The Heart of Business Success: Understanding Supply Chain Management
Not so long ago, the average consumer was not even aware of the supply chain or the impact that it had on their daily lives. It was assumed that the products they wanted to purchase would be available at the retailers that they chose to frequent, and they didn't have to think much more about it.
In recent years, disruptions to the supply chain have highlighted the importance of an optimized system. As a result, supply chain management professionals are beginning to explore how advanced analytics and machine learning can help improve the supply chain, making AI in supply chain management one of the top trending topics in the field.
Why Supply Chain Management Matters Now More Than Ever
In a complex global economy, effective supply chain management is essential for any company's success. Not only does an optimized supply chain allow a company to increase its profits, but it's also the key to customer satisfaction, which is ultimately the driving force behind lasting success. According to the Council of Supply Chain Management Professionals, effective supply chain planning and supply chain operations can:
- Improve customer service and overall satisfaction ratings.
- Reduce operational costs, ultimately helping increase profits.
- Leverage the company's finances, allowing the organization to continue to grow and expand.
The Rise of Global Supply Chains
The global economy means that all consumers and organizations are dependent on a global supply chain, which is more interconnected and complex than ever before. One small disruption in one region of the world, perhaps due to a natural disaster or social upheaval, can have a lasting ripple effect on the entire supply chain, resulting in shortages, rising prices, and more.
For example, at the onset of the COVID-19 pandemic, the supply chain came to a screeching halt as the world put itself on pause. At the same time, there was intense demand among consumers for essentials like toilet paper, and it was difficult for stores to restock items. It took nearly three years for the supply chain to recover from the pandemic. During that tumultuous time, it was not uncommon to see piles upon piles of shipping containers sitting at ports, significant shipping delays, and empty shelves at storefronts.
The extreme disruption caused by the COVID-19 pandemic highlighted the need for advanced supply chain analytics, with many professionals turning to AI in the supply chain to optimize the process and streamline the supply chain overall.
The Growing Demand for Sustainability
Recognizing the impact that the supply chain can have on the local environment and on climate change, an increasing number of consumers are prioritizing brands that have implemented ethical and sustainable supply chain practices. Some of the emerging trends in supply chain sustainability include:
- Decarbonization — In an effort to reduce carbon emissions throughout the supply chain, a number of organizations are upgrading their equipment to more sustainable, eco-friendly options.
- Supply Chain Data Analytics — By relying on demand forecasting and other advanced analytics, supply chain managers can better predict future needs and create a more optimized and efficient supply chain.
- Sustainable Packaging — In hopes of reducing waste, some organizations are choosing to use packaging materials created from recycled materials, as well as developing packaging that can also be recycled once it is used.
The Need for Resilience in the Face of Uncertainty
The COVID-19 pandemic was perhaps the biggest wake-up call for supply chain managers, as they quickly recognized that the existing supply chain was not as resilient or agile as they had once believed. While there is hope that the world will not face another pandemic in the near future, other unexpected events, such as natural disasters and political unrest, can significantly disrupt and disturb supply chains around the world. Having risk mitigation strategies in place allows supply chain managers to create a more resilient supply chain.
How Supply Chain Management Affects Businesses
Supply chain management, when done right, seems to be a process that exists in the background. While it may seem invisible, it's actually the backbone of most business operations, ensuring that customers receive the high-quality products that they want to purchase in a reasonable amount of time.
Cost Optimization Beyond Procurement
While negotiating supplier prices is a primary responsibility of many supply chain managers, cost optimization extends beyond the procurement stage. Advanced strategies such as inventory optimization, lean manufacturing, and logistics efficiency are used to reduce costs overall, allowing companies to increase profits and develop dynamic pricing strategies for consumers.
Enhancing Customer Experience Through SCM
An optimized supply chain can also significantly improve the overall customer experience. A well-managed supply chain will:
- Improve delivery times, allowing customers to receive their products faster than ever.
- Stabilize supply, ensuring that there is always product available on the shelves.
- Deliver enhanced customer service, ensuring that customers feel confident in the brand and comfortable with the quality of the product itself.
Recently, the famed footwear company Adidas decided to invest heavily in automated supply chain operations in an effort to optimize production. As a result, it has reduced its dependence on outsourced manufacturing, and the company is now able to ship its products to consumers faster. This has given them the competitive edge in a market heavily dominated by international manufacturing and impacted by the global supply chain.
Supply Chain as a Driver of Innovation
While the supply chain may work in the background to keep business operations running smoothly, it can also be a major driver of innovation within a company. The work to optimize the supply chain can bring together suppliers, manufacturers, and retailers, which presents the organization with a unique opportunity to create innovative and impactful solutions.
Supply Chain Management in the Digital Age
The age of the AI-driven supply chain has arrived, with machine learning, prescriptive analytics, and descriptive analytics dominating the conversation about how to optimize and revolutionize the supply chain. Advanced analytics in supply chain allow supply chain management professionals to make more informed decisions, particularly when it comes to creating a faster, more efficient, more reliable, and more resilient supply chain.
The Power of Data Analytics
Advanced analytics are redefining the supply chain management landscaping, giving supply chain managers the power to increase their accuracy and precision when making plans and implementing strategies. Supply chain data analytics allow supply chain managers to:
- Predict future needs and demands. Improved forecasting allows supply chain managers to make better decisions well in advance, which can reduce disruptions in the supply chain in the future.
- Enable real-time tracking. Real-time tracking allows supply chain managers to catch disruptions as soon as possible, and quickly thwart any potential issues.
- Perform predictive maintenance, which is key to successfully implementing risk management policies and procedures.
Artificial Intelligence (AI) in Supply Chain
AI in the supply chain will quickly become the norm, as automation begins to take over many processes in the global economy. In the supply chain, AI has the power to streamline processes, reduce errors in every part of the supply chain and improve overall efficiency. AI technology is expected to grow and advance significantly in the coming years, which means that budding professionals will need to know how to leverage AI in supply chain management.
The Role of Emerging Technologies
Emerging technologies will play a crucial role in supply chain management in coming years, particularly as supply chain managers work toward optimization and improved efficiency. Robotic process automation and blockchain technology will help improve production, transparency, and traceability within the supply chain.
The Human Side of Supply Chain Management
There is a human element to supply chain management that should not be ignored. By remembering the importance of collaboration and connection, and the driving force behind any demand for products and services, supply chain managers can ensure that they can optimize production without losing sight of the purpose and intent of the company.
Building Strong Relationships With Suppliers
Supply chain managers spend a lot of time and energy procuring supplies from suppliers, which means that they must have solid interpersonal skills. Collaboration and communication are key to developing successful and lasting supplier relationships, but
trust is at the core of any professional partnership. Your suppliers must be able to trust that you are going to hold up your end of the bargain and continue to move the supply chain forward.
The Importance of Ethical Practices
Ethical practices have never been more important in supply chain management, particularly as consumers become more aware of the supply chain and continue to choose brands according to the practices that they implement. Some of the most crucial ethical issues in supply chain management include implementing fair labor practices, developing responsible sourcing strategies, and prioritizing environmental sustainability.
Discover the Role That Advanced Analytics Plays in Supply Chain Management at UofM Global
At UofM Global, we recognize that up-and-coming professionals will need to have an advanced understanding of the role of AI in supply chain management, which is why we have developed a future-forward curriculum for our Bachelor of Business Administration degree in Supply Chain Management. The rigorous curriculum for this degree program covers foundational SCM concepts while also exploring the critical role that supply chain data analytics plays in today's modern economy, making this an excellent degree program for those who want to embark on a lasting and lucrative supply chain management career.
Request more information about our online degree programs today.
Sources
https://www.cnn.com/2023/01/16/economy/supply-chain-outlook-2023/index.html
https://6river.com/innovative-companies-re-inventing-and-rethinking-supply-chain-and-logistics/
https://www.ibm.com/topics/supply-chain-analytics
https://consumergoods.com/what-are-emerging-and-trending-supply-chain-technologies