The Strategic Importance of Supply Chain Management in Today’s Business Landscape

Effective supply chain management can create a competitive advantage for businesses and help keep customers satisfied and loyal.

This field has become increasingly important over the years as customer demands continue to evolve and increase—with speed and accuracy being expected more than ever. 

REGENT offers a BCom in Supply Chain Management, which equips your employees with advanced knowledge and skills to help drive your company into the future through effective supply chain and logistics management.

This article examines supply chain management, why strategic management is crucial to business success, and courses you can consider.

What is supply chain management?

Supply chain management (SCM) oversees and manages the flow of raw materials, goods, and services to the end customer. It consists of a wide range of supply chain activities, including the following:

• Planning and forecasting: This involves determining customer demand and planning production.

• Sourcing: Selecting suppliers that provide the raw materials and services needed to produce the goods.

• Procurement: Buying the necessary goods and services from the suppliers.

• Inventory management: Managing the stock levels to ensure enough supply to meet customer demand without overstocking.

• Warehousing and storage: Storing goods effectively and in dry places until they’re needed for production.

• Logistics and transportation: Transporting and delivering raw materials and finished goods. 

• Order fulfilment: Processing customer orders on time.

• Return management: Handling the returns of defective goods.

The strategic importance of supply chain management for businesses

Supply chain management’s strategic importance lies in its ability to enhance efficiency, reduce costs, improve customer experience and satisfaction, and provide a competitive advantage.

Companies understand the importance of SCM, which is why its market size continues to grow and is projected to reach a market value of almost $31 billion (over R565 billion) by 2026.

Here are some excellent benefits of effective SCM within an organisation:

• Cost reduction: Efficient SCM minimises production costs, inventory holding costs, and transportation expenses through strategic planning. For example, supply chain managers can plan more effective and less time-consuming delivery routes.

• Improved efficiency: SCM streamlines operations and reduces delays. This ensures that products are delivered on time.

• Customer satisfaction: Supply chain management ensures that products are available when and where customers need them. Timely delivery and excellent quality goods lead to happier customers.

• Competitive advantage: Businesses with optimised supply chains can easily and quickly respond to market changes and growing customer needs, giving them a competitive advantage over their rivals.

• Risk management: SCM can help identify possible risks, including supplier failures, transportation disruptions, or unhappy customers. Managers can mitigate these risks by creating contingency plans and having multiple suppliers.

• Data-driven decisions: Effective supply chain management systems provide data to help companies make more informed decisions. Managers can use this data to optimise inventory levels, forecast demand, and improve supply chain performance.

What are the top strategies of strategic supply chain management?

Here are some popular supply chain management strategies all businesses need to implement.

1. Demand forecasting and planning

Companies need to use advanced analytics and historical data to inform future decisions. This will help determine demand and prevent companies from overstocking their inventory. It will also allow them to align their production with inventory levels and ensure timely delivery.

Examples of such tools include:

• IBM SPSS
• SAS Forecast Server
• R and Python

2. Supplier relationship management

Managers must select suppliers who provide high-quality materials and services at competitive prices. They must also foster strong relationships with these suppliers through effective communication and shared goals.

3. Lean manufacturing

Use Just-In-Time (JIT) to minimise inventory by receiving goods only as they’re required. Also, ongoing process improvements should be implemented to reduce waste throughout the supply chain process.

4. Logistics optimisation

Use algorithms and software to determine the most efficient delivery routes requiring the least resources. Some of these tools include Route4Me, OptimoRoute, and RouteXL. 

Also, implement systems to manage and optimise transportation operations, such as mode selection and freight consolidation.

5. Technology integration

Integrate core business processes to get an overview of all business operations. Use the Internet of Things (IoT) to monitor and manage business assets, inventory, and transportation in real-time. Businesses can also use blockchain technology to enhance transparency, visibility, and secure transactions.

Supply chain management courses

REGENT offers several supply chain management courses in which you can enrol employees.

These include: 

• The Certificate in Supply Chain Management is a one-year programme that equips students with the fundamental skills of managing supply chain and logistics. 

• The BCom in Supply Chain Management is a three-year programme that equips students with in-depth knowledge of supply chain management, including purchasing principles, financial management, and business management. 

FAQ

Why is supply chain management so important today?

Supply chain management is crucial in businesses today because it allows them to navigate the complexities of global networks, meet changing customer demands, and minimise costs. It is crucial for maintaining an advantage over competitors and maintaining operational efficiency.

What are some critical aspects of strategic supply chain management?

Some critical aspects of strategic supply chain management include:

• Alignment with business strategy
• Supplier relationship management
• Demand forecasting and planning
• Integrated logistics and supply chain management
• Inventory management
• Technology integration
• Risk management and resilience
• Strategic sourcing and procurement

How can you get your employees started with strategic supply chain management?

The best way to get your employees started with strategic supply chain management is to provide them with education and training, including workshops, webinars, and online courses. 

REGENT offers its supply chain management courses via distance learning, meaning your employees can continue to work while studying. 

Enrol your employees in SCM with REGENT

Now that you know the importance of strategic supply chain management in your organisation, you know skilled and knowledgeable supply chain professionals are a must.

Enrolling your employees in the BCom of Supply Chain Management can help your company achieve streamlined processes and competitive advantage by providing them with advanced supply chain abilities.