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What is Supply Chain Management?

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The phrase "supply chain management" gets thrown around a lot these days as businesses navigate COVID-19, but what exactly does that mean? It's a bit more complicated than not having toilet paper on the shelves. Sure that's part of it, but have you ever really thought about all the stages that toilet paper goes through before you pick up a package in the store?

Here's the simple definition. Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It's one of the main ways to set a business apart from its competition while providing maximum customer value.

Yet supply chain management is so much more complex than a simple definition. There are a million moving parts. To keep on the theme of toilet paper, the paper starts as raw materials, gets milled into toilet paper, then perforated, then packaged, etc. Some supply chains can include dozens of different touch points along the process route before an item or service reaches the customer. Here are some of the things included in supply chain management:

  • Demand planning:
    Through research and market studies, figuring out just how much demand there is going to be for your particular good or service.
  • Sourcing:
    Whether it's sourcing the raw materials or finding a manufacturer to make the items, sourcing can be an incredibly detailed process.
  • Production:
    Another complicated stage of the supply chain management process. From turning raw goods into products to packaging them, production supply chains can be expansive.
  • Inventory management:
    Software and hardware in place to track supply inventory.
  • Logistics:
    All of the details involved in receiving, storing, and the movement of products
    •  Storage
    • Transportation

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Within today's business climate, supply chain sustainability also comes into play. Sustainability covers:

  • Environmental issues
  • Social issues
  • Legal issues
  • Sustainable procurement
  • Corporate social responsibility

Supply chain management produces benefits such as new efficiencies, higher profits, lower costs and increased collaboration. A well-oiled supply chain can take an average business and put it above its competition.

Written by Dr. Lucas Chesla

Dr. Chesla is a retired United States Marine Corps Officer who faithfully served over 20 years. He is an accomplished Lean Six Sigma Master Black Belt with a robust portfolio of projects from a variety of organizations. Skilled in teaching, project management, coaching, mentoring, strategic planning, team building, conflict management and public speaking. His passions include understanding and interpreting personality profiles and body language.

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