This 15-day transit time will be used to determine when to send an order to that supplier so that it will arrive at your factory on time. Because this juggling of roles is an aspect of the modern managers, Wu said more research needs to be done to find out how managers can integrate their roles smoothly. What attracted me to SCM was that I was in charge of logistics for a business venture I started in high school and I absolutely loved learning and experiencing it, as well as the vast opportunities. Supply chain managers may qualify for positions with an associate’s degree. Although we have to make assumptions in order to plan how a supply chain should perform, we need to deal with reality when it comes to managing the day-to-day operations. Reducing this vulnerability requires collaboration among the firms in a supply chain so that they can help one another deal with threats as they emerge. A lot of uncertainty is involved in that supply chain, from weather to commodity prices to the reliability of the cargo ship. Supply chain management is a hefty task with hefty rewards. Find out why supply chain management is so import to businesses today. Think about the potential effects that any of the following events could have on your supply chain: Each situation represents a scenario that supply chains around the world face every day, and your supply chain needs to be able to respond. If one link breaks down, it can affect the rest of the chain and can be costly. The goal, of course, is to engineer and manage your supply chain so that it can function during and after a disruption — in other words, to be resilient. Good risks, such as a big order, are called upside risks because they are related to growing your business; bad risks are called downside risks. Keeps Businesses Competitive. Retail supply chain management therefore is how you optimize those processes to maximize both speed and efficiency. “The nature of supply management has changed,” Wu said. In many cases, the flexibility is cheap compared to the cost of a supply chain disruption. This typically is comprised of five stages: planning, development, manufacturing, logistics and returns. Why Supply Chain Management Is So Difficult…Reducing the Bullwhip Effect Name Module 2 SLP Instructor Date Introduction Businesses increasingly operate as supply chains, and companies need to manage customer, supplier and distributor relations across the supply chain (Disney, & … Supply chain management (SCM) is the process that is used by a company to ensure that its supply chain is efficient and cost effective. You need to understand a few basic principles to implement a risk management process that spans your supply chain: Statistics say that a disease epidemic is unlikely, for example, so worrying about that situation in advance might not seem worthwhile. As the researchers point out, “Individuals depending upon their organizational position may perceive role-changing behavior differently.” The four roles the researchers identified are: a negotiator for the buyer, a facilitator between buyer and supplier, an advocate for the supplier, and an educator of internal customers. “They questioned the sincerity of the manager, and the better that manager was at navigating between the roles, the more the supplier doubted his intentions.”. Supply chain covers a lot of things: Sourcing, inventory management, production scheduling (for which it is best if you have an understanding of manufacturing), logistics, a little bit of trade,warehousing... so working in supply chain can involve any of those things. There is more time pressure to get the product, more focus on quality control, and managing the expectation of both the suppliers and your internal customers.”. A new customer unexpectedly places a huge order for your products. While the idea of supply chain management is certainly as old as commerce itself, the term only dates to 1982, when British logistician and consultant Keith Oliver used in in when interviewed by the Financial Times. You may find people using the words risk, threat, and disruption interchangeably, but in the context of supply chain management each of them means something slightly different. Why is Supply Chain Management Important? “Maybe some of the supply chain managers are like George Clooney, just naturally good at smoothly navigating relationships, we don’t know,” Wu said. In other words, relying on general statistics about how epidemics emerge can lead you to underestimate the risk for a particular disease. Honestly i don't know any specific details, BUT he majored in supply chain management and logistics and currently works for Nike as a logistics manager. The generic supply chain begins with the sourcing and extraction of raw materials. The cognitive aspect is missing in supply chain research; in this paper we are just measuring the behavioral aspect. A new study by an Oregon State University supply chain researcher shows this balancing act between keeping costs under control and keeping suppliers happy is even more difficult than previously thought due to tough economic conditions. The disruption caused by an upside risk can be just as expensive as the disruption from a downside risk, especially when it triggers the Bullwhip Effect. The Supply Chain Risk Leadership Council offers a free handbook called “Supply Chain Risk Management: A Compilation of Best Practices” that includes a list of all the different things that can go wrong in a supply chain. There is so much more to it than that. Companies and suppliers state they want a supply manager with ability to take on multiple roles – to negotiate on behalf of the buyer as well as to work efficiently with the supplier. Supply Chain Examples. All of these negotiations are part of the “many hats” that Wu says a supply chain manager wears. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. “Or perhaps there are tools that can help form a coherent identity. “Most of the time now, you are dealing with overseas companies, and price negotiation is just part of the job. He is lead author on the paper, which was written with Michelle D. Steward of Wake Forest University and Janet L. Hartley of Bowling Green State University. When supply chain management is effective, it can lower a company's overall costs and boost profitability. Strictly speaking, risks can be either good or bad; there is a risk you might receive a big order, but there is also a risk that you could lose a customer. The degree is applicable in more than one industry Critical thinking is a skill valuable anywhere, not to mention the ability to be innovative, strategic and creative. In the late 1990s, "supply-chain management" (SCM) rose to prominence, and operations managers began to use it in their titles with increasing regularity. The problem with ignoring this risk is that you really don’t have enough information about the disease and the people that are coming into contact with it to know the true probability of whether there will be an outbreak. He doesn't make great money but he likes what he does, and it wasn't too hard to find a job because he hopped around constantly after graduating till he found something he really liked. The average salary for supply chain managers is $84,086 per year. According to me being in a supply chain management is not a tough job for an introvert. It includes all processes that turn raw materials into final products. In many cases, the flexibility needed to protect your supply chain from a risk comes with a cost, so it may be tempting to eliminate this flexibility to save money. The result would be a disruption in the ability of the distribution center to process shipments efficiently. 847 views Supply chain management (SCM) is the management of the processes that control the flow of goods and services within an organization. Supply chain management skills can get broken into two categories: hard and soft skills. Apart from these two rest are mostly knowledge based. Supply chain management is the management of the flow of goods and services as well as overseeing the processes that convert original materials into final products. In the world of a supply manager, navigating the territory between their internal customers, the suppliers and the buyers is tricky. hbspt.cta.load(3951034, 'e84dcc94-6e63-48f1-b2ac-0381ec9f447a', {}); 4 Ways to Make Your Supply Chain More Sustainable, Simple Strategies for Managing Your MRO Process, How to Optimize Your Supply Chain with Remote Monitoring, How Demand-Driven Planning Is Reshaping Manufacturing, Beyond Training: Closing the Skilled Labor Gap, Advances in the Analysis of New and Used Lubricating Oils by High-Resolution ICP-OES, How to Cost Justify a Lubrication Program, Use Lubricant Zone Inspections for Early Problem Detection. For example, a rapid increase in customer orders can trigger a buildup of inventory and overwhelm a distribution center. a risk management process that spans your supply chain, “Supply Chain Risk Management: A Compilation of Best Practices”. Supply chain risk management is very similar to business continuity management. You can think about supply chain resilience in terms of a shipment of bananas bound from South America to a grocery store in the United States. “It’s a more cognitive, more sophisticated job than it was in the past,” he said. A supply chain is the collection of steps that a company takes to transform raw components into final products and deliver them to customers. Salaries for those in SCM range from starting pay at 45k to 60k upwards of 200k for directors and executives. Even so, it is typical for supply chain risk management processes to focus mostly on the downside risks. When reading Bullwhip and Beer: Why Supply Chain Management is so difficult by Michael Bean we get and understanding of how hard being a supply chain manager can be. You must optimize your processes to be as efficient and affordable as you can manage. Demand-chain management (DCM) is the management of relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. The research shows that in some cases managers are successfully able to take on these different roles, but the trust between buyer and supplier can be affected. The key is to recognize how valuable that flexibility could be in the event of a supply chain disruption and then decide whether it’s worth the cost. “Suppliers seem to think they are acting fake, that the supply manager is putting on different faces,” Wu said. Origins of Supply Chain Management. Let’s look at two different examples of a supply chain. Not only does SCM touch on manufacturing, transportation and trucking, warehouse mana… “Hard” is a relative term. Maybe the premium is too expensive, and you’re better off paying the price if you have a problem. But past performance is not a guarantee of future results. However, as logistics becomes increasingly complex, more companies prefer to hire workers who have at least a bachelor’s degree. Wu said the supply manager playing an ever more important role in coordinating the process, which requires taking on multiple identities. A key supplier files for bankruptcy protection. A supply chain’s vulnerability to disruptions can have serious consequences for all the businesses involved. Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. Wolfe explains that supply chain is all about working together as a team, and when a team member is out or busy, you may find yourself stepping up to complete a task you’ve never done before. But if the grocery store has extra inventory or another source of supply then it can continue selling bananas to its customers in spite of the supply chain disruption, so its supply chain is resilient. However, you don’t want to pay outrageous amounts to do that. In other words, think of the cost of supply chain flexibility as though it were the premium on an insurance policy. If a threat occurs, it can cause a disruption. Supply chain management in not only a process served to generate a cost reduction in the budget or a mission to create greater operational efficiencies within an organization. Business continuity plans are often focused on making a particular facility or company more resilient; supply chain risk management looks more broadly at how all of the companies working together contribute to the resilience of a supply chain. A major customer unexpectedly cancels a huge order for your products. SCM is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. Demand-chain management is similar to supply-chain management but with special regard to the customers.. Demand-chain-management software tools bridge the gap between the customer-relationship management … Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Many supply chain managers have a bachelor’s degree in business, industrial engineering, process engineering, or supply chain management. From these risks and others, you see that the supply chain has many threats — many things that could go wrong. Supply Chain Management (SCM) is an important part of every organization, whether small or large. Supply chain management involves coordinating and integrating these flows both within and among companies. In any event, it’s a … As Wu’s paper points out, this is paradoxical and thus shows that being the middleman in a supply chain relationship is more complicated than ever. “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. For example, understanding new tech, cost accounting skills, e-business system knowledge and more are all valuable skills. Introversion and extroversion occur on a spectrum. Wu, an associate professor in OSU’s College of Business and director of the college’s Sustainable Business Initiative, is an expert on supply chain networks and management. Either type of risk can lead to supply chain disruptions. What is Supply Chain Management Definition. This is no longer the case.”. At the same time they may tell you, we’ve got an issue and now the product is going to be late, or perhaps they say they can rush delivery but it will cost more and the cost they quoted is more than your company wants to pay.”. In the article Mr. Bean explains that Suppliers, manufactures, sales people, and customers have their own understanding of … In this lesson, you'll learn about the benefits and best practices of supply chain management. For example, if the transit time between one of your suppliers and one of your factories has always been 15 days in the past then you would assume that the transit time will be 15 days for future orders, too. Supply chain plans are built on assumptions about what will happen in the future, and these assumptions are usually based on past experience. Managing Your Supply Chain in Difficult Times, The Risk Management Process: Identifying, Classifying, and Scoring Risks in…, American Production and Inventory Control Society Certificates and Certifications, 10 Questions to Ask About Your Supply Chain. Generic Supply Chain. The simple answer to why SCM is important to any business is that it helps them remain competitive. But the probability that a particular disease will start to spread may be 100 percent, if you knew that people were coming into direct contact with it. I'm a supply chain management major at Arizona State (another program ranked in the top 5 nationwide), and have only heard good things about the industry. These hard skills, or solid skills, relate to understanding the technology and processes associated with strong supply chain management. SCM course will require you to complete statistics and quantitative research which involves mathematics and if that seems hard then it is hard. A new study by an Oregon State University supply chain researcher shows this balancing act between keeping costs under control and keeping suppliers happy is even more difficult than previously thought due to tough economic conditions. Supply chain management plays a critical role in running a successful business. In any event, it’s a good idea to have a supply chain plan for difficult times. In his new paper in the Journal of Business Research, Zhaohui Wu hypothesized that since research has shown that companies believe supply managers should have the ability to “wear many hats” and take on multiple roles as needed, that this ability would have a positive relationship with the manager’s interpersonal relationships. Supply chain management (SCM) is involved in every aspect of moving products to customers, from raw materials to super market shelves. As an example to illustrate the complex nature of the role of the supply manager, Wu gave this example: “Let’s say you are the buyer for GM, and you have an established relationship with a trusted overseas supplier of an essential component for your product, and all of a sudden your company wants you to get a better deal, or perhaps they want it earlier,” he said. They attempt to integrate and optimize all the steps required to produce the right quantity of the correct product and deliver it to the customer within particular time parameters. With a career in supply chain management, you can expect every day to be unpredictable—for better or for worse. In the world of a supply manager, navigating the territory between their internal customers, the suppliers and the buyers is tricky. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. 3. If the ship breaks down, for example, it could delay the delivery of bananas and disrupt the store’s supply chain. To be in a business like this, they don't need to be talkative. Supply-chain management was then further defined as the integration of supply chain activities through improved supply-chain relationships to achieve a competitive advantage. We outline a few ways that well-executed SCM can benefit your business or project. And in today's logistics labor market, negotiating a salary is in favor of the applicant. Supply chain plans are built on assumptions about what will happen in the future, and these assumptions are usually based on past experience. In fact, Wu’s in-depth interviews with 11 supply managers and their key contacts in eight diverse U.S. companies showed just the opposite: Suppliers believed that supply managers who excelled at these different roles were viewed in a more negative light by suppliers. 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