Areas of Opportunity in Supply Chain Management

Capitalizing on Top Areas of Opportunity in Your SCM

Supply chains are vital for many societal functions, these being our everyday shopping, manufacturing, even healthcare. Since the realization of the importance of supply chains and the development of supply chain management into a whole sector, this area has been a battlefield of challenges and opportunities. As society and its needs change, supply chains need to adapt to these changes as well. This means that there is an excellent opportunity for development and improvement behind every challenge, and why not, capitalization. This article will explain how this can happen.

A way to define the supply chain is to think about all the stakeholders participating in the supply of goods or services. Let's use the need for a new pair of shoes, for example. The process to be followed by someone who wants a new pair of shoes would be to go to a physical or online shop, view the available designs at the requested size, make a decision, purchase the item, and either take it home or wait for it to be delivered. What goes on in the background, though? The shop, either distributor or maker, should have the particular style at the particular size ready or able to procure or manufacture it at a given time. This means that raw materials (fabric, leather, rubber, soles, thread…) should also be available or procurable within known timeframes. Depending on how many people are involved in these steps, the supply chain can be long and tangled or shorter and more straightforward. With the explosion of eCommerce (online purchases), eCommerce supply chain management has evolved to be equally or more critical to managing "physical"-only supply chains. Supply chain management is the management of all these stakeholders' networks, from the people who supply raw materials, to the manufacturer of the shoes, to the person who took the order and the person who will deliver the finished product to the client.

A few decades ago, supply chain (management) was not a frequent term. Nowadays, this term is present everywhere and is a synonym for success. In an era where technology is taking over lengthy, time-consuming, and complex procedures, in an era of abundance of choice, in an era when we want everything cheaper and faster, or we expect a certain level of customer care, supply chain management (or SCM for short) is the means to make this happen and satisfy the needs of both suppliers and customers.

From a grand scheme point of view, the latest updates on SCM are introducing technology and the internet in our lives, and the ongoing effort to protect the environment and make more sustainable and conscious choices on a personal and industrial level. These factors have affected and continue affecting SCM and eCommerce SCM in ways that are constantly changing, with new information, legislation, technological updates, and the response from the environment on our actions. Overall, supply chain management benefits are undeniable, as a good SCM system can lead to better, faster, cheaper, more sustainable product manufacturing and distribution. However, as SCM is inextricably connected to societal needs and behaviors, and these factors are constantly changing, SCM can –and should– be considered an alive process, maybe equivalent to our brain's function for our bodies.

Top Areas of Challenge in Supply Chain Management

One of the most significant recent challenges supply chains had to face was the Covid-19 pandemic. The majority of business sectors were hit, and several SCM stages were hampered, causing delays almost every step of the way from an order to the client receiving their goods. The pandemic affected SCM of specific companies, sub-sectors, or even whole sectors, with too many being affected one way or another by this unprecedented health crisis. The overall "pandemic challenge" is only a placeholder for various other supply chain management challenges revealed under this world catastrophe.

One of these challenges is the efficient and fruitful communication across a single SCM or several SCMs to unite forces. Since the pandemic crippled some particular areas of the world, supply chains using suppliers of these areas or delivering to these areas were disturbed. Efficient communication across supply chains operating in the same sector and facing the same or opposite problems could have introduced collaborations, "exchange" of suppliers, delivery services, or even task force to support SCM's most heavily affected stages and stakeholders.

Another challenge somewhat related to efficient communication is agile response during a crisis (regardless of magnitude). The inability to move around freely suddenly highlighted the importance of online communication, monitoring, and digital technologies in general. Parts of an SCM which were not online suddenly had to be digitized, and this was a challenge, especially for smaller companies that based their supply chain on face-to-face interactions. SCM's ongoing challenge has been the need to comply with sustainability guidelines and try to become greener. Since several sectors faced changes and had to rethink and adapt their supply chain management practices, this challenge was (and is) a great necessarily evil if you want, to make stakeholders rebuild something better.

Finally, another significant SCM challenge is the protection of products, especially when it comes to time-sensitive or condition-sensitive products. An excellent and very current example is the transportation of vaccines from the manufacturer to the end-user point, which is temperature-sensitive and time-sensitive is temperature storage conditions are compromised. To overcome this challenge, providing that the product formulation cannot change, planning and introducing several contingency plan layers is vital.