Logistics and supply chain management aren’t the most glamorous business activities around, but they are central to the customer experience that people take for granted every day. That is especially true of American consumers, who typically expect convenient service without compromising overall quality or a reasonable price. Achieving and preserving that balance is no easy undertaking yet most individuals don’t spend too much time contemplating how physical objects are transported all over the world. Of course, businesses that plan to grow sustainably and thrive really cannot afford to neglect their supply chains.
Fortunately, there is no dearth of insights published already by industry experts. Bart Perkins and Thomas Wailgum at CIO did everyone the favor of both defining supply chain management and highlighting industry best practices. According to them, “supply chain management (SCM) enables enterprises to source the raw materials or components needed to create a product or service and deliver that product or service to customers.” It’s important to recognize the fact that SCM involves more than the final delivery of a product or service to the customer, which is a common oversimplification.
The authors also described the six core components of SCM: (1) planning, (2) sourcing, (3) making, (4) delivering, (5) returning, and (6) enabling. Each discrete category plays a crucial role in the value chain. For instance, “planning” refers to the driving strategy and the metrics used to monitor overall performance, whereas “sourcing” refers to the suppliers integrated into the value chain itself. That those are key considerations should be no surprise to anyone with business leadership experience. Almost all of the suggestions offered are intuitive and straightforward.
There are other perspectives to entertain, too. Simon Brooke at Raconteur shared five relevant supply chain management tips, which are equally as informative. The article is written as a use case, therefore, making it much less abstract than the former overview. She emphasizes things like procurement, manufacturing, and logistics, but the two most valuable takeaways are to (i) understand applicable rules and regulations as well as (ii) focusing on marketing and sales. Avoiding fines and penalties means having to remain compliant with the regulatory landscape. The focus on marketing and sales ensures that the supply chain has consistent inputs.
Something that all three authors fail to adequately cover is the impact of technology enablement on SCM. Christy Pettey at Gartner® addressed that oversight when she promoted eight supply chain technology trends for 2018. Artificial intelligence (AI), advanced analytics, the Internet of Things (IoT), robotics, immersive technologies, etc., were all cited as major variables. There’s likely to be skeptics when it comes to technology enablement, but the pros almost always outweigh the cons. In other words, it’s hard to refute the value offered by fleet maintenance software for trucking companies. Those types of solutions let businesses achieve scale otherwise impossible because of rampant complexity.
Reducing the cost of complexity is precisely what Hamid Moghadam at Fortune predicted. Technology enablement is anticipated to significantly minimize the cost of transportation and energy. “At more than half of total supply chain costs, [that] is the single largest expense,” according to Hamid. Big things are on the horizon, though. Autonomous driving, electrification, solar power, and improved energy storage are all certain to encourage serious efficiencies in SCM. While some of the technologies are still relatively nascent, others have reached maturity. As a result, business leaders will have to be conscientious of the technologies under consideration. Utilizing inappropriate technologies is a recipe for disaster.
Suffice it to say that there is much more to SCM than immediately meets the eye. The entire marketplace of products and services relies extensively on the business practice. That should be motivation enough to spend time learning more about it.