Whether you’re picking up a meal from your favourite local fast food spot or ordering a new smartphone online, there’s an entire network working behind the scenes to make sure products reach you efficiently and on time.
This invisible network is called the supply chain, and managing it well is what keeps businesses running smoothly.
In today’s fast-paced global economy, particularly in countries like South Africa, where load shedding, transport strikes, and port delays are significant challenges, Supply Chain Management has become more crucial than ever.
In this post, we’ll break down what supply chain management is, why it matters, and how South African businesses are using it to stay competitive. We’ll also explore how you can start a career in this exciting field through accredited courses at REGENT Business School.
Supply chain management (SCM) explained:
Supply chain management (SCM) is the coordination of every step involved in turning raw materials into finished products and delivering them to customers.
This includes:
- Sourcing raw materials
- Storing inventory
- Manufacturing goods
- Distributing the final products efficiently and cost-effectively
For example, this is how the supply chain at Burger King might look:
- Phase 1: They source ingredients such as beef, potatoes, lettuce, and buns from trusted suppliers.
- Phase 2: These raw materials are stored in distribution centres and then delivered to Burger King restaurants.
- Phase 3: Once at the store, the ingredients are prepared and assembled into meals, such as Whoppers and fries.
- Phase 4: Finally, these meals are served to customers either in-store, via drive-thru, or through delivery.
The core components of SCM
As you saw with the Burger King example above, the supply chain management industry comprises several components.
Each part plays a crucial role in getting the product from the raw material stage to the customer’s hands. Here is a detailed look at these components.
- Procurement involves finding and buying the raw materials needed for the products. It includes negotiating with suppliers, evaluating quality, and ensuring the timely delivery of inputs.
- Logistics handles the transportation and storage of goods. This includes moving raw materials to factories, finished goods to warehouses, and ultimately delivering products to customers.
- Production is where the transformation happens. Raw materials are converted into finished products through manufacturing or assembly processes.
- Inventory management involves tracking the quantity of materials and products at every stage—raw materials, in-process items, and finished goods—to ensure there’s enough stock without over-ordering.
- Distribution is the final stage of the journey, ensuring that finished goods reach retailers, franchise locations, or consumers directly through various delivery channels.
It’s also worth noting that the supply chain industry is becoming increasingly digital, utilising tools such as AI, blockchain, and real-time data to track goods, do demand forecasting, and minimise waste.
Discover more about the supply chain industry in the digital age and its impact on students and graduates in this field.
Importance of supply chain management
In South Africa’s dynamic economic environment, where issues such as load shedding, strikes, and port delays can cause significant disruptions, efficient supply chain management is essential for business success.
Here’s why SCM in business matters, with local examples to show its real-world impact:
1. Reduces costs and improves profit margins
In a price-sensitive market, effectively managing costs throughout the supply chain is essential for maintaining competitiveness.
Example:
Pick n Pay uses centralised distribution centres and bulk buying to lower logistics and procurement costs. By reducing unnecessary transport and storage costs, they’re able to offer better prices to South African consumers while maintaining healthy margins.
2. Enhances customer satisfaction
With increasing e-commerce and delivery expectations, fast and reliable service is key.
Example:
Takealot, South Africa’s leading online retailer, invests heavily in its supply chain infrastructure. This includes warehouses and delivery networks to ensure quick and accurate order fulfilment. Their success hinges on consistent stock availability and timely delivery.
3. Improves responsiveness to market demand
Economic shifts, seasonal changes, and local trends influence South African consumers. Businesses that can pivot quickly have a far better chance of succeeding.
Example:
Woolworths closely monitors customer preferences and seasonal trends. Their supply chain enables them to adjust stock rapidly, particularly in the fashion and food segments, ensuring that shelves meet current demand without overstocking.
4. Builds strong supplier and partner relationships
In a country with numerous small to medium-sized suppliers, nurturing supplier relationships is essential for ensuring reliability and fostering growth.
Example:
Shoprite partners with thousands of local farmers and suppliers to stock fresh produce and homegrown goods. By investing in long-term relationships, they create a dependable supply network that benefits both the company and local communities.
5. Reduces risk and improves resilience
South African businesses must be prepared for disruptions, from port delays at Durban harbour to power outages.
Example:
Tiger Brands faced supply chain challenges during the COVID-19 pandemic but rebounded by diversifying its supplier locations and increasing local sourcing. These steps enabled them to remain operational while their competitors struggled.
6. Supports sustainability and local development
Supply chain decisions have a significant impact on environmental sustainability and local economies, which are important considerations for maintaining a strong brand reputation in South Africa.
Example:
Clover has implemented energy-efficient logistics practices and works with local dairy farmers. Their approach supports sustainability goals while keeping transportation and sourcing costs manageable in both rural and urban areas.
FAQ
What role does technology play in modern supply chain management?
As the supply chain has evolved over the past several years, technology plays a bigger role than ever, enabling faster, smoother, and more transparent processes. Key technologies that are being used include:
- ERP Systems (Enterprise Resource Planning) – integrate data from procurement, inventory, and logistics.
- GPS & RFID Tracking – allows real-time tracking of goods during transport.
- AI & Machine Learning – predict demand and suggest stocking levels.
- Automation & Robotics – improve warehouse speed and reduce human error.
- Cloud-based platforms – improve collaboration between suppliers, manufacturers, and retailers.
How do supply chain disruptions affect businesses?
Supply chain disruptions are detrimental to business operations, frequently leading to delayed deliveries, increased costs, reduced customer satisfaction, and even reputational damage.
Common disruptions include:
- Supplier shortages
- Port delays or customs issues
- Strikes or political unrest
- Natural disasters or pandemics
- Load shedding or power failures
Impacts of disruptions:
- Stockouts and lost sales
- Increased freight or production costs
- Slower time-to-market
- Damaged customer trust and brand loyalty
How does SCM contribute to cost reduction in businesses?
Effective supply chain management helps cut unnecessary expenses by improving planning, reducing waste, and streamlining operations.
For example, Mr Price Group keeps costs low by sourcing directly from factories and controlling much of its distribution. Their lean supply chain lets them offer trendy clothing at affordable prices while maintaining solid profit margins.
Study supply chain management with REGENT
REGENT Business School offers flexible study options to help you get started in the supply chain. The Higher Certificate in Supply Chain Management is ideal for individuals seeking to develop essential, job-ready skills and enter the workforce quickly.
For those seeking long-term growth and leadership roles, the Bachelor of Commerce in Supply Chain Management offers in-depth knowledge and strategic insight into the entire supply chain process. This equips you for future managerial positions in a dynamic and rapidly growing field.
