8.1 Supply Chain Management and Supply Chain Risk Management
Supply chain management includes all activities that turn raw materials into finished goods and put them into customers’ hands. This can include sourcing, design, production, warehousing, shipping, and distribution. SCM aims to improve efficiency, quality, productivity, and customer satisfaction. (SAP, n.d.; Inbound Logistics, 2023)
Successful global supply chains listen closely. They track market trends and gather customer feedback to understand what products people want, when, and how they want them delivered. From sourcing materials to research and development, manufacturing, and final delivery, smart companies use this customer data to streamline their entire supply chain. It’s all about making things faster, cheaper, and better.
Imagine a supply chain as a series of links. Each link, or partner, needs to work together seamlessly. This means having a well-coordinated system where information flows freely.
Video: “What is Supply Chain Management (SCM) and Why is it Important?” by Eye on Tech [2:00] is licensed under the Standard YouTube License.Transcript and closed captions available on YouTube.
COVID-19 was a stark wake-up call, highlighting the inherent vulnerabilities within some of the most critical global supply chains. Businesses across the globe swiftly recognized the pressing need for modernization. The focus shifted towards implementing agile and resilient supply chain management processes, possessing the flexibility to adapt to unforeseen circumstances without succumbing to disruptions.
Leading companies are currently engaged in a rigorous self-evaluation process. They are scrutinizing their SCM operations and the underlying technological infrastructure, constantly seeking avenues for improvement. This proactive approach centers on a core question: how can we optimize efficiency, profitability, and, most importantly, future-proof our businesses in the ever-evolving global marketplace?
Supply Chain Risk Management
To mitigate these risks, organizations implement robust Supply Chain Risk Management (SCRM) strategies. SCRM serves as a proactive approach to building resilience and ensuring business continuity in the face of uncertainty.
Supply chain risk management (SCRM) is the process of finding and addressing potential vulnerabilities in a company’s supply chain. SCRM aims to minimize the impact of these risks on a company’s operations, reputation and financial performance (McGrath & Jonker, 2023).
By adopting SCRM strategies, companies can:
- Anticipate and minimize potential disruptions
- Optimize cost structures
- Enhance product and service quality
- Improve customer satisfaction levels
Furthermore, effective SCRM facilitates regulatory compliance, safeguards brand equity, and promotes sustainable business practices.
