Perspective of supply chain management

The video identifies commonality in themes, but lack of consensual definition with respect to the term supply chain management.

Professor Martin Christopher, Emeritus Professor of Marketing and Logistics, Cranfield University stresses the importance of relationships to enable companies to work as a single business, when in reality there are many. Sir Michael Arthur, Chairman Boeing UK, discusses the different phases of product development through which Boeing works with its supply chain to not only build 2.5 aircraft / day now, but also to design the aircraft of the future. Vikram Singha, Supply Chain and Product Innovation Cloud Applications Leader, Oracle UK Applications, talks about the need to harness assets to deliver value in terms of the 4 C’s: Customer Experience, Cost, Compliance and Carbon Footprint.

The Council for Supply Chain Management Professionals (CSCMP) is based in Illinois, USA. It was originally founded as the National Council of Physical Distribution Management (NCPDM) in 1963. The NCPDM was formed by a visionary group of educators, consultants, and managers who envisioned the integration of transportation, warehousing, and inventory as the future of the discipline. In 1985, NCPDM’s name was changed to the Council of Logistics Management (CLM) to reflect the evolution of physical distribution into logistics management. Twenty years later, in 2005, the organization was renamed the Council of Supply Chain Management Professionals (CSCMP). This change acknowledged the evolving needs of the council’s members, whose responsibilities had expanded within their companies and the profession to encompass not only logistics, but also procurement, manufacturing operations, and sales and marketing functions. CSCMP currently serves over 8,500 members representing industry, government, and academia from 67 countries.

The evolution to form the CSCMP led to the organisation defining supply chain management in 2005 in a way that I find very useful:

“Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies”

Given the heritage of the organisation it is not surprising that there is a slight logistics bias to the definition, though it is holistic in its nature. It also highlights the primary purpose of supply chain management as to balance demand and supply both within and across companies. This is absolutely fundamental. Whilst we can think it is great to grab a bargain after Easter if the supermarket shelves are awash with unsold Easter eggs, this is not good for the supermarket or potentially the manufacturer depending on the contractual arrangement. In an ideal world the last Easter egg would be sold on the Saturday before Easter at full price just as the store closes. Demand and supply perfectly matched. In our increasingly complex world where demand is uncertain in terms of when we will buy, where we will buy, and what we will buy it becomes a real challenge to manage the supply chain to meet that demand.

Too much supply is inefficient as it means at best discounting products and a loss of revenue, in the worst case it can lead to waste. Not enough supply and consumers become disillusioned and may switch to another product. Despite its limited recognition, supply chain management is at the heart of commercial success or failure.