastest drivers of change – including driverless transportation, artificial intelligence, drones, automated warehousing, 3-D printing, wearable tech and more – real-time information systems, technology and automation continues to streamline supply operations.
- Blockchain technology – with transactions and securities now settled in minutes, companies are reaping the benefits of closer control and management of goods and related payments.
- Mergers and acquisitions – these occur when organisations expand into new services or industries by acquiring those who are already established experts in their desired services.
Building durability and longevity into supply chain networks
Current events have highlighted just how imperative it is to build resilience into supply business models to underpin risk assessment planning. Gartner suggest six strategies to prepare supply operations to weather change:
- Inventory and capacity buffers such as underutilised production facilities or excess safety stocks offer one of the simplest ways to build resilience in the chain. However, buffers can be expensive, so forecasting for surge capacity needs – and lining up contract manufacturers in advance – could be an alternative for chain leaders.
- Manufacturing network diversification refers to diversifying sourcing and/or manufacturing locations, either through new suppliers or existing suppliers who can supply from elsewhere.
- Multi-sourcing relies on business leaders having detailed knowledge of their supplier networks, and how revenue and spend will be impacted by disruption. Additional suppliers can be given business, or a current supplier with multiple locations can be used.
- Nearshoring aims to reduce dependence on global networks and shorten cycle times for completed products. While local or regional chains can incur greater costs, they increase control over inventory and create a shortcut from product to consumer.
- Platform, product or plant harmonisation simplifies sourcing policies and creates opportunities for multiple suppliers to take on higher volumes, increasing resilience efforts.
- Ecosystem partnerships increase collaboration with suppliers of raw materials and external service partners, and are foundational to diversifying production and distribution channels.
Maximise your employability with a postgraduate qualification in supply chain logistics
Influence decision making and operations management throughout your business’ supply chain.
Choose the University of Lincoln’s 100% online MSc Management with Supply Chain programme, and you could develop an in-depth understanding of responsible management and leadership. With a focus on global supply chains, our experts aim to give you the specialist competencies and business acumen to handle the macro issues and challenges associated with the development and lifecycle of products. On completion of this degree, you could bring a range of practical tools and techniques to your role, with skills including strategic chain management, procurement and supply, and logistics and operations strategy.
Your studies will also provide opportunities to choose modules in marketing, project management, finance and accounting, leadership, people management and more.