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Supply chain management: definition, goals + problems

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Good supply chain management increases the success of companies - and we all benefit from it every day. End consumers experience problems in the value chain. Companies prevent this by controlling the flow of goods and information along the entire value chain. We explain what supply chain management is and what it means. In addition, we answer the most important for employees about skills, jobs and salary in supply chain management ...

➠ Content: This is what awaits you

➠ Content: This is what awaits you

What is Supply Chain Management?

Supply Chain Management (SCM) describes the coordination and optimization of value and supply chains. It includes various departments for procurement, production and distribution to customers. The flow of goods, money or information is coordinated from the extraction of raw materials through refining to sale.

In addition to internal processes, the value chain also includes coordination and cooperation between companies. These can form a common supply chain. SCM goes beyond pure logistics, which only looks at the flow of goods.

2 sides of the SCM

With SCM, the processes of the value chain are not only viewed in one direction. It is of course important how a product gets from its own supplier through production and sales to the shelves of a store or directly to the customer's home. Supply chain management also focuses on returning the information obtained from the respective stations in order to improve the entire process:

  • What feedback do customers give?
  • What problems does the sales department regularly struggle with?
  • What would production want from the suppliers?

All links in the value chain collect information and findings that are used for long-term optimization.

Example of successful supply chain management

The fashion chain "Zara" is a popular example of successful supply chain management. Many fashion brands have them produced in Asia at low prices. Zara produces large parts in its own country or in neighboring countries. The higher costs are more than offset by shorter supply chains and faster response to trends. In addition, there are lower storage costs. With SCM alone, Zara has outstripped many competitors.

Goals in supply chain management

Supply chain management is an important success factor for companies. However, only if the SCM runs smoothly. This requires good coordination and communication between the departments. In addition, there is a high degree of reliability and trust. If a link in the chain does not meet its obligations, this has consequences for everyone.

Successful SCM pursues a number of important goals:

  • reduce costs
  • Accelerate delivery (through same-day delivery)
  • Guarantee flexibility
  • Direct the flow of money
  • Enable innovation
  • Improve efficiency
  • Optimize information flow
  • Improve relationships (with suppliers and customers)

Problems in supply chain management

The goals and advantages mentioned are the ideal situation - but there is a long way to go until then, and many problems have to be overcome.

  • Different goals
    The individual links in the value chain sometimes have contradicting goals. Suppliers want to sell profitably at high prices, the other side want to buy cheap and good quality. SCM has to reconcile these goals.
  • Building trust
    The close cooperation in supply chain management requires trust between the departments and companies involved. Supply chain management can only work if all partners pull together and are convinced that action and decisions are made for the benefit of all.
  • Heterogeneity
    There is great heterogeneity between the various levels and those involved. Competence, skills and experience are not always on the same level. Even so, different areas have to work well together in order to support one another.
  • transparency
    Successful supply chain management requires communication, exchange and transparency. A common problem is information that is not passed on and processes that are not made transparent. Part of the value chain doesn't know what someone else is doing.

Tips and requirements for SCM

Tips and prerequisites for successful SCM can be derived from the above goals and problems.

  • cooperation
    All links in the value chain must work together. This requires extensive knowledge of the common processes. Solutions should always be worked out together in order to guarantee the best result in all areas.
  • communication
    Regular and extensive communication is a basic requirement for success in the supply chain. There should also be an exchange of strengths and weaknesses. In this way, some can be used and others can be balanced.
  • flexibility
    Companies must be able to react to changes in the value chain. This requires the necessary flexibility. SCM should avoid rigid structures in order to remain capable of acting in every situation.
  • speed
    Speed ​​is a crucial criterion along the entire supply chain. How long do individual processes take? How quickly are customer requests implemented? How long do optimizations and adjustments take? However, speed must not come at the expense of quality.
  • responsibility
    If many areas and employees work together, clear responsibility is required. Supply chain management must ensure responsibility. Binding agreements and precise specifications about goals, tasks and control are essential.

Work as a supply chain manager

Supply chain management offers numerous career options and is an interesting field in which to make a career. We have compiled the most important information about working in supply chain management for you below.

training

There is no direct training to become a supply chain manager. Economists and industrial engineers have the best qualifications. Mostly professional experience in merchandise management and logistics is expected. Depending on the area in supply chain management, computer scientists, mathematicians or natural scientists are also in demand.

Universities hardly offer tailor-made courses for SCM. In Germany, the subject is mainly offered by (private) universities of applied sciences, business schools or distance learning universities as master's degree programs.

tasks

The supply chain manager acts as a kind of consultant in the company. His job is to leave the famous silo thinking behind. It brings all flows of goods and information under one roof. Supply chain managers could be described as strategic planners who have to react quickly and flexibly. Your tasks differ depending on the industry, company or position.

Those who want to be successful in supply chain management benefit from the following qualities in particular:

  • Analytical thinking
  • Understanding global relationships
  • Strategically strong
  • Observance for details
  • Organizational talent
  • Understanding of numbers
  • Economic know-how (if necessary, studies)

Jobs

Not only supply chain managers work along the value chain. Consultants advise, administrators manage, analysts filter the enormous amounts of data, IT staff take care of the technical architecture. And: job descriptions and profiles are constantly changing, just like in other industries. Here are some job profiles in SCM:

  • clerk
    You check delivery notes and invoices, create calculations and price comparisons. An experienced use of business software (e.g. SAP) is required, a degree is not. Training in the commercial area is often sufficient.
  • Controller / analyst
    The areas of application of supply chain controllers and supply chain analysts overlap. Both work out relevant figures and relationships from the available data, which serve as the basis for strategic decisions in the company.
  • Process manager
    Negotiating with authorities and actively supporting production - these are not necessarily everyday tasks in supply chain management. Sometimes, however, they are actually part of the requirement profile, for example when the company wants to make its supply chain safer, more efficient and more resource-efficient.
  • IT architects
    The supply chain is based on a well-functioning IT. IT specialists are required for the architecture. Creating system architectures, promoting integrated solutions, controlling software development - these are typical tasks for IT architects.

salary

Specialists and executives in supply chain management are the top earners among the logisticians. The current Stepstone salary report shows which salary can be earned depending on professional experience along the supply chain:

  • Up to 2 years: 47,044 euros
  • 3 to 5 years: 56,281 euros
  • 6 to 10 years: 68,977 euros
  • More than 10 years: 87,658 euros

These are of course average values. How high the individual salary is depends on many factors such as the exact profession, the industry, the company and the location.

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