“Supply chains compete, not companies” So say Martin Christopher, Emeritus Professor of Marketing and Logistics at Cranfield School of Management, Cranfield University. More and more companies are beginning to realise the importance of this statement as they turn their thoughts to developing competitive advantage through developing their supply chains and undertaking supply chain management.
For many years it was thought that sales and marketing were the crux of successful business models. However, if there is nothing to sell then there is nothing to market. Marketing and sales rely on providing the right quality product in the right place at the right time to delight the customer. Enter stage left: Supply Chain Management. Professional procurement of goods and services ensure that the five rights are achieved: right quality, right quantity, right place and time achieved at the right price.
Defining Supply Chain Management
But what is Supply Chain Management or SCM? Supply chain describes the ‘links’ along which raw materials and components are developed to produce the final products delivered to the customer. An umbrella view would show several links in the chain, each one represented as an activity or company. The primary sector produces the raw materials and the secondary sector adds value by building the products. Each individual activity in between form the chain. As products are produced they increase in value. However, to add this value we also need to add costs including transportation and storage. The ability of the supply chain to reduce these costs has a direct impact on the bottom line and affects the competitive advantage gained through delivering products at affordable prices.
A quick look at recent supply chain disasters highlights the importance of supply chain management. The Samsung Galaxy Note 7 has been in the news because of a tendency to burst into flames. Result? Samsung share price plummets and sales are suspended with a recall of over a million units. Reason? Phones use lithium ion battery packs for their power, and it just so happens that the liquid swimming around inside most lithium ion batteries is highly flammable. Do Samsung make the batteries? No, they are part of the supply chain…
Somewhere along the Samsung supply chain, a mistake was made. There are a myriad of supply chain mistakes that create risk to a supply chain. These include poor market analysis, poor supplier appraisal, badly written specifications that form part of the contract and inefficient supplier, contract and supply chain management. It has been a costly mistake for Samsung. They marketed the product well and sold millions, but this was let down by poor supply chain management.
The Future Role of SCM
So is this the end of strategic marketing and sales? Do we focus purely on strategic supply chain management? The fact is that SCM is part of an overall strategic plan. An important part, but not the only one. Exit supply chain management stage left. Enter stage right: Synchronised Continuity Management (the new SCM).
Synchronised Continuity Management (SCM) is the process of integrating and stimulating activities to achieve strategic goals. The process requires commitment from the highest levels of management and perseverance throughout the tactical and operational levels. The process requires cultural change as much as system and management change.
The objective of Synchronised Continuity Management is to maximise output whilst maintaining momentum and conserving resources through optimisation. This output may be achieved in a micro environment (within the organisation) or a macro environment (between organisations), with the macro environment being the most difficult to achieve.
The key to SCM is to align the core activities including procurement, operations, sales and marketing to work together to achieve the strategic goals of the organisation.
If you want to find out about Supply Chain Management, you may be interested in a CIPS Diploma in Procurement and Supply. For more information about the procurement courses from The Oxford College of Procurement and Supply, get in touch with one of our course advisors on +44 (0)1865 515255 or email email@example.com.