business plan for supply chain management

Supply Chain Planning: Strategy, Processes and Practices

Supply chain planning helps your business meet customer demand in the most efficient way possible. But to increase profitability and keep demand from outstripping supply, every step in the supply chain planning process—from ordering raw materials to product delivery—has to be reliable.

The process also has to be adaptable, efficient and accurate to address changing market forces. It sounds like a tall order, but there are best practices that can help.

Video: What is Supply Chain Planning (SCP)?

What is Supply Chain Planning?

Supply chain planning helps you match product supply with customer demand using forecasting, pricing strategy and inventory management techniques. Before delving into the details of supply chain planning, here are two key concepts you need to know.

Supply chain planning vs. supply chain execution

Supply chain planners are long-term prognosticators, asked to peer months or even years into the future. But their predictions aren’t based on what they see in crystal balls. Instead, they analyze manufacturing, logistics and inventory data to make their plans.

Supply chain execution, on the other hand, is the day-to-day implementation of that plan—order fulfillment, transporting goods, warehousing. Think of them as two sides of the same coin.

What is supply chain management software?

Supply chain management software supports planning and execution. It forecasts demand and manages inventory so you can keep costs down and deliver products faster. It provides real-time updates about the status of your supply chain, lets you inspect your operations and helps balance supply with demand.

Supply Chain Benefits

Supply chain planning is a way to improve your operations by standardizing procedures, reducing waste and planning for variability.

It also plays a pivotal role in price and delivery—two of the most important aspects of customer satisfaction. A well-run supply chain lowers manufacturing costs, improves the reliability of deliveries and helps you respond to unplanned demand.

Importance of Supply Chain Planning

Supply chain planning affects your top and bottom lines. Stock shortages can result in lost sales or rush shipping charges. Too much inventory ties up cash. And over-forecasting and canceling orders can damage important relationships with suppliers and disrupt your own business.

It’s difficult to argue with the why , but there’s often less agreement on how the process should be structured.

Supply Chain Planning Process

Achieving desired business benefits requires strategic, long-range supply chain planning. However, in a flexible supply chain, managers are empowered to respond tactically to changing conditions and alter those plans on the fly.

Strategic planning:

This phase focuses on the long term and establishes a framework for your supply chain. In this phase, you’ll factor in elements like the location of your business and suppliers. You’ll map transportation routes and determine the size and location of warehouse space for materials and finished products. If you already have a location, this is when you determine how to leverage it.

Tactical planning:

The next phase delves deeper into individual aspects of this framework. For example, you might place standing purchase orders with certain suppliers for just-in-time delivery. You may decide to store safety stock of key materials to avoid shortages. And even the best-laid plans can require tactical adjustment, such as changing sourcing strategy or rebalancing inventory among overseas warehouses if new tariffs raise your costs, for example.

Supply Chain Strategies and Methods

Many planners use a combination of just-in-time delivery and safety stock to cut costs while hedging against shortages. The just-in-time approach delivers materials right before they are needed for manufacturing or other processes. With less inventory, less cash and space are tied up.

But companies risk pauses in production if there are delays in shipping or problems with materials. Alternatively, with the safety stock approach, companies store more inventory to provide an extra buffer against supply chain disruptions; the downside is an increase in inventory costs.

Supply Chain Planning Elements

A product requires supply chain planning at every phase of its life cycle. Steps include:

Demand planning and management: Accurately forecasting demand for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without having to store surpluses. Supply chain planners look at historical customer behavior, projected versus actual sales, market conditions and other factors. Increasingly, they use predictive analytics to better understand the demand for a particular product—how much, where and when it should arrive. Then, supply chain planners estimate the internal demands on each link in their supply chains.

Supply management: Supply management involves sourcing and procuring trusted sources of raw materials, components, software and other goods that go into making your product or service.

Production management: In parallel, capacity planning addresses your own company’s production lines in terms of machinery, staff and efficiency. The key question: How much can we realistically produce during the planning period? Keep in mind that this could be less than your demand forecast.

Inventory management: How a company orders, handles and stores goods can significantly impact costs, operational efficiency and customer satisfaction. Companies aim to manage inventory levels with supply chain partners to keep stock on hand at an optimal level while ensuring reliable customer service.

Inventory management can also provide other financial advantages, such as the ability to capitalize on volume prices from suppliers and accurately include the value of inventory in assets listed in company balance sheets and tax filings. More sophisticated inventory management systems can identify high- and low-performing products and trigger reorders when stock dwindles.

Pricing strategy: Setting an optimal price is part art, part science. Honing an effective strategy is critical, however, to manage the balance between supply and demand . For example, price cuts can stimulate sales during periods of low demand, helping you cover the fixed costs of production lines and your workforce.

Event management: This involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain and developing contingency plans, such as workarounds, buffers and backups.

Integrated business planning (IBP): This is an approach that links your supply chain planning with the rest of your business, from sales and operations through finance. Because IBP gathers information from across the enterprise, it also can help companies perform better predictive analysis to grow the business and manage risk.

Award Winning Cloud Inventory

7 Steps to Supply Chain Planning Success

Here are seven basic principles that leading supply chain planners adopt:

• Synchronize supply chain planning and execution, how often you update your data and planning horizons—or how far into the future your company will project.
• Systematically manage data so that you can use consistent information throughout your supply chain planning and management processes. This includes data about items, customers, manufacturing resources and suppliers.
• Build cooperative relationships with suppliers and primary customers so you can more easily adjust forecasts, orders and increase sales.
• Examine the data used in your demand planning for flaws, such as forecast errors or bias.
• Focus on actual point-of-sale data more than your company’s sales orders.
• Continuously analyze the product lifecycle, looking for ways to improve the links between product development and the supply chain.
• Create a culture of steady improvement to better understand customer behavior.

Supply Chain Planning Trends

Despite the fact that companies increasingly use technology to improve supply chain planning and management, demand forecasting remains a formidable challenge for many organizations.

Companies are turning to predictive analytics to better understand buyer behavior and other factors that influence demand. Predictive analytics is also becoming an important tool for planning the production, distribution and other supply chain functions needed to fulfill that demand.

Supply Chain Defined

A supply chain is a coordinated network that includes all the companies, facilities and business activities involved in sourcing, developing, manufacturing and delivering products. Each business relies on its supply…

More On This

Trending Articles

Learn How NetSuite Can Streamline Your Business

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

Before you go...

Stay on top of your business with the CFO's Guide to AI and Machine Learning.

Before you go. Talk with our team or check out these resources.

Want to set up a chat later? Let us do the lifting.

NetSuite ERP

Explore what NetSuite ERP can do for you.

Business Guide

Complete Guide to Cloud ERP Implementation

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

A Simpler Way to Modernize Your Supply Chain

• David Simchi-Levi
• Kris Timmermans

Conventional wisdom says it takes three to five years and tens of millions of dollars to digitize a corporation’s supply chain. However, a few companies have reaped major benefits—including higher revenue and customer retention—with a faster, cheaper approach. It involves assembling available data; using analytics to understand and predict customers’ and suppliers’ behavior and optimize inventory, production, and procurement; and adding automation to revamp or introduce processes. The transformation requires three main initiatives: replacing consensus forecasts with one unified view of demand, changing one-size-fits-all supply strategies to segmented ones, and creating a plan to continually balance supply and demand and manage deviations or disruptions.

How to spend less and accomplish more

Idea in Brief

The conventional wisdom.

Digitizing a company’s system for managing its supply chain is a megatransformation project that takes three to five years and costs tens of millions of dollars.

The Reality

There is an alternative: Substantial benefits can be reaped from a modernization effort that takes 12 to 24 months and costs a few million dollars.

What It Entails

Assembling readily available data; using advanced analytics to understand and predict customers’ and suppliers’ behavior and to optimize inventory, production, and procurement decision-making; and adding some automation to revamp existing processes and introduce new ones.

Most executives believe that digitizing a major corporation’s supply chain costs tens of millions of dollars. The assumption is that it will be a massive three- to five-year transformation effort—requiring major investments in cloud technology, the installation of RFID tags and readers on every product container and in every facility, the deployment of 3D-printing and robotics technologies, and new instruments on machines on the shop floor to monitor their performance and condition. All that is necessary, the thinking goes, to break down the walls between functional areas and create an integrated supply chain that provides a competitive advantage.

• David Simchi-Levi is a professor of engineering systems at Massachusetts Institute of Technology and the head of the MIT Data Science Lab.
• Kris Timmermans is a senior managing director at Accenture and the head of its supply chain and operations practice. Connect with him on LinkedIn .

Partner Center

Supply Chain Management 101: Principles, Examples, and Templates

By Andy Marker | June 25, 2017 (updated February 22, 2022)

• Share on Facebook
• Share on LinkedIn

Link copied

Globalization has become an undeniable part of commerce over the last few decades, as large companies have grown first to source labor and parts from developing regions, and then to start selling in those same areas as they grew in wealth and buying power. Supply chains have had to keep in step, passing through numerous countries to obtain goods most efficiently and cost effectively, and growing more complex as a result. And on the other end, the supply chain grows more frayed in order to deliver to countless countries for consumption. For the largest companies, managing a supply chain can require dedicated teams in every area the chain touches. It’s safe to say that supply chain management is both an art and a science.   This article will cover what a supply chain is, with examples; discuss how supply chain management works and its principles; and vital concepts in the field. Then we’ll move on to current issues and where the field is going. Finally, you’ll find useful resources, templates, and education programs. Ready? Let’s get started.

What Is a Supply Chain?

A supply chain is a collection of suppliers required to create one specific product for a company. The chain is made up of nodes or “links,” which can include multiple manufacturers for parts, then the completed product, then the warehouse where it is stored, then its distribution centers, and finally, the store where a consumer can purchase it. The concept of the chain is important, because each link is connected in a specific direction and order, and the next link cannot be reached without going through the previous one. Each link adds time and costs, and can involve labor, parts, and transportation. Every product a company carries may have its own supply chain, though they may use certain suppliers for multiple products. You can see why this gets so complicated, especially for international supply chains.

The process described above was that of a typical retail supply chain. However, there are many different types in practice. Here are three examples from well-known masters of supply chains:    Example: Walmart and “Big Box” Retailers The “Big Box” store, which represents one of the major disruptions of the retail model from the last century, thrives on size, ubiquity, and well-planned supply chains to drive out the competition. How else would a company like Walmart make a profit on a t-shirt made overseas that retails for $5.00?   Walmart succeeds by having fewer links in its supply chain, and buying more generic goods directly from manufacturers, rather than from suppliers with brand names and markup. It uses “Vendor Managed Inventory” to mandate that manufacturers are responsible for managing products in warehouses owned by Walmart. The company is also is particularly choosy with suppliers, partnering only with those who can meet the quantity and frequency it demands with low prices, and with locations that limit transportation needs. They manage their supply chain like one firm, with all partners operating on the same communication network.    By buying at large enough quantities to take advantage of economies of scale, moving products directly from manufacturers to warehouses, and then delivering to stores which are large enough to be distribution centers, it reduces links in the supply chain and cost per item, translating to low prices for consumers. 

Example: Amazon and “Ecommerce Platforms” Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s “online big box” concept is a perfect example of unique supply chains. As an e-commerce shop, obviously they cut the retail store out and ship from distribution center to consumer’s homes directly. Where Amazon innovates is both in its supplier-side and its final supply chain link - delivery.    Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As a result, Amazon has more things than any other online store, so when people shop online, they think of Amazon. Then, it produces everyday goods cheaply, and underbids suppliers. Next, their warehouses make serious use of automation to store items going to like destinations together, ready for immediate transport. Finally, its investments in delivery staff and technology make 2-day shipping a basic expectation, and even same-day delivery a possibility. Amazon ditches third-party logistics (3PL) and fulfills orders itself.

Example: Tesla and Specialized, Owned Chains Automotive manufacturing has come a long way since Henry Ford used assembly line manufacturing to speed up the production of a single car model in a single color. Now, in a time when even American carmakers are opening factories abroad, Tesla is making innovative, incredibly popular, and luxurious cars right in California, a location with incredibly costly real estate.   Rather than having a long supply chain of cheap part makers, they have a vertically integrated supply chain, with a full-service auto plant near its corporate headquarters and plans for a supplier park and a massive battery factory, and Tesla owns it all. Even more interesting is the digital supply chain the company promotes - new firmware and algorithm updates are pushed out to existing car owners over the cloud.

What Is Supply Chain Management?

As the name implies, supply chain management (SCM) is handling and optimizing all the many complicated facets of a supply chain, involving goods and services. Even ensuring timely handoff from manufacturer to shipper to supplier to shipper to buyer is a massive task, but to do it cost effectively and build net value is truly a challenge.    Supply chain management is so important because modern commerce exists in a networked global economy. Most businesses are specialized - even department and big box stores are only really equipped to sell to customers, despite their wide variety of products. The value of vertical integration is hard to justify when communication costs and SCM tools are so inexpensive - it almost always makes more sense to outsource for price efficiency.

The concept of supply chain management was in effect long before the term was created in 1982. In the colonial era, international trade by ship was already making for complicated transportation issues and the need for efficiency. During the Industrial Revolution, the ability to quickly produce goods with machine assistance led to the need to manage significant inventory and constant consumption. By the time history arrives at Henry Ford’s famous assembly line for the world’s first car production in 1913, supply chain management had become an art.    As the century wore on, more companies were producing more goods and looking for ways to reduce costs. They vertically integrated into owned supply chains to try reducing costs at each stage. In the 1980s and on, globalization became a realistic dream for many companies, because of computer systems, easier communication, and commerce-friendly trade laws. Around the 1990s, it became a common practice for firms to specialize, and focus on core competencies and outsourcing the rest, abandoning the vertical integration of the previous era. At this point, supply chains became truly complex, in order to coordinate hundreds of otherwise unrelated and geographically-distant manufacturers, suppliers, shippers, warehousers, and retailers.    Now, in the “SCM 2.0” era, the Internet and new methodologies have led to collaborative platforms and democratized processes. This is allowing smaller competitors to use some of the same manufacturers as major players, and reducing inefficiencies for those manufacturers as a  result. Better communication and planning tools are providing a way for small and large companies alike to manage even more complex supply chains.

Variants of SCM

Global SCM: The combination of global manufacturing with supply chain management, which must account for tariffs and local taxes as goods and services travel internationally to ultimately provide greater value at the end of the chain.   SAP SCM: Systems, Applications, and Products (SAP) is a software company that revolutionized logistics and enterprise resource planning. It provides an automated way to manage supply chain networking, supply chain planning, and supply chain execution, along with production planning, business forecasting, and demand planning.   Logistics and SCM: The art of coordinating efforts between every member of the supply chain to get products from their source to the consumer.    Purchasing and SCM: The focus on the monetary aspect of SCM, from costs to value added at each link in the supply chain.

Principles of Good Supply Chain Strategy

‌ Download Supply Chain Management Checklist

The Basics of Supply Chain Management Processes

There are key supply chain processes that you must take into consideration to effectively understand and manage them. These processes are all at play regardless of the type of supply chain you’re using.   Customer relationship management (CRM) comes first, because as the principles of SCM state, you must adapt everything in the supply chain to the customer. If no one is buying, there’s no need to produce anything. At the front of your supply chain, where a store’s staff interacts with its consumers, they must have plans in place for ongoing relationships. They need CRM tools to gather customer information for marketing and market research, all to determine the products and services to offer in the future.   Customer service management is another process that ties in, as it is where you gather negative and positive feedback to determine future needs.   Demand management is closely linked with the previous two, as it takes customer interactions and orders into account to determine the workload all the way up the supply chain. At its core, customers buying more means make more, and customers buying less means make less. Customer forecasting is an important task that analysts must perform well to determine the current demand and what it will be in the future, to prevent waste in the supply chain.   Product development is an important part of the supply chain that is informed by consumer demand. You must work with CRM and customer service data to determine what they want, which influences new products, product line extensions, and also what to stop making. You must integrate suppliers in this process because it affects cost, quality, and delivery time.   Supplier relationship management goes without saying - if you want to produce your products on time and on budget, you need a solid rapport with everyone you’re outsourcing to in the chain. This impacts manufacturing flow management , which ensures everything gets where it needs to go without delay, and at the correct spec.    Order fulfilment involves coordinating with distribution centers and either retail locations or 3PL to get the product direct to consumers. You’ve now made it all the way back to the beginning of the cycle, and need to pay attention to new CRM and customer service data.   Returns management , also known as the “reverse supply chain,” is a vital part of the flow of products that doesn’t fit perfectly into the clean supply chain cycle. It involves picking up online orders from 3PL locations or from consumers’ addresses and accepting returns at retail locations. Once these items are put back into inventory, they must be ready to get to a different customer while the product run is still live. 

What Supply Chain Managers Look for When Managing Supplier Relationships

One of the most complex parts of SCM is handling all the other people in the supply chain. They have their own needs and motivations, and to keep them all happy and working together with partners they are only loosely affiliated with is a challenge - especially when trying to meet deadlines and turn a profit. The following are what managers should focus on most in such relationships:   Org Chart and Leadership Style: How is the supplier’s organization set up? Is it a vertical or horizontal structure? Is the leadership strong and long lasting, or fickle and prone to change? You need to know who you’ll be interfacing with, and who will be the next one in line should some shakeup occur. Business relationships are always between people, and don’t always survive a reorg.    Management Style: How do the leaders at this supplier run their shop? Make sure it works with your crew. A micromanager at a relatively replaceable link in your supply chain will waste inordinate time, just as a hands-off manager at a vital link could result in sloppy delivery or substandard product quality.   Company Culture: Always important for working with suppliers, determine what kinds of people rise to the top, and how everyone acts when nobody's watching. If, for example, middle managers are constantly in fear for their jobs because of ruthless quarterly performance reviews, they may over-promise, make excuses, or otherwise be unstable work partners.    Product Flows: Once you know that you can work with the people, make sure their facilities are in order. Are they equipped for orders of the size and frequency you plan to make? How do they handle emergency, fast-turn around orders? What about other customers - are they only able to use their facilities for your product flows at certain portions of the month due to full inventory? Leave no stone unturned.   Information Flows: Just as vital is the ability to control information about the day-to-day flow of materials, and to communicate and coordinate long-term plans. Is the supplier up on their product details, inventory, and SKU organization? Is their security and encryption up to the standards of your company, and your industry? Big data is useless if the right people don’t see it in time.   Rewards and Risks: Take into account opportunities and threats of working with this supplier. Maybe they’re well-equipped to handle your exact product because they also work with your competitors. Perhaps they are new and establishing themselves, so offer a substantial discount, but may not be able to deliver on time? Do what’s best for the company, and use risk assessment to keep your whole supply chain operable.

Vital Supply Chain Management Concepts to Know

Having a passing familiarity with the following terms will help you see just what kind of skillset and abilities will be required when working in supply chain management:   Border Adjustment Tax: Also known as a destination-based cash flow tax (DBCFT), it is a tax levied on imported goods which is important to know in global supply chains.   Customer Relationship Management: Also known as CRM, this concept refers to providing ongoing service to customers and collecting data about their likes and purchases. There are also CRM tools that help automate and record interactions with customers.   Cumulative Mean: A figure for knowing how much or how little to produce in advance, involving mean orders with all previous data treated as equally useful.   Demand Management: Understanding customer behavior and patterns to control how much is ordered and produced at each link in the supply chain, with the goal of eliminating wasted production.   Financial Flows: Credit terms, payment schedules, accounts payable and receivable, and other factors that you must monitor to determine if a supply chain is profitable or not.   Information Flows: Transmission of orders, delivery status, and other data that influence the supply chain’s responsiveness to demand.   Integrated SCM: This is a method of SCM wherein all of the links are tightly integrated, operating almost as one company rather than a loose association of buyers and sellers.   Inventory Management: Monitoring and controlling orders, storage, and use of owned components to create the products your company sells.   Lean Six Sigma: A data-backed philosophy of continuous improvement that focuses on preventing defects and mistakes rather than discovering them later, which reduces waste and production time via standardization. Read Everything You Need to Know About Lean Six Sigma to learn more about this methodology.    Logistics: The physical movement of products from one link in the supply chain to the next, and the practice of improving their efficiency.   Make vs. Buy: A simple evaluation of whether it is more cost-effective and time-efficient to produce a required product with your company’s existing resources, or to outsource the need.   New Product Development: The creation of new products both in response to and in anticipation of customer demand, using data gleaned from CRM and the whole supply chain. Read Innovation for Everyone: Everything You Need to Know About New Product Development to learn more about this process.   Operational Accounting: Accounting for a company that focuses on planning, directing, and controlling of daily activities by their costs and eliminating waste.   Physical Flows: The actual movement of parts and products throughout the supply chain, which the Logistics team must manage and analyze to keep going without pause.   Project Management: The process and tools involved in ensuring that a codified piece of work (project or product) gets done on time while keeping all contributors aware of their next step.   Reverse Supply Chain: Aftermarket customer service, which may involve accepting returns, refurbishing and discounting, or otherwise finding use for the reacquired inventory.   Risk Management: Identifying, evaluating, and then choosing which risks to address first, with the goal of reducing overall risk in a supply chain.   S&OP: Sales and Operations Planning is a management process that aligns its constituent parts to ensure that the organization is only focused on operations that improve sales. Learn more about S&OP here .   Strategic Sourcing: Formalizing a company’s information gathering in order to use its purchasing power to take advantage of the best values in the marketplace of suppliers.   Theory of Constraints: A methodology that identifies the largest limiting factor in production, then finding a way to remove it to improve the efficiency of the entire production.

Current Issues in SCM

In addition to the major terms, it’s important to keep aware of legal, political, and social events which affect supply chain management when seeking a career in the field. Here are some of the bigger issues of the day:   Dodd-Frank Decision: This was a 2010 law which included a clause on “Conflict Minerals.” It requires companies to audit their supply chains in order to determine whether gold, tungsten, tantalum, and tin came from the Democratic Republic of the Congo, and report on their due diligence. It adds an extra layer of complexity and costs to SCM for those involved in chains with those minerals.   NGO Actions: Activist groups of all kinds work to end common practices within major companies’ supply chains, such as sweatshop labor, or push consumers towards less complicated supply chains by encouraging them to support local businesses and farms.    SEC Regulations: Whereas NGO actions can force a company’s hand for PR reasons or changing the marketplace of ideas, the Securities and Exchange Commission can slap that same company with fines, making company’s quick to comply. Third-party audits of supply chains are an important part of keeping in step with these regulations.    SECH Ratings: This is a rating that involves economic, social, and environmental judgements to gauge a company’s overall sustainability.   Transparency: Though protecting data is important, certain measures of transparency can improve company performance. Among consumer products, many younger, disruptive brands make their supply chain a selling point in marketing by being upfront about how and where they get their components, and where they make their products. The reasoning goes, if a company is hiding something, there must be an unethical component to it.   Sustainability Measures: As major companies and countries around the globe move towards sustainable production, all supply chains become impacted. Whether due to changing regulations or seeking good PR, many companies are working to reduce pollution and other issues in their chain.

The Future of Supply Chain Management

Aside from the issues of the day, it’s also vital to see where the field is going. The future of SCM is bright, but certainly evolving. We asked a group of experts and innovators in supply chain management to discuss what they believe the future of SCM holds: ​

Jake Rheude , Director of Business Development and Marketing for Red Stag Fulfilment

Over the next decade, we will see massive and disruptive forms of innovation both in terms of technology that expedites the speed at which customers receive their products ( drone delivery ) as well as technologies that drastically enhances the online shopping experience for customers, ( virtual reality ).

While these and other technologies no doubt have the opportunity to significantly change the landscape of online shopping and the supply chain, I expect we will see firms diverge on two different strategies. Some will rush to implement these costly new technologies in order to drive down the total time between an order being placed and last mile delivery, while other firms will stand by the current landscape (for most B2C online sellers) of product delivery in approximately two-days, acting cautiously, particularly in regards to the cost of these new technologies versus their impact on the overall value chain for consumers.

Certainly, there are niche industries where significant investments in drone delivery technology will provide a distinct competitive advantage, but I predict that for many B2C online sellers, the impact on the overall value chain of these new technologies will be misaligned with a consumer's perception of value, and therefore make the initial cost of these new technologies unjustified.

Lauren Stafford , Digital Publishing Specialist for Explore WMS

Embracing big data is an essential principle of modern SCM, specifically real-time data which has the potential to improve the efficiency of a supply chain and negate potential risks to strategy. We know that logistics optimization through technological innovations and data integration can make supply chains more efficient and more financially sound.

The future of the multi-modal SCM depends on successful integration with data and systems to achieve synchromodality. To achieve this, there needs to be a connection to all available transport modalities in the form of a real-time data flow. Once any issues with connectivity are addressed, a ranking system is required to consider a variety of variables such as dock schedules and material restrictions. Pricing data is another integral component.

The great advantage of a synchromodal platform is that it’s informed by every available option and makes a selection based on key factors like speed requirements. There is still significant work to be done in terms of how best to access and integrate a supply chain partner’s real-time data but, as these platforms are developed, we’re likely to see faster order processing times for large shipments and systems which can help generate a better ROI. The way we understand it, SCM is changing because now an efficient supply chain can be a competitive asset as opposed to a cost center.

John Boyd , founder of The Boyd Company, Inc

Probably the most dynamic link in the supply chain in recent years has been the "last mile": that movement of goods from a DC to a final destination in the home. E-commerce king Amazon has done much to challenge and ultimately rewrite the rules of last mile delivery. Last mile delivery has also produced a new warehousing subsector: the locker. Studies show that online shoppers not only want their packages now, they also want their packages delivered to places other than their homes. These lockers can be viewed as "micro warehouses" and will come with additional costs. We expect many to be operated by an emerging sector of third-party logistics (3PL) providers specializing in this particular segment of the supply chain.

Lockers are now common in Europe, where densely populated and congested urban centers make them a natural fit. We anticipate that lockers will also become the next boom sector within logistics/distribution site selection in the United States. Amazon already has automated lockers in six states, while the U.S. Postal Service has lockers located within post offices in the Washington, D.C., area.

Upstart third-party logistics providers will be looking for sites where they can locate lockers, such as in transit centers, apartment buildings, convenience stores, or any establishment that provides off-hours access for picking up packages. Also, the growing online meals industry is expected to fuel the need for temperature-controlled lockers for the delivery of perishables.

Careers in Supply Chain Management

With a bright future filled with unique challenges, a career in SCM is a strong choice. It might be surprising to hear about an industry that’s all about outsourcing and automation, but new experts are more vital than ever for global organizations and even local ones to grow. Look at these industry stats:

Career Paths

What kind of positions can you take on in supply chain management?   Supply Chain Business Analyst: Examine your company’s workflow and come up with creative ways to streamline its business processes. Live and breathe efficiency.   Inventory Control Administrator: Ensure that inventory systems’ data is accurate with physical inventory, troubleshoot discrepancies, discover root causes and interact with everyone related to this inventory.    Purchasing Specialist: Work out deals with suppliers and compare bids to minimize cost across the supply chain.   Procurement Manager: Research, evaluate, and purchase large quantities of products for companies to resell or use in operations. Determine what is in your company’s store, ecommerce shops, and more.    Operations Analyst: Evaluate, report on, and improve the management of activities that generate recurring revenue for your organization, i.e. its core competencies.   Material Planning Manager: Plan, monitor, and manage products and the materials required to make them in your organization’s manufacturing operations. You ensure the constant flow of materials so the factory never runs out. 

Logistics Analyst: Evaluate and report on transportation of goods and services up and down your organization’s supply chain, ensuring that everything gets where it needs to go and when it needs to get there.

Top Higher Education Programs

Supply chain management is a game with global stakes, as such major universities and academies around the world offer Bachelor’s and Master’s degrees in the subject. If you want to secure a job in the sector with a Fortune 500, becoming accredited in SCM is vital. Look at some of the top schools on this list for more details on breaking into the industry:

• Cambridge University
• Copenhagen Business School
• Cranfield School of Management
• Eindhoven University of Technology
• London Business School
• Vlerick Business School

Certifications in Supply Chain Management

If a full Master’s program seems like too big a commitment, explore some of the short-term certifications available below. They give you a shot at entry level jobs if you’re inexperienced, and are a nice brush-up on current SCM standards for seasoned professionals.

• Chartered Institute of Supply Chain Management (CISCM) Chartered Supply Chain Management Professionals (CSCMP)
• Institute for Supply Management (ISM) Certified Professional in Supply Management (CPSM)
• Institute of Supply Chain Management (IOSCM)
• International Institute for Procurement and Market Research (IIPMR) Certified Supply Chain Specialist (CSCS) , Certified Procurement Professional (CPP) and Certified Supply Chain Associate (CSCA)
• International Supply Chain Education Alliance (ISCEA) Certified Demand Driven Planner (CDDP) and Certified Supply Chain Manager (CSCM)
• Association (SCMA) Supply Chain Management Professional (SCMP)
• The Association for Operations Management (APICS) Certified Supply Chain Professional (CSCP) and Certified Production and Inventory Management (CPIM)

Supply Chain Management Templates

Outside of the physical work of checking inventory, or the personal work of communicating with different members of the supply chain’s links, much of your work as a supply chain manager is using systems and dashboards to get an understanding of logistics, operations, and flows. What follows are some templates that can help manage and streamline workflow, while understanding and sharing inventory reports and more.

Download Risk Management Matrix Template

Excel  |  Word  |  PDF  |  Smartsheet

Download Stock Inventory Control Template

Excel  |  Smartsheet

‌ Download Supply Chain Dashboard Template

‌ Download Microsoft Excel Template for Choosing MRP Software

‌ Download RFP Vendor Template

A Better Way to Manage Supply Chain & Manufacturing Operations

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

A 6-step Guide to Create an Effective Supply Chain Management Plan

October 5, 2023

Share it on

Supply chain management is the foundation of any thriving business. It serves as the intricate web connecting suppliers, manufacturers, distributors, and customers. In today's hyper-connected global markets, streamlining and optimizing your supply chain is not only an option; but a strategic necessity. A well-crafted supply chain management strategy can be the defining factor between excelling in a competitive marketplace or grappling with customer satisfaction and cost control challenges.

In this comprehensive blog, we will demystify the intricacies of supply chain management and provide you with a step-by-step guide encompassing six essential actions to craft an efficient supply chain management plan.

According to Invesp, the majority, or 79%, of companies excelling in their supply chain management experience revenue growth surpassing the industry average.

Why Businesses Need an Effective Supply Chain Management Plan 

An effective supply chain management plan is indispensable for businesses due to several compelling reasons.

• Operational Efficiency: An effective supply chain management plan streamlines the movement of goods and services, reducing operational bottlenecks and ensuring smooth processes.
• Risk Mitigation: Businesses can proactively address disruptions in the supply chain, minimizing potential setbacks and ensuring continuity in operations.
• Data-Driven Decision-Making: Supply chain analytics empower data-driven decision-making, offering valuable strategic planning and adaptability insights.
• Resilience: It enhances a business's ability to weather unforeseen challenges and market fluctuations, contributing to long-term resilience and sustainability.
• Cost Reduction: This leads to significant cost savings by optimizing inventory levels, transportation, and procurement, contributing to improved profitability.
• Customer Satisfaction: Timely deliveries and product availability, facilitated by a well-managed supply chain, enhance customer satisfaction and foster brand loyalty.
• Competitive Edge: A robust supply chain management plan is crucial for staying competitive in the modern business landscape, where responsiveness and efficiency are key to success.

6 Steps to Create an Effective Supply Chain Management Plan

Here are the key steps to design a supply chain management plan to enhance operational efficiency and meet customer demands effectively.

1. Define Clear Objectives and Goals

Start by establishing well-defined objectives and goals that align with the organization's broader mission, vision, and strategic direction. These objectives should adhere to the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound). 

Goals should not only reflect the company's values but also consider market demands, customer expectations, and competitive positioning. Objectives might encompass improving efficiency, cost reduction, customer satisfaction, inventory optimization, or sustainability. Ensuring alignment with the organization's overall goals is essential for the supply chain plan to effectively contribute to the company's success. 

2. Conduct In-Depth Market Analysis

The next critical step involves conducting a thorough market analysis. This entails a comprehensive study of market trends, demand patterns, and competitor strategies to gain valuable insights. Analyze consumer behaviors, economic fluctuations, technological advancements, and regulatory changes impacting the industry. Comprehend the dynamics of the supply and demand chain and identify potential risks and opportunities.

A comprehensive market analysis informs decisions related to production volumes, inventory management, supplier selection, and distribution channels. It also ensures that the supply chain strategy remains agile and responsive to evolving market dynamics, helping the organization maintain its competitive edge. Regularly reviewing and updating this analysis is crucial for adapting the supply chain management plan as the market evolves.

Is the supply chain different from logistics?

Yes, supply chain and logistics are related but distinct concepts. The supply chain encompasses a broader network, including procurement, production, distribution, and logistics, focused specifically on transporting, storing, and distributing goods. Click here to know how 'A Global Logistics Shipment Solutions Provider Successfully Improved Efficiency Levels with Our Support.'

3. Design an Efficient Supply Chain Network

After market analysis, the third step involves designing an efficient supply chain network. This entails optimizing the sourcing, manufacturing, warehousing, and distribution structure. Evaluate factors like location, capacity, and technology to streamline goods' flow and minimize costs. 

Consider proximity to suppliers and customers, transportation routes, and consolidation hubs. Employ technology and modeling tools to simulate network configurations and scenarios for data-driven decisions. Aim for a network balancing cost-efficiency with responsiveness. Include contingency plans for disruptions and resilience. Collaborate with stakeholders and seek feedback for design fine-tuning, setting the stage for optimized operations and customer satisfaction.

4. Carefully Select Suppliers and Partners

Following network design, the fourth step is meticulous supplier and partner selection. Identify suppliers meeting quality, reliability, cost-effectiveness, and ethical criteria. Evaluate financial stability, capacity, delivery timelines, and track record. Establish clear communication and expectations for mutual benefit. 

Consider strategic partnerships for collaboration and innovation, negotiating contracts with terms, conditions, pricing, and metrics. Prioritize trust, transparency, and shared goals in long-term relationships. Regularly review supplier performance, diversifying sources to mitigate risks, enhancing supply chain resilience and efficiency.

5. Develop Robust Inventory and Demand Management Strategies

The fifth step involves developing strong inventory and demand management strategies. Categorize products based on demand patterns and criticality. Implement just-in-time (JIT) or just-in-case (JIC) approaches for optimized stocking and reduced carrying costs while ensuring availability.

Leverage forecasting models, historical data, and market trends for accurate demand predictions. Collaborate with sales and marketing to align forecasts with activities. Employ technology and demand planning software for enhanced accuracy. Establish efficient order management with automation and digital tools. Use data analytics to identify slow-moving or obsolete inventory, taking timely action. 

Regularly review and update these strategies to match market dynamics and preferences. Effective inventory and demand management optimize stock, cash flow, and customer satisfaction.

6. Implement Performance Metrics and Continuous Improvement Processes

The sixth step involves implementing performance metrics and continuous improvement processes for ongoing enhancements. Set KPIs aligned with objectives: cost efficiency, on-time delivery, inventory turnover, customer satisfaction, and sustainability. Track and analyze these metrics regularly.

Promote a culture of continuous improvement, fostering collaboration, innovation, and best practice sharing. Conduct reviews to identify inefficiencies and use methodologies like Six Sigma or lean principles. Encourage open communication and feedback loops for proactive problem-solving. Embrace emerging technologies for a competitive edge.

By measuring performance, nurturing a culture of improvement, and using data-driven insights, refine and adapt the supply chain to evolving business needs, resulting in a more effective supply chain management plan.

Supply Chain Management future is on the edge of transformative changes, propelled by cutting-edge technologies such as IoT, blockchain AI and data analytics. These groundbreaking innovations hold the potential to usher in a new era of heightened visibility, unparalleled efficiency, and enhanced sustainability within the SCM landscape.

Nonetheless, these advancements also bring forth novel challenges, encompassing cybersecurity vulnerabilities, apprehensions regarding data privacy, and the essential task of upskilling the workforce. Hence, to adeptly navigate this intricate terrain, forging partnerships with industry authorities emerges as an imperative strategy. 

At Invensis , we bring specialized insights and a wealth of experience to optimize supply chain operations, identify and mitigate risks, and harness emerging technologies. Reach out to us to stay ahead of the curve and safeguard your operations against evolving threats and challenges with our supply chain and logistics BPO services .

Mark Anderson is an esteemed supply chain and logistics partner with a wealth of experience spanning more than a decade. His mastery in optimizing supply chain operations across diverse industries has made him a trusted resource for businesses seeking efficiency and cost-effectiveness. Mark excels at translating intricate logistical challenges into pragmatic strategies that drive collaboration among departments. As a prolific writer, Mark delivers clear and concise insights, empowering businesses to navigate the complex world of supply chain management with confidence.

Discover Our Full Range of Services

Explore the industries we serve, top articles, related articles.

Explore the best countries for outsourcing business operations in 2024, highlighting top destinations that offer cost-effective and high-quality services.

June 6, 2024

Read time: 8 mins

AI is now revolutionizing businesses. Explore seven transformative applications and discover how is AI used in businesses for efficiency and innovation.

June 4, 2024

Improving your business helps drive real results and growth. Know how to improve this with key tips here.

Services We Provide

Industries we serve, logistics related services.

Supply Chain Strategic Planning: A 5-Step Process + Template

If you're a supply chain manager, you're probably feeling the pressure of staying ahead of the competition, juggling multiple initiatives, and navigating through constant supply chain disruptions. 

Don't worry, you're not alone! A recent survey of 1,000 supply chain leaders by Gartner found that 42% of them are struggling to find the right balance between profitability and other important factors like sustainability, speed, and innovation.

But don't lose hope just yet! It's time to shake things up and take a new approach to supply chain strategic planning that will drive successful on-the-ground execution. The next decade will be make-or-break for supply chains. 

It's up to you to determine whether your supply chain will be a winner or a loser. So, let's dive in and find out what it takes to achieve supply chain strategic planning excellence and come out on top!

Here’s what we’re going to cover in this article:

The Supply Chain Strategic Planning Process: Unpacking The Right Approach

The 5 steps of highly effective supply chain strategic planning, 5 pitfalls to avoid during your supply chain planning process (and how to avoid them), upgrade your strategic supply chain management with cascade 🚀.

Supply chain strategic planning can be a challenging task, especially when it requires a focus on the overarching strategy rather than just day-to-day execution. 

But the times are changing, and so is the approach to strategic planning. Gone are the days of a yearly, set-it-and-forget-it exercise.

The shift from linear strategic planning to shorter strategy execution cycles. Source: Cascade

Supply chain managers must now be ready for the unexpected and be able to pivot quickly as things change. 

In order to build a resilient and operationally excellent supply chain, companies must focus on strategic alignment between the overarching supply chain strategy and operational planning . In other words, strategic plans need to be connected with execution. This means providing teams with the context and tools they need to act quickly when necessary. 

As a result, your organization can be more prepared for the unexpected and adapt faster to changes, improving its supply chain strategy and operations , and securing a competitive advantage.  

So how do you achieve this? An effective supply chain strategic planning process can act as a missing puzzle piece if approached wisely.

In this section, we will cover the five essential steps to creating a successful supply chain strategy . From setting goals to keeping an eye on how things are going, these steps will make sure that your strategy works and is efficient. So, sit back, grab a cup of coffee, and let’s dive into each step.

Step 1: Lay the groundwork for a winning supply chain strategy

• Align with the Big Picture: Time to get on the same page as the rest of the biz! Start by aligning your supply chain strategy with the overarching business strategy and objectives. For example, if the business goal is to reduce costs, supply chain strategies should focus on optimization and cost-cutting initiatives.
• Identify your supply chain drivers: What's driving your supply chain? Think about factors like technology, regulations, customer demands, and global supply chain events. Understanding the key drivers will help you make informed decisions and steer your supply chain in the right direction. These drivers include:  1. Sourcing : The procurement of raw materials and other inputs is crucial to the success of the supply chain. 2. Inventory : Efficient inventory management is key to meeting customer demand while avoiding excessive stock levels. 3. Logistics and warehousing : Effective warehouse management processes and logistics management can reduce lead times, improve service levels, and increase efficiency. 4. Information and data : By forecasting demand, demand planning helps to align the supply chain with customer needs and minimize the risk of shortages.  For example, do you have enough inventory or safety stock to meet customer needs? Is your production concentrated in one country, or should you consider diversifying or changing your logistics and transport methods? 
• Include your rockstar suppliers and stakeholders : Who's who in your supply chain? Make a list of your MVPs (most valuable players) and prioritize them. Don't forget about customers, logistics providers, regulators, and even your competitors—they all play a role in your supply chain success. Different perspectives will help you understand operational constraints, gaps to fill , and the importance of potential improvements or investments. 
• ‍ Assess the current state of your supply chain: Give your supply chain a check-up! Assess your logistics, supplier reliability, and ability to bounce back from disruptions. Analyze your organizational structure and operating systems. Get input from different perspectives to identify opportunities for improvement and get buy-in from key stakeholders. For example, does your manufacturing plant in the United States outsource some of its work to China? What contingencies have you put in place to ensure consistent quality and supply?
• Conduct a SWOT analysis of your supply chain: The strengths and weaknesses of your supply chain and the resulting opportunities and threats will be critical for planning, forecasts, and strategic risk management .

Step  2: Design your supply chain strategy

With a solid foundation in place, it's time to start designing your supply chain strategy. This is where you'll put the pieces together. 

Make sure to set some strategic priorities to help guide your strategic planning and decision-making process. 

Strategic focus areas are the key pillars to focus on. These may include optimizing production planning, increasing profit margins, or diversifying supply and production.  

Some examples of supply chain strategies include:

• Invest in technology : Use cutting-edge technology and digital tools to improve your supply chain operations and gain a competitive edge.
• Foster collaboration and build strategic relationships : Work closely with your suppliers and stakeholders to develop a supply chain that's built on trust, communication, and collaboration. For example, let’s take a look at IKEA . They have strategically placed distribution centers worldwide and trading offices near suppliers to minimize transportation costs. On top of that, the close proximity of IKEA's trading service offices to its suppliers' facilities allows the company to monitor production, negotiate prices, and check the quality of the goods and materials it purchases. 
• Enhance resilience : Prepare your supply chain for unexpected disruptions by investing in end-to-end visibility, supply chain risk management, and contingency planning.

With this in mind, a strategic plan needs to be clear-cut and concise so your teams won't need a week to go through it. Remember, simple is always better. 

📚 Recommended reading: Strategy study: How IKEA became a household name

Step 3: Develop the strategic plan for your supply chain

Now it's time to get into the nitty-gritty and put together a detailed plan that outlines all the specific steps needed to execute your supply chain strategy. 

This plan should cover focus areas, clear goals, timelines, budgets, resources, owners, and potential risks. And let's not forget about the all-important KPIs (Key Performance Indicators). KPIs are critical to measure the success of your supply chain strategy, so it's important to set them early on.

👉 Here’s how Cascade can help you: 

In Cascade , you can easily build your strategic plan, including all the key elements mentioned above. With our structured approach to strategic planning and user-friendly UI, building your plan and setting KPIs has never been easier. You can also monitor performance and make adjustments as needed.

👉 With Cascade’s Supply Chain Strategy Template , you can get started right away and execute your plan with confidence.

Step 4: Time to execute your plan! 

It's go time, folks! You've laid the foundation, designed your strategy, and developed a solid plan—now it's time to execute and bring it all to life. Here's what you need to do:

• Get the Word Out : Communication is key when it comes to executing your supply chain strategy. Make sure everyone who needs to know is in the loop, from employees to suppliers to customers. Ensure everyone understands their role in the process and the end goal.
• Align with Operations: Your supply chain strategy is only as good as the day-to-day execution that supports it. That's why it's important to create alignment with your operations teams to ensure they have the tools and resources they need to bring the strategy to life. Integrated business planning is a good way to approach this. 
• Support Cross-Collaboration: To promote cross-collaboration and ensure everyone is working towards the same goal, create joined KPIs, and track progress in real-time. And that's where Cascade comes in - our platform offers integrations and live dashboards so everyone has access to the same information and can work together towards a common goal.

Now that you know the steps, it's time to put your plan into action! 

👉 Get started by using Cascade's Supply Chain Strategy Template to build your plan and start executing right away.

Step 5: Monitor and review progress - keep an eye on the prize!

As the old saying goes, "what gets measured gets done." And that's why step 5 is all about keeping your eye on the prize and making sure you're on track to hit your goals. 

Set up regular progress reviews: Regularly monitor and review progress against the plan, and make adjustments as needed. According to Cascade’s Strategy Report , only 18% of team members review progress on a weekly basis. This is crucial for employee engagement, accountability, and fast adaptability.

Rethink Your Tools: Remember the days of manual reporting? Let's ditch that and move into the modern age of automation and data-driven decision-making. 

With the right tools in place, you'll be able to make faster, more informed decisions, and track your progress in real-time. And that's where Cascade can help you—with its powerful reporting capabilities , you'll have all the data you need at your fingertips.

👉If you’re a Cascade user : Use the Report feature to get real-time insights from multiple data sources across various departments in your organization. With it, you'll be able to make and update progress reports quickly, so your team and management board will always have the most up-to-date information. 

Here’s an example of the supply chain management report in Cascade that will help you demonstrate the ROI of your initiatives and progress against set targets.

🔥 Want to see how Cascade helps team leaders save hours on making useful reports for meetings in real life? Learn how Kreg Tools uses Cascade to execute its strategy. Click here to watch the video.

There are several challenges that organizations may face when it comes to effective supply chain management and supply chain strategic planning:

Navigating complexity

⛔ Problem: Supply chains are multi-faceted, with several stages and stakeholders. In a McKinsey survey of senior supply chain managers, more than half of them stated they didn’t understand where their Tier 1 suppliers were located or what their key risks were. Because of this, it can be hard to come up with a strategy that takes into account all the important factors and can adapt to changes. 

💡 Solution: Maintain regular communication with suppliers and other stakeholders to have a clear understanding of the supply chain and all the different elements involved.

Managing uncertainty and disruptions

⛔ Problem: The business environment is continually evolving, making it hard to predict future consumer demand, price fluctuations, and other uncertainties like material shortages that may impact the supply chain. 

💡 Solution: To mitigate the impact of uncertainty, it's important to have a flexible and adaptable supply chain strategy that can quickly respond to changes. Focus on execution over planning, and adapt the plan as you go. With Cascade, you can easily update the supply chain strategic plan and notify your teams with just one click.

Breaking down silos

⛔ Problem: Organizations that work in silos are more likely to be disrupted, waste resources, and change too slowly. Supply chain, manufacturing operations, and sales teams need to share information in real-time to work effectively and create a coordinated response to changes. 

💡 Solution: With Cascade, you can create a single source of truth with shared KPIs. This makes it easy to track progress and ensure alignment across cross-functional teams.

Managing limited resources

⛔ Problem: Organizations often have limited resources, such as time, money, and personnel. This can make planning and executing a supply chain strategy challenging. 

💡 Solution: Support cost optimization by allocating resources in alignment with strategic priorities and avoid initiatives that increase supply chain costs. With Cascade, you can quickly identify underperforming areas and kill misaligned initiatives. It’s like having a personal advisor; you can see where your resources are being spent, analyze what’s working and what’s not, and make adjustments to maximize efficiency.

Improving visibility

⛔Problem: Outdated operating processes and tools can make it hard and time-consuming to track strategy progress and supply chain KPIs. This problem can compound if your teams rely on multiple disconnected tools, including your company’s ERP, spreadsheets, and other planning tools. 

💡 Solution: You should have one place where you can connect all the necessary data, track the progress of your strategy, and assess its impact on business and supply chain KPIs. With features like Dashboards and Reports , Cascade makes monitoring and reporting simple.

It's important to remember that supply chain strategic planning is a continuous process, not a one-time event. Regular monitoring and reviewing progress against the plan can help you make necessary adjustments and fine-tune your strategy for optimal results. 

Whether you're starting from scratch or revamping an existing plan, Cascade offers a comprehensive solution to help you every step of the way. With our structured approach to strategic planning and powerful features like integrations, live dashboards, and reports, you'll be well on your way to a successful and thriving supply chain in no time. 

Don't wait, sign up today for free and start executing your plan with confidence!

Popular articles

Viva Goals Vs. Cascade: Goal Management Vs. Strategy Execution

What Is A Maturity Model? Overview, Examples + Free Assessment

How To Implement The Balanced Scorecard Framework (With Examples)

The Best Management Reporting Software For Strategy Officers (2024 Guide)

Your toolkit for strategy success.

Already on SCMDOJO? Log in

I accept SCMDOJO'S Terms of Use and Privacy Notice .

How to Create a Supply Chain Strategic Plan that Will Work for (Nearly) Any Business

• Continuous Improvement Supply Chain Management Supply Chain Strategy

2017 is about to start with new set of goals and challenges; it can be hard to know where you should first focus your efforts and what your supply chain strategic plan for coming year should be. After all, by now you’ve probably read so much about supply chain strategic plans that you’re left feeling overwhelmed and not sure of what needs to be done.

When you feel like this, it’s important to take a step back and create your plan. In this post, we’re going to take a look at how you can create a supply chain strategic plan for nearly any type of business, regardless of size, nature and industry.

We’ll examine how you can build a rock-solid supply chain strategic plan for the next year, from the ground up, what would be key elements of consideration and how you can adapt your plan, if changes need to be made.

By the end of this post, you should feel less overwhelmed and more confident about how to take your supply chain to the next level.

Understand Supply Chain Goals, Strategy and Tactics

When you’re creating an online marketing plan, it’s important that you understand the difference between goals, strategy and tactics. When you do, you’ll be better able to adapt your approach, when conducting a supply chain strategic plan.

On top of that, you’ll also be able to better judge how you can implement things that you learn from various articles that you may read in the future.

So, what’s the difference between goals, strategy and tactics?

A Goal is the overarching result that you’re looking to achieve.  It’s often what you focus on first, as shown above. So a goal of yours might be to drive 95% On-Time Deliver performance , by doing daily root cause analysis for highest Pareto issues and committing to improvement actions .

Strategy is a set of decisions you want to make in a certain direction and is high-level thinking related to how you might achieve that goal. So, the strategy might be to get people through APICS or CIPS or SCMDOJO Academy training to develop supply chain competencies to give your business a competitive advantage.

Tactics are the specific set of actions that you take in order to achieve the strategy. So, tactics might include to start an inventory ABC analysis for inventory optimization or strategic pricing in 2017.

One of the best way to aligned and communicate Strategy, Goals and Tactics is deploying S&OP process so the same message is delivered at all levels of organization.

A lot of the supply chain content that you’ve probably read by now focuses on tactics, rather than goals and strategy or linkage of 3.

For example, a blog post, telling you how you’re going to get more throughputs out of your warehouse, doesn’t always include strategy, in terms of how it is linked to your overall business strategy and goals.

As a result, after reading such an article, you probably tried to apply the tactics mentioned in the blog to either Slot Most Ordered Products in Picking Areas or Narrow the Aisles or Take Advantage of Overhead Space but you didn’t see how increasing throughput would contribute to the larger picture of supply chain strategic plan.

When creating supply chain strategic plans, based on content that you have read, it’s important that you know how to link supply chain tactics with supply chain strategy and goals.

Okay, so now that we’ve cleared that up it is very important to under understand your customer needs and expectation known as Voice of Customer. As with all supply chain efforts, it is absolutely essential that you know who your end customer is.

Let’s take a look at how you can outline your goals, tactics and strategy. I can explain this by showing you how I do it. To start with I always keep 4 Pillars of Supply Chain Strategy in mind. And then I think about What Results & Goals I have to achieve next year, what my Key initiatives are and what are my key Strategic Projects which have a longer term (more than 12 months) impacts.

Studying competitors is important while thinking about Goals, Strategy and Tactics, because doing so lets you know what tactics are already working in your niche or markets and you might adopt/learn a thing or two.

Supplier Relationship Management

E-Auction Basics

Procurement Toolbox # 1: Category Management

Supply chain strategic planning process.

Now it is time to explain the 3 Step process to define Supply Chain Goals/Results, Key Tactics/Initiatives and Strategy

Step 1: Define your key Supply Chain Goals & Results:

Looking at your business model and competitors, list down key goals and results you want to achieve. A typical example of goals could look like:

• Maintain On Time Delivery Performance >95%
• Manage Working Capital – £3.8M <68 DOH (Days on Hand) as Inventory Target
• Improve Supplier On Time Delivery > 85%
• Improve ERP Planning Parameters to achieve On Time Delivery Performance 95% level.
• Reducing Lead Time of 70% of product we sell by 25%.
• Reducing total logistic cost as percentage of sale by 6% from previous year.

Step 2: Define Key Tactics & Initiatives to Achieve Goals

Tactics in general could be a set of short terms initiatives you are taking to achieve your short term goals, which also contribute towards your long terms strategy. A typical example of initiative could look like:

• Develop Individual Personal Development Plans for each Supply Chain team member.
• Develop advance project management skills.
• SCMDOJO Academy certifications to support in Supply Chain team knowledge development
• Conduct ABC analysis with all strategic suppliers (Min/Max stocks, Lead-time reduction).
• Implement Direct Line Feed (DLF) with high running manufacturing cells.
• Deliver Cost Out projects committed in freight & warehousing spend.
• Deploy best practices in your supply chain .

Step 3: Outline Supply Chain Strategy

As Max McKeown (2011) defines, “strategy is about shaping the future and is the human attempt to get to desirable ends with available means”.

Most of us have read or heard of this strategy definition at some point in some variation. But what strikes me most in this definition is the “desirable ends with available means”. Whilst it is always great to be ambitious but what needs to be considered in achieving the strategy with available means.

The following is a typical example of what supply chain strategic themes may look like:

• 100% deployment of Material Handling Training and Safety Culture training (safety first!)
• Drive Consignment inventory or Vendor Manage Inventory programme with key strategic suppliers.
• Develop & Implement Supplier Development Strategy – Improve supplier performance through scorecards, reviews, and action plans.
• Localize in Eastern Europe to reduce total lead time and possibly reduce total supply chain cost.
• Introduce supplier self-assessment programme.
• Create Robust SIOP (S&OP) Process – with more focus on capacity planning & supply management.
• Explore sourcing options in North Africa.

Supply Chain Strategic Plan – how you can combine everything

Combining everything – decide on how your Supply Chain Strategic Plan is going to be effective?

Once you’re clear on your goals, who your customer are, the results you’re aim to achieve and how you will get them, you then need to decide how you’re going to make it happen. Sound obvious right! But is it that simple?!

To start with you can put the all three elements in one slide like below image and sit down as a team and agree on the short term and long term actions with owners, due dates and projected results. Pulsing these actions effectively and systematically takes lot of effort and focus – this in itself is a huge area to be covered in a different blog!

Note: When you’re working on this stage of your supply chain strategic plan, it also helps to decide on a figure that you’re willing to spend, in order to achieve your goal. Having that figure in mind will help make it easier to select the tactics that you can take advantage of.

Also above image is just an example, you need to create one suitable for your business and market.

See my talk at IPSM Conference 2019, Ukriane on  ‘How to create a supply chain strategic plan’, which you will find it useful.

The foundation of nearly every successful supply chain effort comes down to a well-conceived plan.

It’s important to know the difference between tactics and strategy when you’re formulating your supply chain strategic plan – otherwise, you might just end up going round in circles.

It also helps to see what’s already working well in your industry, so that you can learn from those who have come before you.

Are there any tips you can share when it comes to creating a supply chain strategic plan? Please let me know in the comments below!

About the Author-  Dr Muddassir Ahmed

Dr MuddassirAhmed  is the Founder & CEO of SCMDOJO. He is a  global speaker ,  vlogger  and  supply chain industry expert  with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles.   Dr. Muddassir  has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.

You can follow him on  LinkedIn ,  Facebook ,  Twitter  or  Instagram

• APICS Research & Improvement

OmniFlow Software

Manage fulfillment from any location within a single platform

Fulfillment

Flowspace makes logistics and supply chain easy.

Specialty solutions for categories and verticals

What can Flowspace help you with?

• Supply Chain

Supply Chain Planning for New Businesses: 5 Steps to Get Started

Table of Contents

Starting a new business can be overwhelming, especially when you delve into the complexities of running a successful supply chain. Fortunately, this guide to supply chain planning has everything you need to create a winning supply chain plan for your new business. 

What is Supply Chain Planning

Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services, and information from supplier to customer, while balancing supply and demand. 

Often included with the mention of supply chain planning is supply chain management (SCM) , which encompasses the broad range of activities required to control and execute a supply chain plan in the most economical, and efficient way possible. You will need both SCM and SCP to meet customer demand in the most efficient way possible. 

Supply Chain Planning Strategies and Methods for New Businesses

Supply chain planning for new businesses is an immense subject, with dozens of complexities and applications. Though it seems confusing, you can tackle this complex field by breaking it down into a series of simple steps. 

Define Your Supply Chain Goals and Key Results

Start by considering your business model, as well as that of your competitors. List your key goals and results you wish to achieve. A typical example might look like:

• Maintain On Time Delivery Performance greater than or equal to 95%.
• Reduce Lead Time of 70% of products you sell by 25%.
• Improve Supplier On Time Delivery to greater than or equal to 85%.
• Improve ERP Planning Parameters to achieve On Time Delivery Performance 95% level.
• Manage Working Capital – $3.8M < 68 DOH (Days on Hand) as Inventory Target.
• Reduce total logistic cost as percentage of sale by 6% from previous year.

Define Key Tactics and Initiatives To Achieve Supply Chain Goals

The next phase explores the individual aspects of your framework, i.e., your supply chain tactics. Think of your supply chain tactics as a set of short term initiatives you utilize to achieve your short term goals, and enable your long term strategy. A typical example of initiative could look like:

• Conduct ABC analysis with all strategic suppliers (Min/Max stocks, Lead-time reduction).
• Implement Direct Line Feed (DLF) with high running manufacturing cells.
• Deliver Cost Out projects committed in freight & warehousing spend.
• Support Part Transitions via ramp up/ramp down to support cost out.
• Develop Individual Personal Development Plans for each Supply Chain team member.
• Develop advanced project management skills.
• 2 x CPIM & 1 x MCIPS certifications to support the Supply Chain team in 2021.

Outline Your Supply Chain Strategy

Every item you sell requires supply chain planning at every phase of its life cycle. This phase is where you outline the supply chain strategy for each item. Supply chain strategy outlines typically include:

• Demand planning and management – Supply chain forecasting for a product improves your chances of producing and stocking adequate inventory to meet customer needs on a timely basis, without the need to store surpluses.
• Supply management – Supply management involves sourcing and procuring trusted sources of raw materials, components, software, and other goods that go into making your product or service.
• Production management – Production management, a.k.a. capacity planning is when you address production issues in terms of machinery, staff, and efficiency. The key question in this phase is “How much can we realistically produce during the planning period?” .
• Inventory management – Inventory management is how to manage inventory levels with supply chain partners, and keep stock on hand at an optimal level while ensuring reliable customer service.
• Pricing strategy – Pricing strategy is how you set an optimal price for your goods and manage the balance between supply and demand. One example of pricing strategy is a price cut designed to stimulate sales during periods of low demand.
• Crisis management – Event management in regards to your supply chain involves identifying all possible supply chain bottlenecks, breakdowns and delays at every link in the chain, and developing contingency plans to stay in business should you lose a supplier. 
• Integrated business planning (IBP) – Integrated business planning is how you link supply chain planning with the rest of their business, like sales, operations, and finance. Because IBP gathers information from across the enterprise, it also helps companies perform better predictive analysis.

Combine Goals, Tactics and Strategy into Your Supply Chain Plan

This phase of supply chain planning is where you combine everything, and decide on how your supply chain plan is going to be effective. Here’s where the process gets tricky, as you will have to corral your managers to agree on short term and long term actions, due dates and expected results. 

When working on this stage of your supply chain plan, it’s a good idea to decide on a figure that you’re willing to spend to achieve your goal. Keeping that figure in mind will make it easier to select the tactics that provide the most advantage.

Find a Fulfillment Partner

The last and final step in the supply chain planning process for new business is to invest in supply chain fulfillment . Flowspace is the fulfillment partner that handles everything after a consumer clicks buy. With a flexible, distributed network of fulfillment centers, the Flowspace platform makes it easy for businesses to enable fast, affordable fulfillment, from anywhere to anyone.

Contact us today to get started!

Request Information

Written By:

Allison Champion

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.

More Articles

What Is Lean Manufacturing? 5 Principles Explained

How To Effectively Manage Overflow Storage: Four Tips

How To Overcome Supply Chain Disruptions

Inbound Logistics: Flowspace ranked among 2021 Top 100 Logistics IT Providers

What is Supply Chain Analytics and How Does It Affect Your Logistics

Supply chain management is the handling of the entire production flow of goods or services—starting from the raw components to delivering the final product to consumers. A company creates a network of suppliers that move the product from raw materials suppliers to organizations that deal directly with users.

Effective supply chain management systems minimize cost, waste and time in the production cycle. The industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers. Retailers can then restock shelves almost as quickly as they sell products. One way to further improve on this process is to analyze the data from supply chain partners to see where to improve further.

By analyzing partner data, CIO identifies three scenarios where effective supply chain management increases value to the supply chain cycle: 1

Identifying potential problems

When a customer orders more products than the manufacturer can deliver, the buyer can complain of poor service. Through data analysis, manufacturers might be able to anticipate the shortage before the buyer is disappointed.

Optimizing price dynamically

Seasonal products have a limited shelf life. At the end of the season, retailers typically scrap these products or sell them at deep discounts. Airlines, hotels and others with perishable “products” typically adjust prices dynamically to meet demand. By using analytic software, similar forecasting techniques can improve margins, even for hard goods.

Improving the allocation of “available to promise” inventory

Analytical software tools help to dynamically allocate resources and schedule work based on the sales forecast, actual orders and promised delivery of raw materials. Manufacturers can confirm a product delivery date when buyers place orders—significantly reducing incorrectly-filled orders.

This guide summarizes what sustainability-forward organizations look for in their ESG software platform to help achieve their goals.

Register for the guide to the EU's CSRD

Most experts and practitioners refer to five critical components of supply chain management:

Plan and manage all resources required to meet customer demand for a company’s product or service. When the supply chain is established, determine metrics to measure whether the supply chain is efficient, effective, delivers value to customers and meets company goals.

Choose suppliers to provide the goods and services needed to create the product. Then, establish processes to monitor and manage supplier relationships. Key processes include: ordering, receiving, managing inventory and authorizing supplier payments.

Organize the activities required to accept raw materials, manufacture the product, test for quality, package for shipping and schedule for delivery.

Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and receive payments.

Create a network or process to take back defective, excess or unwanted products.

The supply chain is the most obvious “face” of the business for customers and consumers. The better and more effective a company’s supply chain management is, the better it protects its business reputation and long-term sustainability.

IDC defines supply chain management by identifying the five Cs of the effective supply chain management of the future: 2

• Connected: Accessing unstructured data from social media, structured data from the Internet of Things (IoT) and more traditional data sets available through traditional enterprise resource planning (ERP) and business-to-business (B2B) integration tools.
• Collaborative: Improving collaboration with suppliers increasingly means the use of cloud-based commerce networks to enable multi-enterprise collaboration and engagement.
• Cyber-aware:  Hardening systems and protecting them from cyber-intrusions and hacks is a crucial enterprise-wide concern for the supply chain.
• Cognitively enabled:  Collating, coordinating, and conducting decisions and actions across the chain, the AI platform serves as the modern supply chain's control tower, enabling most of the supply chain to be automated and self-learning.
• Comprehensive: Scaling analytics capabilities with data in real time to ensure that insights are comprehensive and fast is critical, as latency is unacceptable in the future supply chain.

Many supply chains have begun this process, with participation in cloud-based commerce networks at an all-time high and with major efforts underway to bolster analytics capabilities.

While yesterday’s supply chains focused on the availability, movement and cost of physical assets, today’s supply chains are about the management of data, services and products bundled into solutions. Modern supply chain management systems are about much more than just where and when. Supply chain management affects product and service quality, delivery, costs, customer experience and ultimately, profitability.

As recently as 2017, a typical supply chain accessed 50 times more data than just five years earlier. However, experts analyze less than a quarter of this data. That means the value of critical, time-sensitive data—such as information about weather, sudden labor shortages, political unrest and microbursts in demand—can be lost.

Modern supply chains take advantage of massive amounts of data that the chain process generates and that analytical experts and data scientists curate. Future supply chain leaders and the ERP systems they manage will likely focus on optimizing the usefulness of this data—analyzing it in real time with minimal latency.

With IBM Services®, you can evolve your supply chain processes into intelligent workflows to reach new levels of responsiveness and innovation. Challenge siloed processes to uncover efficiencies and enable your teams to execute and deliver. Use emerging technologies like AI and blockchain to unlock opportunities in every step of the value chain—from demand planning to order orchestration and fulfillment.

A supply chain control tower is traditionally defined as a connected, personalized dashboard of data, key business metrics and events across the supply chain.

Order management is the tracking of orders from inception to fulfillment, and the management of the people, processes and data connected to the order as it moves through its lifecycle.

Inventory management, a critical element of the supply chain, is tracking inventory from manufacturers to warehouses and from these facilities to the point of sale.

EDI is the intercompany communication of business documents in a standard format. It is a standard electronic format that replaces paper-based documents such as purchase orders or invoices.

Supply chain analytics helps to make sense of the massive amounts of data a supply chain generates by uncovering patterns and generating insights.

Supply chain optimization makes use of technology and resources like blockchain, AI and IoT to maximize efficiency and performance in a supply network.

Blockchain for supply chain solutions help supply chain leaders use data to handle the disruptions of today and build resiliency for the future.

B2B integration is the automation of business processes and communication between two or more organizations.

MFT is a technology platform that allows organizations to reliably exchange electronic data securely and in compliance with applicable regulations.

IBM Sterling® Order Management software enables you to orchestrate your entire fulfillment network with powerful core capabilities and next-level options.

The IBM Sterling® Transparent Supply application provides a blockchain platform that enables companies to join or build their own data-sharing network with trusted supply chain partners.

IBM Food Trust® is a collaborative network of growers, processors, wholesalers, distributors, manufacturers, retailers and others, enhancing visibility and accountability across the food supply chain.

Retail technology solutions from IBM® help optimize your retail supply chain with the ability to respond to trends at any scale.

Find articles on everything from supply chain sustainability to relevant technology trends and government regulations.

Make your supply chain smarter, resilient and more sustainable with state-of-the-art solutions from IBM.

Explore five essential supply chain management strategies that can help chief supply chain officers distinguish themselves from the competition.

Learn how Farmer Connect and IBM Food Trust are connecting coffee growers and consumers with blockchain.

IBM Sterling Supply Chain Intelligence Suite is an AI-based optimization and automation solution. Designed for organizations struggling to solve supply chain disruptions through traditional transformation, the suite facilitates supply network resiliency and sustainability, increases agility and accelerates time-to-value through actionable insights, smarter workflows and intelligent automation.

1 " What is supply chain management? Mastering logistics end to end " (link resides outside ibm.com), Bart Perkins, Sarah K. White, Thomas Wailgum, CIO, 28 October 2021

2 " The Path to a Thinking Supply Chain " , Simon Ellis, John Santagate, IDC Technology Spotlight, August 2018

0800/5 34 34 24

United States

+1-800-872-1727

Or see our complete list of local country numbers

Chat Unavailable

Allow Functional Cookies to enable chat

Send us your comments, questions, or feedback.

• All Products
• Supply Chain Management
• SAP Integrated Business Planning

What is supply chain planning?

• Demand-Driven Material Requirements Planning
• Demand Forecasting
• Inventory Optimization
• Response and Supply Planning
• Sales and Operations Planning

Supply chain planning: What it is and how it's used

Supply chain planning optimizes the manufacturing and delivery of goods – from raw materials to finished products, and from suppliers all the way to customers. Essentially, it’s a demand-driven balancing act between shortage and surplus.

Reduce risk when changing supply chains and drive sustainable growth, June 4–5.

Register for the virtual event

Supply chain planning overview

In the past few years, a big chunk of our small talk has shifted from “looks like rain” to “how about these supply chain problems?” Of course, the pandemic was the cause of much of that disruption…but not the only cause. With the rise of AI, the ubiquity of online and omnichannel shopping, and the generally supersonic pace of social and technological change – it’s no wonder that supply chain planning is today, one of the most deeply affected and vulnerable operational areas.

To compete, modern supply chain planners must be responsive, accurate, and agile if they want to keep up with fast-shifting customer demands, heightened competition, and unpredictable global events.

People tend to focus mostly on inventory and logistics when they think of supply chain planning. But of course, it’s so much more than that. For physical products and manufacturing, it starts way back with managing the suppliers who grow and mine raw materials, and goes right up to the moment an item is delivered to a shelf or a front door – and even beyond, to returns, recycling, and reverse logistics. Supply chain planning is also informed by consumers at every level: their shopping habits, their reviews and feedback, and their ever-changing shopping behaviours.

Components of the supply chain planning process

The best integrated solutions can help you optimize, coordinate, and centralize the core aspects of supply chain planning. Following are key functionalities that can be used as stand-alone solutions, but are more powerful when combined:

Demand forecasting

It goes without saying that improving demand forecasting and demand management are key to better integrated business planning. Companies rely upon accurate demand predictions to manage their entire range of supply chain operations, from raw materials sourcing to last mile delivery and fulfillment.

As a vital part of effective supply chain planning, demand forecasting helps businesses avoid costly surplus and anticipate customer needs to maximize profits.

Inventory management

Inventory management allows you to meet service level targets without carrying or paying for more inventory than you actually need. To simplify a complex distribution network and respond to demand variability, organizations must first learn how to master these inventory challenges. Integrated, cloud-based planning solutions give you a single, unified view of inventory, using complementary data sets and advanced analytics to help give more precise predictive recommendations.

Response and supply planning

The best practices of response and supply planning help organizations meet their operational challenges through intelligence supplied by AI and machine learning. This creates a business supply chain that is more resilient , efficient, and adaptable.

Sales and operations planning (S&OP)

Sales and operations planning offers you the opportunity to make better decisions that are informed by key supply chain drivers, such as sales, production, inventory, and marketing. Improving your S&OP process involves using better data, rigorously defining your performance metrics, and aligning goals and objectives company-wide to ensure that clear roles and expectations are developed, defined, and carried through.

Demand-driven replenishment (DDMRP)

Materials procurement has traditionally been driven by analysis of past demand data – an approach that has obvious limitations in times of demand fluctuation and uncertainty. Today’s solutions, however, include predictive models. Demand-driven material requirements planning (DDMRP) – an extension of traditional MRP – helps organizations become more agile and adaptable without compromising the quality of their product.

Supply chain monitoring

At the center of your supply chain lies a data dashboard known as the supply chain control tower that offers real-time end-to-end visibility of every component of your supply chain. With AI , machine learning , and collaborative information sharing, today’s supply chain monitoring provides insights that can improve every stage of your supply chain and manufacturing process.

From supply chain planning to integrated business planning (IBP)

Traditional supply chain technologies and manual processes are simply no match for modern demands for speed, visibility, and agility. Business planning solutions had to evolve to meet these needs by incorporating powerful AI-driven optimization algorithms, advanced analytics, and real-time forecasting capabilities -- allowing businesses to adjust their plans dynamically and optimize their supply chain performance on demand. And just as importantly, planning solutions needed to become truly integrated, to take full advantage of each aspect of supply chain planning technology.

Cloud-based solutions offer scalability and flexibility, allowing organizations to accommodate business growth and seamlessly integrate with third-party systems. This delivers a holistic view of the supply chain, facilitating collaboration among different teams and stakeholders, and breaking down silos that hindered efficient planning processes in the past.

By streamlining supply chain planning processes, integrated planning solutions help businesses improve operational efficiency and navigate the complexities of today's supply chain landscape.

Successful supply chain planning examples

One of the best ways to see how incorporating new technology solutions can lead to better supply chain planning is by looking at companies that have already done it. Here are case studies of global businesses that have successfully integrated new technologies and approaches to optimize their supply chain strategies and planning.

1. Deutsches Rotes Kreuz (DRK) / German Red Cross (of Saxony)

With only two weeks between the signing of the contract and the go-live, the Deutsches Rotes Kreuz Landesverband Sachsen e.V (German Red Cross State Association of Saxony) was given the monumental task of planning, launching, and running a state-wide COVID-19 vaccination program. This included complex and sensitive supply chain and logistical issues related to the procurement, transport, and storage of these essential vaccines. This local DRK association reacted quickly to various sets of changing circumstances, including supply chain shortages and delivery delays, all while maintaining strict safety and data protection standards. To manage these challenges and get vaccines into Saxony’s four million arms on time, the DRK used SAP Vaccine Collaboration Hub, which is based around the key components of integrated business planning solutions. When run on cloud ERP and analytics solutions, it offered the coordination and planning team end-to-end visibility of the vaccine supply chain, allowing them to make more accurate plans based on resource availability. From there, it integrated SAP Vaccine Collaboration Hub with existing third-party vaccine appointment management software to help citizens plan their visits based on real-time resource availability. The solution even allowed the association to prioritize first and second shots based on need, to ensure the most vulnerable were protected.

Through better forecasting models, businesses can achieve more responsive integrated business planning and, in turn, improve resilience and agility.

When a customer needs a new mattress, they don’t want it in weeks – they need it in days. Zinus, Inc. is a South Korean mattress manufacturer dedicated to offering customers in-home comforts faster than any competitors. The only way that it can make this happen is with a more resilient and transparent supply chain. To help accelerate growth and keep the company agile while offering consumers the reliable customer service they expect, Zinus sought to improve visibility across its supply chain. This visibility would allow it to make improvements to the supply chain overall, leading to increased agility in response to customer demands and market trends. The easiest way for Zinus to adopt these central tenets of integrated business planning was to take advantage of customized supply chain software applications. Their automation and integration capabilities allowed Zinus to reduce manual work and automate many aspects of demand forecasting, inventory planning, and even sales and operations. The solutions were natively integrated with a powerful ERP, allowing them to be quickly factored into company-wide decision-making. After adjusting to the new applications, Zinus was able to harmonize their planning and execution, thanks to improved forecast accuracy and optimized planning results from responsive forecast algorithms. These powerful supply chain analytics empowered their team, allowing them to make more informed, proactive, and transparent decisions.

3. Orkla Food Ingredients

If you’ve ever been to Europe and have enjoyed the taste of a fresh bakery bun or decadent ice cream, chances are you have experienced some of the products supplied by Orkla Eesti AS . This Estonian confectionery company was established in 1806 and since then has developed a massive line of products manufactured out of its two Estonian factories. To continue providing customers with high-quality products where and when they need them, Orkla sought to automate and standardize a wide range of its supply chain processes. To do this, it required flexible and responsive modern software solutions that could offer real-time supply chain insights. The goal of this new scalable solution was to provide company leadership with integrated business planning components that were easy to access and could be simultaneously rolled out across multiple countries. Using integrated business planning tools, project leaders leveraged a standard solution for demand planning that offered comprehensive business process knowledge and expertise. The result was a 100% improvement in supply chain transparency, with a 7% increase in company-wide planning accuracy. Having reliable, transparent data has significantly reduced redundant work, made the decision-making process more consistent, and allowed for optimized costs, enabling the company to pass these savings on to its customers.

Explore SAP Integrated Business Planning

Boost your supply chain resiliency, sustainability through integrated planning.

Perspectives on supply chain planning

Explore this collection of key insights on how supply chain planning can help improve operations and navigate complexities.

• Search Search Please fill out this field.
• What Is Supply Chain Management?
• How SCM Works

5 Phases of Supply Chain Management

Types of supply chain models, example of scm, the bottom line.

• Supply Chain

Supply Chain Management (SCM): How It Works & Why It's Important

What Is Supply Chain Management (SCM)?

Supply chain management (SCM) is the process of managing the flow of goods and services to and from a business, including every step involved in turning raw materials and components into final products and getting them to the ultimate customer. Effective SCM can help streamline a company's activities to eliminate waste, maximize customer value, and gain a competitive advantage in the marketplace.

Key Takeaways

• Supply chain management (SCM) is the centralized management of the flow of goods and services to and from a company and includes all of the processes involved in transforming raw materials and components into final products.
• By managing the supply chain, companies can cut excess costs and deliver products to the consumer faster and more efficiently.
• Good supply chain management can help prevent expensive product recalls and lawsuits as well as bad publicity. 
• The five most critical phases of SCM are planning, sourcing, production, distribution, and returns.
• A supply chain manager is tasked with controlling and reducing costs and avoiding supply shortages.

Investopedia / Alex Dos Diaz

How Supply Chain Management Works

Supply chain management represents an ongoing effort by companies to make their supply chains as efficient and economical as possible.

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of a product . By managing the supply chain, companies can cut excess costs and needless steps and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories , internal production, distribution , sales, and the inventories of company vendors.

SCM is based on the idea that nearly every product that comes to market does so as the result of efforts by multiple organizations that make up a supply chain. Although supply chains have existed for ages, most companies have only recently paid attention to them as a value-add to their operations.

A supply chain manager's job is not only about traditional logistics and purchasing but finding ways to increase efficiency and keep costs down while also avoiding shortages and preparing for unexpected contingencies. Typically, the SCM process consists of these five phases:

To get the best results from SCM, the process usually begins with planning to match supply with customer and manufacturing demands. Companies must try to predict what their future needs will be and act accordingly. This will take into account the raw materials or components needed during each stage of manufacturing, equipment capacity and limitations, and staffing needs. Large businesses often rely on enterprise resource planning (ERP) software to help coordinate the process.

Effective SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails working with vendors to supply the materials needed throughout the manufacturing process. Different industries will have different sourcing requirements, but in general, SCM sourcing involves ensuring that:

• The raw materials or components meet the manufacturing specifications needed for the production of the goods.
• The prices paid the vendor are in line with market expectations.
• The vendor has the flexibility to deliver emergency materials due to unforeseen events.
• The vendor has a proven record of delivering goods on time and of good quality.

Supply chain management is especially critical when manufacturers are working with perishable goods. When sourcing goods, companies should be mindful of lead times and how well equipped a supplier is to meet their needs.

Manufacturing

This is the heart of the supply chain management process, where the company uses its machinery and labor to transform the raw materials or components it has received from its suppliers into something new. This final product is the ultimate goal of the manufacturing process, though it is not the final stage of supply chain management.

The manufacturing process may be further divided into sub-tasks such as assembly, testing, inspection, and packaging. During the manufacturing process, companies must be mindful of waste or other factors that may cause deviations from their original plans. For example, if a company is using more raw materials than planned and sourced for due to inadequate employee training, it must rectify the issue or revisit the earlier stages in SCM.

Once products are made and sales are finalized, a company must get those products into the hands of its customers. A company with effective SCM will have robust logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of its products.

This includes having a backup or diversified distribution methods should one method of transportation temporarily be unusable. For example, how might a company's delivery process be impacted by record snowfall in distribution center areas?

The supply chain management process concludes with support for the product and customer returns. It's bad enough when a customer needs to return a product, but even worse if that's due to an error on the company's part. This return process is often called reverse logistics, and the company must ensure it has the capabilities to receive returned products and correctly assign refunds for them. Whether a company is conducting a product recall or a customer is simply not satisfied with the product, the transaction with the customer must be remedied.

Returns can also be a valuable form of feedback, helping the company to identify defective or poorly designed products and to make whatever changes are necessary. But without addressing the underlying cause of a customer return, the supply chain management process will have failed, and future returns will likely persist.

Supply chain management does not look the same for all companies. Each business has its own goals, constraints, and strengths that will shape its SCM process. These are some of the models a company can adopt to guide its supply chain management efforts.

• Continuous flow model: One of the more traditional supply chain methods, this model is often best for mature industries. The continuous flow model relies on a manufacturer producing the same good over and over and expecting customer demand will show little variation.
• Agile model: This model is best for companies with unpredictable demand or custom-order products. This model prioritizes flexibility, as a company may have a specific need at any given moment and must be prepared to pivot accordingly.
• Fast model: This model emphasizes the quick turnover of a product with a short life cycle. Using a fast chain model, a company strives to capitalize on a trend, quickly produce goods, and ensure the product is fully sold before the trend ends.
• Flexible model: The flexible model works best for companies affected by seasonality . Some companies may have much higher demand requirements during peak season and low volume requirements in others. A flexible model of supply chain management ensures that production can easily be ramped up or wound down.
• Efficient model: For companies competing in industries with very tight profit margins, a company may strive to get an advantage by making its supply chain management process the most efficient. This includes utilizing equipment and machinery in the most ideal ways in addition to managing inventory and processing orders most efficiently.
• Custom model: If any model above doesn't suit a company's needs, it can always turn toward a custom model. This is often the case for highly specialized industries with high technical requirements, such as an automobile manufacturer.

Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. decided to transform its supply chain by investing in technology to streamline the entire process. That included using big data , collected from its 9,000 stores and 20,000 suppliers, to help improve its forecasting capabilities and better manage sales and inventory. In 2019 it appointed its first-ever chief supply chain officer, a key leadership role in the company.

The company has also incorporated supply chain management into its environmental, social, and governance (ESG) initiatives, including those involving human rights, animal testing, sustainability, and transparency regarding product ingredients.

Why Is Supply Chain Management Important?

Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand. At the same time, control over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides multiple opportunities for companies to improve their profit margins and is especially important for businesses with large and international operations.

How Are Ethics and Supply Chain Management Related?

Ethics has become an increasingly important aspect of supply chain management, so much so that a set of principles called supply chain ethics was born. Many investors today want to know how companies produce their products, treat their workforce, and protect the environment. As a result, companies respond by instituting measures to reduce waste, improve working conditions, and lessen their impact on the environment—all of which can involve SCM.

How Much Do Supply Chain Management Jobs Pay?

Supply chain managers across the United States had average annual salaries in the range of $109,645 to $140,513 as of December 2023, according to the website Salary.com.

A supply chain starts with the ordering of raw materials or components from a supplier and ends with the delivery of a finished product or service to the end consumer. In supply chain management, every link in that chain may offer an opportunity to add value or reduce inefficiency. A well-run SCM program can increase a company's revenues, decrease its costs, and bolster its bottom line .

Cision PR Newswire. " Walgreens Transforms Supply Chain Management with Kyvos, Tableau, and Big Data ."

Walgreens Boots Alliance. " Walgreens Boots Alliance Announces Key Leadership Appointments Live ."

Walgreens Boots Alliance. " Environmental, Social & Governance. "

Salary.com. " Supply Chain Manager Salary in the United States ."

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Data, AI, & Machine Learning
• Managing Technology
• Social Responsibility
• Workplace, Teams, & Culture
• AI & Machine Learning
• Diversity & Inclusion
• Big ideas Research Projects
• Artificial Intelligence and Business Strategy
• Responsible AI
• Future of the Workforce
• Future of Leadership
• All Research Projects
• AI in Action
• Most Popular
• The Truth Behind the Nursing Crisis
• Work/23: The Big Shift
• Coaching for the Future-Forward Leader
• Measuring Culture

The spring 2024 issue’s special report looks at how to take advantage of market opportunities in the digital space, and provides advice on building culture and friendships at work; maximizing the benefits of LLMs, corporate venture capital initiatives, and innovation contests; and scaling automation and digital health platform.

• Past Issues
• Upcoming Events
• Video Archive
• Me, Myself, and AI
• Three Big Points

How To Do Strategic Supply-Chain Planning

• Supply Chains & Logistics

Any company that has a global supply chain should consider introducing its strategic left hand to its operational right hand. Strategic supply-chain planning that combines aspects of business-strategy formulation with aspects of tactical supply-chain planning can make each far more valuable to the planning effort than either would be alone. Strategic supply-chain planning is the Pegasus of strategy: It can soar, but it also needs to keep its feet on the ground. Although companies routinely weigh long-term supply-chain-related decisions in light of alternative sources of supply, new geographic markets or new products, various levels of management use different approaches, often in isolation. Senior managers make such decisions as part of formulating business strategy; supply-chain planners, as an extension of their tactical supply-chain planning.

How should companies ensure that relevant supply-chain details inform the business-strategy formulation and that strategic direction and the supply chain are in alignment? They can do so through early communication between senior managers and supply-chain planners, which shortens strategy-implementation time while letting each group pursue its forte: senior managers formulating strategy to maximize shareholder value; supply-chain planners running optimization models to minimize total supply-chain costs.

One Company’s Story

Consider a strategic supply-chain planning exercise at a polyvinyl chloride (PVC) manufacturer that we’ll call Acme Vinyl Co. Acme’s North American revenues came from PVC for building (55%), packaging (15%), consumer goods (10%), the electronic industry (10%), the automotive industry (4%) and from non-PVC products (6%). At the end of the 1990s about 4% of those revenues came from Asia. Acme had been seeing revenue growth for several years, mostly as a result of acquiring other PVC manufacturers.

With fragmented spare capacity around North America, a falling stock price and a need to rationalize the postacquisition supply chain, Acme’s leaders considered their options. Some favored consolidating manufacturing into one or two new mega-plants; others suggested closing existing plants or lines. Management chose to do a strategic supply-chain planning exercise to assist decision making.

The Planning Spectrum

Strategic supply-chain planning falls in the middle of a decision-making spectrum that has business-strategy formulation at one end and tactical supply-chain planning at the other. (See “Strategic Supply-Chain Planning and the Planning Spectrum.”) With a focus on fundamental changes in manufacturing and distribution capacity, it is long-term in scope and impact but can benefit from detailed optimization models and advanced planning-and-scheduling (APS) technology that is more often associated with medium- and short-term planning. Used in this strategic context, the tools help determine what would be an appropriate supply-chain configuration for sourcing and which plants or distribution centers should be closed or kept open.

Strategic Supply-Chain Planning and the Planning Spectrum

View Exhibit

Strategic supply-chain planning falls in the middle of a decision-making spectrum that has business strategy formulation at one end and tactical supply-chain planning at the other.

In contrast, tactical supply-chain planning is short- or medium-term in scope and impact, with supply-chain planners using past demand to make forecasts for the near term and adjusting these forecasts on the basis of market intelligence or planned promotions. Used in this context, optimization models and APS technology help determine where and when to produce what items and how to distribute them.

Planning Processes and Optimization

Although business-strategy formulation also uses tools and frameworks, it requires much more creativity than tactical planning. The optimum route to maximizing shareholder value is rarely obvious. It takes creative thinking and freewheeling negotiations to identify, understand and agree upon possible actions. Computers and spreadsheets support analysis, but they don’t determine strategy.

For tactical supply-chain planning, the decision options and the factors affecting them (production capacity, distribution capacity, variable costs, demand forecast) are clearly defined. The goal of minimizing total supply-chain costs — for manufacturing, storage and handling, and transportation — is narrower.

Because tactical planners can identify beforehand possible decisions and factors that might affect these decisions — and can build those elements into the software — they can use optimization models that rely on mathematical techniques. The models make recommendations that both minimize costs and help companies meet forecasted demand without exceeding production and distribution capacity. Advanced planning-and-scheduling technologies are available from several companies. 1

Business-strategy planners can’t plug clearly defined factors into software as supply-chain planners do, because strategy formulation is, in part, about trying to identify just what those factors are. But strategic supply-chain planning can benefit from appropriately used optimization models because tactical supply-chain models can be extended to include strategic decisions about closing or opening plants and distribution centers. APS vendors offer software for that purpose. The factors rarely change — production capacity, distribution capacity and variable costs. The goal of minimizing cost is extended to include the fixed costs of keeping plants and distribution centers open and the one-time costs of opening new ones and closing existing ones. These more strategic computer models can then guide decision making.

Optimization models for tactical supply-chain planning and models for strategic supply-chain planning differ only slightly in their design, but markedly in their use. Even if supply-chain planners tweak the production and distribution schedule obtained from tactical models to expedite an order to a key customer, they largely retain the model’s recommendation. In contrast, when using a strategic supply-chain model, managers are trying to determine how much the opportunity cost of a particular decision differs from the model’s recommendation.

At General Motors Corp., for instance, Electronic Data Systems Corp. consultants found that 90% of the time, GM managers used their models’ recommendations to benchmark actions that they were likely to consider. 2 The candidate decisions were based on qualitative criteria not included in the models. Creating benchmarks in this way is unique to optimization models using linear programming, a method using advanced mathematics to capture all the constraints, such as capacity, and to find the best possible recommendations that would minimize the total operating cost or some other stated objective. Such models guarantee the lowest possible supply-chain cost. Spreadsheet calculations or simulation models cannot provide that sort of benchmarking capability. 3

Use of Optimization for Strategic Supply-Chain Planning

A variety of industries have successfully implemented optimization-based tools, including one called Strategic Analysis of Integrated Logistics Systems (SAILS). 4 Baxter International Inc. used SAILS software to evaluate consolidation approaches following its 1985 acquisition of American Hospital Supply Corp. SAILS also helped Pet Inc. assess supply-chain synergies from two potential acquisitions. In another case, a personal-computer manufacturer made successful strategic use of an optimization model for its global manufacturing and distribution network. 5 GM uses a tool called Production Location Analysis NETwork System (PLANETS) to determine what products to produce —and how, when and where to make them. 6 The now defunct Digital Equipment Corp. (DEC) probably lengthened its life by using supply-chain models to decrease costs. 7

The Need for a Combined Process

Clumsy integration following mergers or acquisitions points to the dangers of relying on only one type of decision making. M&A business-strategy formulation rarely entails the use of models to optimize the supply chain before and after a merger, even though most operating costs reside in the supply chain. In one study, researchers surveyed 700 high-value international mergers and acquisitions occurring from 1996 to 1998 and found that failure to integrate supply chains was the main reason four out of five deals “failed to enhance shareholder value.” 8

Using an optimization model without a good strategy is similarly lacking. DEC’s strategic supply-chain planning system of the early 1990s improved manufacturing, distribution and service, but, without a robust business strategy, the company ultimately succumbed to acquisition by Compaq Computer Corp. 9

As supply chains become increasingly global, managers are making more strategic decisions about supply-chain design and reengineering. Thus supply-chain management has evolved from a function garnering little attention or prestige to a highly visible and respected one. 10

But improvements in tactical supply-chain planning resulting from the use of technology from advanced planning-and-scheduling software vendors has created unwarranted expectations that, with similar software, senior leaders could delegate strategic supply-chain planning to supply-chain planners. But senior executives’ aloofness from strategic supply-chain planning tools creates the same problems as ignorance of tactical advanced planning-and-scheduling tools. DEC likely relied too much on supply-chain planners. And after Nike Inc.’s $400 million APS technology implementation, $100 million in inventory got misdirected, ultimately triggering a $2.5 billion loss in market capitalization. 11

The reason that senior managers keep aloof is lack of knowledge, and even suspicion. Managers at Royal Dutch/Shell Group, for example, harbored a distrust of optimization models that biased the company against using such models in its scenario-planning processes during the early 1980s. 12 The extensive detail, rigid structure and managers’ lack of familiarity with optimization models aren’t conducive to the freewheeling discussion that strategy development needs. Moreover, because management education is focusing less on analytical strategic planning and operations research, M.B.A.s rising to the senior ranks since the mid-1980s have shown less and less interest in the technical side of management. 13

That’s why they need input from supply-chain planners who are familiar with optimization models. Only through a seamless process that encompasses those who are developing strategy and those who are using detailed supply-chain models can companies align their business strategy and their supply chain.

Scenarios and Scenario Planning

In scenario planning — a flexible process for formulating business strategy — senior managers build internally consistent, alternative views of possible future outcomes, including some that are “unthinkable,” as Herman Kahn suggested in his 1950s examination of Cold War scenarios. 14 Typically, to keep the focus on important factors in relation to the long-term future, only a few business scenarios are developed.

Building scenarios is more art than science. The creative input needed from managers differs too much from one company to another for experts to offer more than guidelines. 15 (See “Three Approaches to Scenario Planning.”) Leaders creating business strategy use “what if ” situations based on the plausible interplay of factors expected to have long-term effects. The only constraint is plausibility.

Three Approaches to Scenario Planning

The idea of strategic supply-chain planning draws mainly on three scenario-planning techniques.

Erik Larsen, professor of management and systems at London’s Cass Business School, has identified three phases of scenario planning. Scenario building involves identifying issues, driving forces and factors that produce uncertainty, then devising rough scenarios that are further fleshed out. In scenario planning, managers evaluate possible decisions, policies and strategies to determine their effects in each scenario, modifying and reevaluating them as necessary. Scanning the business environment involves checking early indicators of change in the environment to see which scenario or combination of scenarios is actually unfolding, thus enabling managers to revise and refine the decisions made earlier in Phase Two.

Consider Acme Vinyl’s scenario planning in light of Larsen’s approach. Acme managers deemed three decisions as likely candidates: first, the rationalization of existing production capacity and the closing of plants or parts of plants, while possibly expanding other plants; second, the concentration of production at one or two new megaplants; and third, the rationalization of the company’s distribution network, the closing of some distribution centers and the opening of others.

They identified four main drivers affecting the company’s prospects: macroeconomic forces that determine growth in the gross national product (GNP) of the United States and Canada and the growth of demand in most sectors; the efforts of western European governments and the European Union to phase out PVC, partly in response to Greenpeace activism; fluctuating oil prices and their impact on the cost of raw material (and the company’s margins); and the cycle of prices for PVC goods.

The managers also predicted business trends: continued U.S. construction growth; slower industrial growth in the United States, Japan and western Europe; rapid growth from 2000 through 2005 in Asia (excluding Japan); a gradual shift from PVC to packaging polymers by major Japanese and western European producers of household goods, chemicals and construction materials; and a reduced use of PVC compounds in the auto industry in western Europe.

After their analysis, the managers developed two business scenarios: a so-called “Official Future” and one referred to as “Sunrise-Sunset.” The Official Future reflected senior managers’ belief that, for at least four or five years, the company’s business would grow at the same rate as the GNP growth of the United States and Canada (about 2% per year). Some sectors, such as electronics and consumer goods, would continue to grow faster than others. Asian demand (excluding Japan) — a small proportion of Acme’s total North American production — would grow as the GNP of Asian countries grew and as Acme achieved greater market penetration. Those trends would continue for 20 years, and U.S. government policies would remain favorable to the PVC industry regardless of which political party was in power. The electronics and consumer-goods businesses and growth in Asian demand would eventually slow down.

The Sunrise-Sunset scenario anticipated that events in western Europe and Japan would lead to a downturn in the U.S. and Canadian PVC industry. Concerned about dioxin emissions from the burning of PVC, state governments would begin to file lawsuits against PVC manufacturers and garbage-incineration companies. Non-PVC polymer production would gain in importance. Meanwhile, a new day would dawn for PVC exports to Asia, where an overwhelming need for buildings, water and sewer lines would increase demand for 20 years despite environmental issues. The total market would expand and Acme would see its market penetration increase, especially in India, China, Thailand and Indonesia, where Acme might even need to build or acquire plants.

Middle Ground

The ideal process adds a step between business-scenario creation and final decisions: using supply-chain planners’ optimization models. (See “Strategic Supply-Chain Planning Using Scenario Planning.”) For each of the business scenarios, supply-chain planners can create multiple detailed model scenarios to run with their supply-chain optimization models. The result: a supply-chain configuration that minimizes the total fixed and variable, long-term supply-chain costs for the particular business scenario.

Strategic Supply-Chain Planning Using Scenario Planning

The senior team, which uses brainstorming and other hard-to-measure approaches to formulate strategies that increase shareholder value, combines its strengths with those of supply-chain planners, who rely on optimization software to reduce supply-chain costs.

How do these model scenarios of supply-chain planning differ from the more familiar business scenarios of scenario planning? Model scenarios feature an array of demand forecasts and tactical production configurations (extra shifts, planned maintenance and the like). The underlying factors are built into optimization models for use with advanced planning-and-scheduling software. Creating model scenarios is straightforward and involves little creativity or discussion. It is similar to a company taking a macro business scenario and creating micro scenarios for business units or regions. 16 Only convenience and the time it takes to solve a model scenario constrains how many a company can have for each business scenario.

Linking each business scenario to multiple model scenarios and uniting the creative work of strategy formulation with the analytical, optimization-model approach results in a powerful synergy with “right brain” strategizing joined to “left brain” planning. 17

Phase One: Scenario Building

In Phase One, the strategy team identifies the candidate decisions and their attendant uncertainties, then outlines business scenarios. The supply-chain team develops or modifies its supply-chain model on the basis of input from the strategy team regarding possible decisions. The two teams then validate the model. The strategy team garners useful information about the supply chain and updates its notions about how long-term supply-chain configurations affect total supply-chain cost. Next, the strategy team fleshes out the business scenarios using this information and data-on-demand forecasts, plant locations, distribution centers and so on. Finally, the supply-chain team develops multiple model scenarios for each business scenario to run through its software.

After developing the Official Future and Sunrise-Sunset scenarios, Acme’s strategy team met with the supply-chain team. The teams agreed that the supply-chain group should make recommendations for both scenarios to reconfigure the supply chain to minimize the cost of manufacturing, distribution, the closing of old plants and the establishment of new ones. They identified possible locations for megaplants and determined which of the existing plants could be altered or closed; they also identified 14 product families that, in aggregate, totaled several hundred products. Then the supply-chain team, focusing on demand for North American production, developed model scenarios.

Phase Two: Scenario Planning

In Phase Two, the supply-chain team runs the model scenarios and makes scenario-specific recommendations. Then the strategy team modifies its pool of possible decisions, finally choosing one that it then shares with other managers.

Acme’s supply-chain team used software from an APS vendor and ran model scenarios requested by the strategy team. The latter group weighed the resulting recommendations with factors relating to the long-term profitability of the business. As a result, Acme decided to spin off part of the vinyl business as a joint venture with a supplier; it also chose to merge with a non-PVC polymer company.

Phase Three: Scanning the Business Environment

In Phase Three, the strategy team identifies leading indicators (in the case of a company like Acme, it might be housing starts) that enable early detection of which scenario or combination of scenarios is actually unfolding. When the strategy team has determined which scenario is occurring, it informs the supply-chain team. With the new information, that group revises the scenarios and runs the model again to fine-tune its recommendations. The strategy team then revises its decisions and shares them widely so they can be acted on.

Upsides and Downsides

Acme preserved shareholder interests following the exercise and the merger, its stock price remaining level despite the plunging prices of other chemical stocks during the same period. Having executives who formulate business strategy participate in scenario planning was critical to the final decisions, which undoubtedly would have been different had the company used only supply-chain optimization modeling.

But even without optimization-based planning, scenario planning would have elicited the same decision regarding the merger. The main benefit of optimization lies in refining the decisions that emerge from scenario planning, including rationalizing the supply chain.

Whenever a company considers a merger, it must evaluate its own assets accurately (in addition to its target’s) so that its shareholders get the best deal. Acme’s main assets were plants and long-term customer contracts, and supply-chain modeling and optimization helped senior managers understand which, in a merger, could be spun off to increase Acme’s value.

Like any other management tool, however, both scenario planning and optimization modeling can have their downside. Some managers become seduced by colorful future possibilities in scenario planning when they should be focusing on the trends, underlying factors and uncertainties relevant to genuinely possible decisions. Others remain aloof, relying first on consultants and later ignoring the scenarios when making decisions. Similarly, development of a strategic supply-chain planning optimization model sometimes serves no practical use, becoming unwieldy or taking too long to complete because of multiple motives.

Still, the joint use of scenario planning and optimization models is the better road to shareholder value — more effective than using either approach in isolation. Strategic supply-chain planning, like Pegasus, is more than the sum of its parts.

About the Author

ManMohan S. Sodhi is an associate professor of supply-chain management at Cass Business School in London. Contact him at [email protected] .

1. Suppliers of APS technologies include SAP, i2 Technologies, Manugistics and Logility.

2. R.L. Breitman and J.M. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

3. Optimization models can be built into spreadsheets by using the Solver feature within Excel, for instance, or by using add-on software, but these models are not comprehensive enough to take into account the scope and detail needed for a global supply-chain model. For such optimization, the cost of APS software, including implementation, may exceed $1 million.

4. A.M. Geoffrion and R.F. Powers, “Twenty Years of Strategic Distribution System Design: An Evolutionary Perspective,” Interfaces 25 (September–October 1995): 105–127.

5. M.A.. Cohen and H.L. Lee, “Strategic Analysis of Integrated Production-Distribution Systems: Models and Methods,” Operations Research 36, no. 2 (1988): 216–228; and M. Cohen and H. Lee, “Resource Deployment Analysis of Global Manufacturing and Distribution Networks,” Journal of Manufacturing and Operations Management 2, no. 2 (1989): 81–104.

6. R. Breitman and J. Lucas, “PLANETS: A Modeling System for Business Planning,” Interfaces 17 (January–February 1987): 94–106.

7. B. Arntzen, G. Brown, T. P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93.

8. A. Macdonald and D. Beavis, “Seize the Moment — Radical Supply Chain Integration as a Means of Increasing Shareholder Value and Enabling Acquisitions To Deliver on Their Promises,” Manufacturing Engineer 80, no. 4 (2001): 175–178; C. Farrell and R. Melcher, “The Lofty Price of Getting Hitched,” Business Week, Dec. 7, 1997; and D. Henry, “Mergers: Why Most Big Deals Don’t Pay Off,” Business Week, Oct. 14, 2002, 72–78.

9. B. Arntzen, G. Brown, T.P. Harrison and L. Trafton, “Global Supply-Chain Management at Digital Equipment Corporation,” Interfaces 25 (January 1995): 69–93; J. Muller, “Compaq Will Buy Digital in a Record $9.6b Deal,” Boston Globe, Jan. 27, 1998, p. A1; and “Compaq To Acquire Digital for $9.6 Billion,” Compaq press release, Jan. 26, 1998, New York, http://h18020.www1.hp.com/newsroom/pr/1998/pr260198c.html.

10. D.J. Frayer and R.M. Monczka, “Enhanced Strategic Competitiveness Through Global Supply Chain Management,” Annual Conference Proceedings of the Council of Logistics Management (Oak Brook, Illinois: Council of Logistics Management, October 1997): 433–441.

11. J. Greenbaum, “SCM Is Dead, Long Live SCM,” July 16, 2002, http://itmanagement.earthweb.com/columns/entad/article.php/1407831.

12. A.P. de Geus, “The Living Company” (Harvard Business School Press: Boston, 1997), 69.

13. H. Mintzberg, “The Rise and Fall of Strategic Planning” (New York: Free Press, 1994).

14. See M. Porter, “Competitive Advantage: Creating and Sustaining Superior Performance” (Free Press: New York, 1985); B. Melzer, “The Uncertainty Principle,” CIO Insight, June 1, 2001, www.cioinsight.com; and H. Kahn, “Thinking About the Unthinkable” (New York: Horizon Press, 1962).

15. E. Larsen, “What Is Scenario Planning?” teaching note, Cass Business School, London, 2000; P. Schwarz, “The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company” (New York: Doubleday, 1991); P.J.H. Schoemaker, “Multiple Scenario Development: Its Conceptual and Behavioral Foundation,” Strategic Management Journal 14 (March 1993): 193–213; and P.J.H. Schoemaker, “Scenario Planning: A Tool for Strategic Thinking,” Sloan Management Review 36 (winter 1995): 25–40.

16. T.F. Mandel and I. Wilson, “How Companies Use Scenarios: Practices and Prescriptions,” SRI International, Menlo Park, California, report no. 822, spring 1993.

17. H. Mintzberg, “Planning on the Left Side and Managing on the Right,” Harvard Business Review 54 (July–August 1976): 49–59. Also published as H. Mintzberg, “Planning on the Left Side, Managing on the Right,” in “Mintzberg on Management: Inside Our Strange World of Organizations” (New York, Free Press, 1989), pp. 43–55.

More Like This

Add a comment cancel reply.

You must sign in to post a comment. First time here? Sign up for a free account : Comment on articles and get access to many more articles.

6 Steps to Write a Supply Chain Management Plan

The Value behind Writing a Supply Chain Management Plan

Share This:

By Daniela McVicker, 29 July, 2020

Supply chain standardization is a challenging yet beneficial process for all businesses regardless of their scale or target markets. With COVID-19 crisis underway, writing a reliable supply chain management plan for your company has become more than a welcome addition to its business model. 

However, drafting such a document without insight into typical supply management practices can be tricky. Businesses which deal with import/export, as well as those who require raw materials for processing, know what such documents should and shouldn’t contain. With that in mind, let’s discuss the steps to write a supply chain management plan in 2020 in order to better streamline your procurement pipeline.

Why should you pay attention to strategic supply chain management in your company? After all, you’ve handled procurement without such documents before, what is different now? As we’ve briefly mentioned, the current global crisis has put a wrench in the proverbial machine for numerous industries, physical shipping included. 

Whether you operate as a redistribution or packaging company for your local market or work in manufacture and require raw substances, proper supply management matters. Businesses in the B2B sector tend to work with long-time and reputable brands far more than they do with new players on the market. 

Here are some relevant facts in regards to supply chain management as published by Finances Online recently:

• 57% of companies believe that proper supply chain management gives them a competitive edge
• 62% of companies have limited visibility of their supply chain management
• 74% of companies utilize 4-5 transportation methods based on current situation
• 46% of businesses don’t track their inventory and have no automated method to track it

Despite the potential loss of revenue, industry reputation and public trust, many businesses still fail to use a supply chain management plan to their benefit. This opens the doors for your own and other companies who are willing to go forward and write such a plan to maximize future productivity. Doing so will also bring several crucial advantages into your corner, including:

• Increased net revenue
• Better B2B networking potential
• Improved in-house productivity
• Lowered margin for supply management errors
• Better analytics possibilities due to standardization

Steps to Write a Supply Management Plan

1.Assess your Current Supply Pipeline

The best place to start writing your supply chain management plan is through an internal audit of your company. More specifically, analyze the ways in which you have procured goods or services up to this point. What worked well and what caused you problems? Which companies were willing to work with you long-term and which ones turned out to be less than ideal for cooperation? 

Go through the available documentation and try to separate your current supply management pipeline into “good” and “bad”. Whatever is good, you can carry over into standardized procurement going forward, and vice versa. Don’t write a supply chain management plan without a clear idea of where your company currently stands on.

2.Define the Supply Management Outline

A supply chain management plan is a written document which serves to standardize your procurement processes. As such, you should start writing it with the goal of creating a long-term template which your sales department can use for the foreseeable future. Start by outlining your company’s basic information on the front page. You can use a thesis writing company in order to write or edit your supply management documentation in a reliable manner.

Data related to your legal and contact information should find their place on the aforementioned front page. Leave an empty table on the first page just below the legal information as you will copy the data in regards to your order here afterward. The purpose of the outline page is to give your recipient a clear idea of the procurement request without having to read through multiple pages.

3.Quality Assurance (QA) Overview

Depending on your warehousing units and available technology, your QA details should find their way into the supply chain management plan. This will give both your employees and procurement companies you work with ample information on what can and cannot be stored on your property. 

Certain items might require refrigeration or special storage due to their chemical properties, unlike electronics or paper products which are more durable. The information on your QA requirements in regards to transport and storage will let the supplier know exactly what logistical resources you have available. It will also proactively ensure that no goods arrive at your company without explicitly following the QA standards.

4.Break down your Supply Needs

The list of goods you require from a supplier should be highlighted in the supply chain management plan to allow for quick and easy access. Depending on the industry you operate in, this list can take the form of a spreadsheet, a bulleted list or a chart with visualized supply elements. 

You should account for any special requests you may have and clearly outline what those refer to in a separate section. If you require pipes of a specific diameter, length and material which is otherwise not standard for your supplier, make sure to annunciate that point. Make sure that there are no typos or spelling mistakes in this section as they can severely hinder your efforts at supply standardization. Proofread both your supply chain management plan’s template and any future supply procurement requests you file using said template.

5.Develop a Supply Timeline

Once you assemble a list of goods you require, you should proceed to outline the delivery timeline for your supplier’s benefit. Do you simply require these items to be packaged and ready for pickup by your company? Or, do you require different amounts of items to go to different warehouses or retail storefronts under your brand? 

The supply timeline is just as important as the breakdown of your required goods as short deadlines or wide distribution requirements may not be viable. The timeline will give your supplier enough information to make an objective decision on whether or not to proceed with your order. As such, this section should include contact information for your sales department representative which can be used to confirm or further discuss the procurement request.

6.Government Laws & Regulations

Lastly, international shipping will require you to list laws and regulations in regards to your government’s import standards. Whether you transport goods by international roads, water or air, government regulations should be made available to your supplier. The same can be said for state-to-state shipping in the US, as different states will have drastically different shipping standards. 

Including this section in your supply chain management plan will significantly speed up customs processes on both ends. Likewise, it will ensure that your supply arrives as was intended, which is important for goods which require special storage and handling (see QA standards). 

Follow Up and Reinvent (Conclusion)

While the goal of writing a supply chain management plan is to standardize your procurement process, you can build on the foundation through supplier feedback. Inquire about how legible, organized and informative your supply documentation is with companies. 

Ask for feedback on what works and doesn’t work, as well as what they would do differently in your place. The role of the supply chain management plan template is to help you, not hinder your productivity – be on the lookout for more development opportunities. Adopting such a mindset will ensure that your documentation becomes of higher quality and easier to manage over time.

Image source : https://unsplash.com/photos/oh0DITWoHi4  

Author’s bio. Daniela McVicker is a passionate digital marketer. Daniela is interested in everything related to SEO and blogging. She collaborates with Essayguard and other websites where she shares her experience and helps marketers make their names in the online world.

Sign up to receive industry updates, relevant articles and events

Nice check your email, recommended events, vic women in leadership workshop.

5th - 6th, September 2024

Melbourne, Australia

NSW Women in Leadership Workshop

25th - 26th, July 2024

Sydney, Australia

VIC SES-Level Strategic Leadership for Outcome Delivery

20th - 21st, August 2024

WA Women in Leadership Summit 2024

15th - 19th, July 2024

Perth, Australia

NSW Public Sector Grades 9-10 High Performance & Leadership Workshop

25th - 26th, June 2024

APS 5-6 Critical Thinking & Problem Solving

23rd - 24th, July 2024

Canberra, Australia

NT Women in Leadership Workshop

19th - 20th, June 2024

Darwin, Australia

Find Your Next Event

Thank you for joining us, great keep an eye out on our updates and newsletters..

Need a business plan? Call now:

Talk to our experts:

• Business Plan for Investors
• Bank/SBA Business Plan
• Operational/Strategic Planning
• L1 Visa Business Plan
• E1 Treaty Trader Visa Business Plan
• E2 Treaty Investor Visa Business Plan
• EB1 Business Plan
• EB2 Visa Business Plan
• EB5 Business Plan
• Innovator Founder Visa Business Plan
• UK Start-Up Visa Business Plan
• UK Expansion Worker Visa Business Plan
• Manitoba MPNP Visa Business Plan
• Start-Up Visa Business Plan
• Nova Scotia NSNP Visa Business Plan
• British Columbia BC PNP Visa Business Plan
• Self-Employed Visa Business Plan
• OINP Entrepreneur Stream Business Plan
• LMIA Owner Operator Business Plan
• ICT Work Permit Business Plan
• LMIA Mobility Program – C11 Entrepreneur Business Plan
• USMCA (ex-NAFTA) Business Plan
• Franchise Business Planning 
• Landlord Business Plan 
• Nonprofit Start-Up Business Plan 
• USDA Business Plan
• Cannabis business plan 
• eCommerce business plan
• Online Boutique Business Plan
• Mobile Application Business Plan
• Daycare business plan
• Restaurant business plan
• Food Delivery Business Plan
• Real Estate Business Plan
• Business Continuity Plan
• Buy Side Due Diligence Services
• ICO whitepaper
• ICO consulting services
• Confidential Information Memorandum
• Private Placement Memorandum
• Feasibility study
• Fractional CFO
• How it works
• Business Plan Examples

Supply Chain Management Business Plan Sample

Published Nov.28, 2014

Updated Apr.24, 2024

By: Shawn Jensen

Average rating 5 / 5. Vote count: 4

No votes so far! Be the first to rate this post.

Table of Content

Do you want to start Supply Chain Management Business?

Do you want to start a supply chain management business? Well that can be an amazing idea if you want to quickly start a business. One of the main reasons is that this supply chain business plan will not need you to have any specific technical knowledge or degree. You can start this business with just a few contacts and grit.

Even though it is relatively easier to start a career in supply chain management, it still doesn’t mean you should go in unprepared. The best thing you can do is go through a business plan for supply chain management. You can get a business chain management plan supply from anywhere on the internet. And if you want, this document is also a great place to look for help supply chain business plan .

Executive Summary

2.1 the business.

Clark’s Management will be a supply chain management startup owned by Clark Bridgers. The main objective of the supply chain business plan is to guide and assist companies in streamlining their supply chains in Oakland. It will offer versatile resources and services for the best supply chains.

2.2 Management of Supply Chain Management Company

To ensure that your company is well managed, you need to develop a supply chain management business plan as the first step.

In this supply chain strategy model, we will including all the important aspects of a business for buy side due diligence .

In order to make your supply chain business plan , you can study a sample pdf of supply chain management like this one. You can also use the internet to go through a plan for supply chain management filetype pdf. These will give you a good idea of what you should include in your supply chain business plan . And this will apply even if you are developing a business plan for video production .

2.3 Customers of Supply Chain Management

Our clients will be from all industrial and professional domains since supply chain is a part of the lifecycle of any product or service. Keeping that in mind, our recurring customers will include:

• Product Businesses
• Service Businesses
• Hybrid Large/Small Businesses
• Manufacturing Units

2.4 Business Target

The primary goal of our supply chain business plan is to become the most reliable and trusted option for our clients whenever they want to improve their supply chains.

The financial targets that we aim to achieve in the first two years are shown below:

Company Summary of Supply Chain Management

3.1 company owner.

Clark Bridgers will own Clark’s Management. Clark completed his Bachelor’s in Management about 3 years back. After his studies, he pursued a job in a corporation as a business management consultant. But he left job in pursuit of starting his own supply chain business plan .

3.2 Why the Supply Chain Management Company is being started

Clark observed that a lot of businesses are looking for ways to reduce their production costs. But there are very few businesses that offer any help in the area. He quickly realized that he could use his innovative ideas and knowledge to improve supply chain management for these companies.

3.3 How the Supply Chain Management company will be started

Step1: Plan Everything

Before you look into things like what is supply chain strategy definition, you need to consult supply chain business plan experts. They will guide you in development of supply chain organization models.

Clark decided to offer his services to both service and product based companies. So, you can use this or any related supply chain management project report pdf to get started with your own supply chain business plan . These documents will help you understand the role of supply chain management in business plan.

Step2: Define the Brand

A crucial step in starting a new supply chain business plan is to get noticed. You will have to identify and highlight your core values and market those to your potential customers to gain attention.

Step3: Establish a Web Presence

The most important part of any business in the digital age is online promotion. For this, Clark decided to establish social media presences for his supply chain business plan . He also decided to outsource a simple website through which people can book appointments and reach out.

Step4: Promote and Market

As the final step, you need to create and follow a marketing plan to promote your supply chain business plan .

Services of Supply Chain Management

When you are starting supply chain business , one of the major things you need to figure out the services you will be providing to your customer base. You can refer to a sample business plan supply chain management for an idea.

The requirements of supply chain management in a business plan is different as compared to other plans such as aerial tourism business plan .

But since Clark decided to provide a whole array of services so this example of supply chain strategy can also be used for other ventures like internet radio business plan . You can gain a lot of insight from this plan for operations and supply strategy.

• Identifying and Dealing with Logistics Problems

Our company will offer solutions to all basic problems that may occur in the supply chain. If, for instance, a customer complains about service quality, it can reflect poorly on the supply chain business plan . But our company ensures that most problems are identified beforehand through data analysis.

• Price Optimization

Many businesses offer products or services that are seasonal. Since seasonal offers are not needed throughout the year, businesses have to find a way to reduce their prices and sell them. Our company will help businesses set these marketable prices through analytical software. This will ensure that:

• Products are sold, and
• Business is still profitable
• Dynamic Resource Management

Businesses have limited resources. Our company will help businesses organize and allocate their resources such as equipment and workforce in a way that optimizes performance.

• Supply Chain Consultation

Our company will also provide consultation experts that can help businesses with supply chains reduce their costs and improve their performance.

Marketing Analysis of Supply Chain Management Company

When you are describing your company for supply chain management in a business plan, you will need to describe your customer base. Identifying your customers is one of the essential steps of starting a supply chain business plan . And you have to include this information in your plan even it is a business plan template for summer camp .

excellent work

excellent work, competent advice. Alex is very friendly, great communication. 100% I recommend CGS capital. Thank you so much for your hard work!

You should have detailed information about your customer. And the best way to get these details is through a market analysis. The market analysis included in your supply chain development strategy, should have all information regarding past, present and future market trends.

The supply chain strategic management is used to analyze the market prices and to figure out the financial goals of your own supply chain reporting structure. You can use a supply chain management project pdf sample like this to see how the market analysis is presented.

5.1 Market Trends

According to ExploreWMS, the number of warehouse in US have grown by 6.8% in the last five years. This means that more and more companies need better supply chain management techniques and services. And due to the shift for efficiency, supply chain management positions are increasing faster than economic averages. So, there is no deficiency of demand in the market for a supply chain management or services.

5.2 Marketing Segmentation

The potential customers of Clark’s Management are divided into the following categories:

Business plan for investors

5.2.1 product businesses.

Our main customers will be the product based businesses that rely on the sale of their products. Since the sale of a product is affected by a lot of factors in the supply chain so these businesses are more likely to regularly use our services.

5.2.2 Service Businesses

Our second target customers will be service providing businesses much like ours. Services are also provided as a result of a supply chain that involves ideation, planning and development as some of its parts. So service businesses are also expected to utilize our services quite often.

5.2.3 Hybrid Small/Large Businesses

Every supply chain business  works for an endpoint through a series of pre-defined steps. These steps form a supply chain even in hybrid (product and service) businesses. Since these businesses are usually big corporations with their own management departments so they are likely to use our services every so often.

5.2.4 Manufacturing Units

Manufacturing units on their own also require management tips to work more smoothly. They are expected to avail our services often to streamline their operations.

5.3 Business Target

• To become the best supply chain management company throughout Oakland
• To increase the range of our offered services over time
• To earn a net profit of around $30k per month by the end of the second year
• To achieve and maintain customer satisfaction above 90%.

5.4 Product Pricing

Our prices will be a little bit higher than the market average. But we will offer more services over a longer period of time as a compensation. This will help our customers more in the long run as compared to our competitors.

Marketing Strategy of Supply Chain Management

To gain attraction in a huge industry, you need to find areas where you have competitive advantage. For this, you need a solid marketing strategy and branding so that people can recognize your offers.

In the present supply chain management report template, we are describing the marketing strategy for Clark’s Management. You can also refer to an example such as business plan supply chain management to improve your business proposal. This is helpful even if you are just starting a paintball business .

6.1 Competitive Analysis

• We have amazing customer support available. We will deal with all customers patiently and also gain feedback for future improvement.
• Through our physical shops, website and social media, customers have different ways to contact us. And we will respond to them at the earliest.
• We will provide consultations and services in accordance with all the standard practices so that our customers can focus on their work without worry.

6.2 Sales Strategy

• We will advertise through word of mouth, Google Ads, Social Media, and billboards.
• We will provide long-term services in reasonable and market-competitive prices.
• We will also provide special discounts to first-time and long term customers.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan of Supply Chain Management

No business can run without the diligence of its workers. The success of any business actually depends a lot on the behavior of employees. Clark knew the importance of hardworking and patience workforce and so he developed a selection criterion for employees. This criterion will be a part of business plan for supply chain management.  You can also find examples of this in a sample business continuity plan supply chain management on the internet.

7.1 Company Staff

• 1 Co-Manager for overall assistance
• 2 Purchasing Agents
• 3 Logistics Analysts
• 1 Operations Manager
• 3 Planning and Expediting Clerks
• 2 Storage and Distribution Managers
• 3 Operations Consultants

7.2 Average Salary of Employees

Financial plan.

You can’t become successful by just selling products or services. To be profitable, you need to carry out a detailed financial analysis. Usually, like in this supply chain business plan sample, financial analysis is included. Every good supply chain management business plan has a thorough financial plan included.

In your financial plan, you need to show how you will cover your expenses with your sales and profits. You also need to identify ways to reduce your expenses and increase your efficiency.

We have provided a comprehensive financial plan for supply chain management business. But you can also refer it for business plan movie selection .

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

8.5 Projected Balance Sheet

8.6 business ratios.

• How do I write a business plan for supply chain management?

You can write a business plan for supply chain management by reading business plans like the one here or by consulting a business plan expert.

• What is supply chain in business plan?

Supply chain consists of processes that are involved in the production of a product or the provision of a service. And in reference to a supply chain business plan , it includes all the details needed to start a business in supply chain management.

• What are the examples of supply chain management?

Supply chain management is involved in all kinds of supply chains including product design, manufacturing, farming, packaging, and transportation etc.

Download Supply Chain Management Business Plan Sample in pdf

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

Ice Vending Machine Business Plan

OGScapital at the National Citizenship and Immigration Conference

How to Start a Plumbing Business in 2024: A Detailed Guide

Vegetable Farming Business Plan

Trading Business Plan

How To Write A Textile Manufacturing Business Plan

Any questions? Get in Touch!

We have been mentioned in the press:

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Search the site:

Supply chain management

Reimagine supply chain as a digital network that operates in perfect harmony, so it’s better for people, the business and the planet.

• Explore Our Latest Insights
• The Future Digital Supply Chain
• The Basic Components of Supply Chain Management
• Effective Supply Chain Management Strategies
• Sustainable Supply Chains

Supply Chain Ecosystem Services 2023 Vendor Assessment

What is supply chain management?

A supply chain transforms raw materials and components into a finished product that’s delivered to a customer. It is made up of a complex network of organizations and activities, such as raw materials suppliers, manufacturers, distributors, retailers and the customer.

Supply chain management is the orchestration between these networks comprising procurement, management and storage of raw materials and manufacturing, as well as the moving, delivery, and storing of finished goods and after-market services to create maximum efficiency, lower cost and net value.

Supply chains: From linear to network

To understand the importance of supply chains management, it’s worth first thinking about the importance of a supply chain at its most basic level.

Traditional supply chains follow a linear progression. The output of one step is typically the input of the next step. For instance, suppliers must send raw materials to the manufacturer before the products can be made. If there’s a problem at any step, the entire linear chain is disrupted.

Today’s supply chains, however, are more complex than linear models —they’re sophisticated supply networks that are more flexible and efficient. This helps meet customer expectations for a wide selection of customized, sustainable products and fast deliveries that meet individuals’ specific needs.

Resiliency in the making

Turning adversity into advantage for engineering, supply, production and operations.

Explore our latest insights

Can you see your Scope 3?

Can you see and act on emissions across all supplier tiers? You can now. Accenture's research and new tools to shed light on Scope 3.

Supply chain disruption

Supply chain networks of the future must have resilience and sustainability at their heart.

Supply chain control tower - from visibility to value

A use-case-driven Supply Chain Control Tower moves companies beyond improved visibility to increase enterprise value.

How the cloud boosts supply chain innovation

The role of cloud computing in supply chain transformation, helping leaders build resilience & ensure responsible operations.

The benefits of supply chain visibility

How different types of visibility can help build resilient supply chain networks.

How sustainable supply chains can unlock net zero emissions

Supply chains are now a major part of the CEO's environmental focus to unlock net zero emissions.

The future digital supply chain

The supply chain is no longer just an efficient maker and mover of goods; it’s now required to be a principal driver of business growth. Resilience is also critical, as future supply chains must manage ongoing disruptions. Sustainability is vital, too, so that supply chains not only address the concerns of investors, board members and governments, but also make a positive contribution to society through achieving zero waste, building circular processes and building trust.

Why?  Disruption  is the new reality. Technology is advancing. Customer demands are evolving. Complexity and uncertainty are increasing risk. Supply chain management is key to solving this conundrum—and it touches everyone, everywhere.

Ready for a new approach to Supply Chain cyber-risk?

We explain how CEOs and supply chain leaders can leverage digital capabilities to manage cybersecurity risk in new ways.

• Intelligent supply chains
• Sustainability & trust

Being more efficient throughout the supply chain and delivering goods for customers needn't come at the expense of the planet or get in the way of good governance. On the contrary, in fact. Effective supply chain management can and should put sustainability at its core. It's not just the more responsible thing to do; it's what customers want. They also expect companies to protect people through enhanced human rights efforts. Accenture's Human Rights Due Diligence Tool helps companies identify and assess risks in sourcing and production, as well as visualise risks by country and site. Technologies like this, across all aspects of ESG, ensure that companies are held accountable. Companies can no longer fall back on the "we didn't know" defense, and should instead focus their attention in creating a business model that not only delivers products customers need, but produces them in the manner customers expect.

Intelligent supply chains are built on digital technologies, including  Cloud , data and  artificial intelligence  (AI). They enable companies to implement supply chain strategy and achieve three key outcomes:

• Operational resilience, which helps companies withstand disruptions
• Customer and employee relevance, which provides flexibility and agility to respond to changes in demand and personalization in a cost-effective way
• Business responsibility, which fosters sustainable practices enabling prosperity for society and the environment

These outcomes are important to business, society and the planet. To achieve them, companies must build intelligent supply chains that bring humans and machines together. And this all starts with effective supply chain management.

Reinventing supply chains with generative AI

Generative AI is one of the biggest breakthroughs in AI’s history. Signifying a new era of enterprise intelligence, it holds out huge promise for supply chains in every industry. 

That’s because, combined with analytics capabilities, it puts new kinds of hyper-intelligence into the hands of supply chain professionals, dramatically amplifying what they can achieve. 

As humans working with generative AI “colleagues” become the norm, every role in every supply chain has the potential to be transformed. 

From advising on vendor selection to introducing new speed and creativity to product design, and from accelerating onboarding of supply chain partners to transforming customer service interactions and introducing new sustainability to E2E operations, one thing is clear: generative AI ‘s arrival means supply chains will never be the same again.  

To secure future competitive advantage, now is the time for supply chain leaders to understand and begin to adopt this breakthrough technology.

• How Generative AI will reinvent Supply Chains
• How Generative AI will reinvent Sourcing and Procurement
• Generative AI: Why smarter supply chains are here

Supply chain in the age of generative AI

Turning promise into performance

The basic components of supply chain management

Supply chains vary by company and industry. But at their core, they comprise several interdependent disciplines and, at a high level, commonly contain seven basic components:

• Engineering:  Creating a new product that customers will want
• Planning:  Anticipating and optimizing events through visibility within every step of the supply chain
• Sourcing and Procurement:  Identifying and buying the components that make up a product, with the aim of ensuring quality and reliability at the lowest cost
• Inbound Logistics:  Handling the transportation of goods into a business
• Manufacturing:  Making enough products to satisfy demand and maintain target inventory levels
• Fulfillment and Delivery:  Getting a product to the customer as quickly and economically as possible
• Service Management:  Maintaining or fixing a product to ensure customer satisfaction

From Engineering to Service Management, each area’s output is the input to the next—each link relies on the others to form a strong supply chain. For example, Sales and Operations Planning can provide real-time sales results to inform product innovation that drives repeat business. In addition, Procurement must source and buy the right parts and get them to the right plant in time to meet production schedules. And products must be made and shipped on time to ensure that customers get what they want, when they were promised.

Intelligent supply networks are similar, but they have one key difference: They leverage digital tools and technologies to optimize the supply chain and provide visibility across the ecosystem to deliver deeper insights and greater value, more quickly. This shift has a knock-on impact on the seven core components of supply chain management, and the skills that each requires.

This shift has a knock-on impact on the seven core components of supply chain management, and the skills that each requires.

Scaling AI in the supply chain

A look at current supply chain sub-disciplines

Each discipline within supply chain management must transform to meet the needs of the future. That’s not just our opinion—it’s what supply chain executives told us as part of our  Accenture Technology Vision 2021 research , which explored technology trends.

Engineering

Engineering drives the ideation, design and development of a new product or service. In the future, AI and cloud technologies will help engineers innovate using new capabilities, automate deployment and testing for faster product launches, and will connect with the business to optimize functions.

Today’s planners determine how to get the right product or service at the right place and time to meet demand. Tomorrow, algorithms will make most day-to-day planning decisions.  A digital twin can optimize outcomes  based on different variables. Data and AI will provide insights into what’s happening in the supply chain to react efficiently.

Sourcing & procurement

In order to acquire the goods and services for finished products, procurement teams will need entrepreneurial, collaborative and analytical skills to build relationships with ecosystem partners to select supplies that provide transparency into supply sources and practices. They’ll also need to use digital technologies to solve problems.

Inbound logistics

AI and cloud technologies will transform logistics to provide real-time visibility and optimize decision-making for more efficient movement of raw or finished goods from supplier to factory, warehouse or store.

Manufacturing

Factory managers will have a wealth of information from advanced AI and algorithms, coupled with sensors across manufacturing facilities. They’ll need to be extremely adept at using this data to make the right decisions. Read more: case study .

Fulfillment & delivery

AI and cloud technologies will allow companies to offer  true omnichannel fulfillment of orders to customers . This will enable customers to buy anytime, anywhere, with dynamic delivery options.

Service management

Rather than being reactive in supplying parts and personnel, companies will have AI and cloud technologies  that enable them to make real-time decisions about product support, decrease resolution times and improve service performance and profitability.

Effective supply chain management strategies

Right now, many companies’ supply chains are built on dated, legacy technologies. They can’t support end-to-end visibility or real-time decision-making, meaning they struggle to deliver strategic business value. They’re essentially analog machines trying to solve problems in a digital world. The result? Slow response times, waste, conflicting priorities between functions, delays and rigidity. What’s more, companies struggle to meet increasingly granular customer needs.

Furthermore, traditional supply chain organizations usually focus on optimizing a particular aspect of the supply chain—not all of it. Instead, organizations should share data across silos and optimize along the entire value chain.

Digital transformation of supply chains

To address these challenges, companies should  create intelligent supply chains  based on data, analytics and AI. These, along with digital twins, are among the  top technologies that supply chain  executives are looking to deploy in their organization. Enabling and optimizing them all, however, starts with the cloud.

Operating in the cloud is critical  because it allows companies to process huge amounts of data—from virtually unlimited sources across the entire supply chain—at speeds and volumes never before possible. Deeper analysis of more data, faster, means developing critical business insights and smarter decision making. This includes gaining the ability to reconfigure how people work, and gaining the agility to respond quickly to new insights that the data generates. Along with being more powerful, simple and flexible, the cloud is also more affordable. This opens up endless possibilities for improving and optimizing the supply chain, particularly in terms of building in resilience and ensuring responsible operations.

There are additional benefits, too. When companies transform their supply chain organization, the focus shifts from driving profitability to delivering value across growth, sustainability and trust. Along with driving profits, the supply chain becomes instrumental in  positively impacting the planet and society alike .

Digital technologies and data lay the foundation to make supply chains customer-centric, service-oriented, self-learning, intelligent and agile. There are five keys to executing an effective intelligent supply chain strategy:

• Break down barriers between functions.  Traditionally, some roles (such as planning) operate in separate timeframes and don’t collaborate enough with other teams. In an intelligent supply chain, everyone works closely together.
• Build a digital foundation.  Create transactional layers of real-time data visibility. Ensure that the insights are digestible, so that leaders can make quick decisions.
• Transform your talent.  Technologies like artificial intelligence, digital twins, the internet of things and cloud are changing the game brings big changes to existing supply chain roles. Successful  supply chain transformations put employees at the center  and give people the skills and support they need. This requires building new digital skills, but also involving everyone in the implementation of new tools and processes so teams have a sense of ownership and the opportunity to innovate.
• Create partnerships and collaborate in new ways.  Source technology partners who can help boost operational efficiency, increase yield or innovate products.
• Automate routine work.  Redirect staff to focus on strategic analysis and innovation. This helps build an intelligent supply chain that improves customer experiences, increases competitive advantage and drives profitable growth.

New technology means big changes to existing supply chain roles

Sustainable supply chains

Supply chains generate around 60% of all carbon emissions globally. Companies that are serious about sustainability are working hard to make their supply chain networks more responsible and resilient.

There are many opportunities to increase supply chain sustainability, including:

• Product design:  Developing products with sustainability in mind.
• Planning:  Reducing waste by accurately matching supply and demand.
• Sourcing and procurement:  Making sure suppliers follow ethical and environmentally friendly practices, and ensuring transparency across the entire supply chain.
• Manufacturing:  Making production more efficient to reduce waste and energy consumption, and more responsible by using ethical labor practices.
• Logistics:  Optimizing distribution and transportation to reduce fuel consumption and emissions.

Greenhouse gas (GHG) emissions are categorized into one of three different scopes. Scope 1 involves GHG emissions directly from an organization’s owned sources; scope 2 involves indirect GHG emissions; scope 3 emissions are caused by an organization’s value chain, but not owned by the organization. Reducing carbon emissions can occur all the way through the supply chain.

Matias Pollmann-Larsen discusses how resiliency, sustainability, and visibility are the focus of their latest United Nations Global Company CEO Study and its incredible findings.

• BETTER TECHNOLOGY, GREATER RESPONSIBILITY
• THE CIRCULAR ECONOMY

Cloud is one of the core ways to create supply chain sustainability and responsibility—but also creation of a resilient supply chain. The cloud enables companies to efficiently process huge volumes of data, they can also use new technologies to reduce their environmental impact, boost efficiency, improve compliance, mitigate risk and  maintain efficiency even amidst global disruption . Internet of Things (IoT) and blockchain are examples of cloud-based technologies that can help  optimize the supply chain  by avoiding overproduction, minimizing shipping distances, maximizing sell-through and managing returns more efficiently.

Companies can connect their products, too. This paves the way for the use of a wide range of circular business models including rental, re-commerce of used goods and product-as-a-service. It’s a great way for companies to infuse greater sustainability and trust into their businesses.

Leading companies are taking greater responsibility for what's happening at the end of the supply chain. This means looking at what customers do with products and packaging when they’ve finished with them.

Some businesses are creating formal takeback programs, whereby people can send back products at the end of their lifecycle so the materials can be transformed into new, useful products. But taking transformative steps toward circularity isn’t solely about responsibility; it’s about  creating new opportunities for competitiveness and sustainable prosperity .

Helping customers reduce their environmental impact has several knock-on benefits, including a boost in customer loyalty, increased sales, a competitive advantage and reduced materials costs. The key is using circular economy principles, in which manufacturers are responsible for their products throughout the lifecycle, to help supply chains address resource scarcity and rising demand for sustainable goods.

Related capabilities

We help clients create enduring change by reimagining tomorrow’s supply networks to positively impact business, society and the planet.

VIEW OUR CAPABILITIES

Join the team

Meet several of our supply chain leaders from around the world. There’s never been a better time than now to help solve business and national issues and be part of supply chain transformations. Learn more.

Supply Chain & Operations People of Change

Frequently asked questions, what is a successful supply chain.

Successful supply chain leaders can better anticipate and adjust to shifts and disruptions in the market. They maintain high levels of  customer satisfaction  because they have a holistic view of their service levels, are sustainable, are responsible and create trust through data that helps generate actionable, predictive insights.

Once companies migrate their systems and applications, and gain the ability to process massive and diverse data sets from across all functions, they quickly experience the erosion of organizational silos as data is shared and acted upon more intelligently and with greater speed and accuracy.

Companies can become even more informed by using technology to  build digital twins of their supply chains . These virtual supply chains allow companies to model and simulate disruptions or changes, as well as identify ways to improve supply chain performance before implementing those changes in the physical world.

What are the different types of supply chain?

There are two types of supply chains: Reactive and Data-Driven. Reactive supply chains make operational improvements based on guesswork or imitating competitors. A Data-Driven approach, however, helps every function within the supply chain, including even  best-in-class manufacturing operations  find new ways to improve efficiency.

What are the main functions of supply chain management?

Supply chain management involves five main functions: engineering, planning,  sourcing , fulfillment, manufacturing and aftermarket services.

For example, supply chain management helps ensure vaccines are manufactured and delivered safely and on time. It helps retailers maintain adequate stock levels of critical supplies. It  directs recyclable products  to the right facilities instead of landfills. It enables the  ability to feed billions  of people around the world.

When supply chain management is truly effective and optimized for flexibility and efficiency, it makes  coping with uncertainty and responding rapidly  to ever-changing demands less of a challenge, and more "business as usual."

What does a good supply chain look like?

The characteristics of a good supply chain are visibility,  cost reduction , growth/value, responsible/sustainable business management, manage enterprise and a digital core.

What is the future of supply chain?

Through 2024, 50% of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics capabilities, and  run with cloud computing . The COVID-19 pandemic amplified the need for supply chain organizations to seek tools that help them make better and more informed decisions, faster.

New digital supply chains will be based on a flexible, asset-light model that places customers firmly at the center so they can anticipate and withstand disruption, as well as support environmental, social, governance and other sustainability practices. Companies will be able to serve diverse customer segments through multiple agile and responsive supply chains based on a network of shared assets. Ecosystems partners and digital technologies will be at the heart of this shift in supply chain planning, all the way through to aftermarket services.

• Mining & Minerals
• Pharmaceuticals
• Pulp, Paper & Forestry Products
• Fostering Inclusive Trade
• Addressing Social Challenges
• Partnerships
• Certifications
• MSC Modern Slavery Transparency Statements
• MSC Ship Recycling Policy

/en/lp/blog/key-terms/supply-chain-business-guide

Moving Goods & Managing the Process: What is a Supply Chain?

Have you ever considered how many steps it takes for a product to reach your hands? From inception to completion, there are numerous stages and steps involved to produce the final product, all of which fall under the term ‘supply chain’. A typical supply chain might start with agricultural produce being harvested at a farm. It is then transported to a storage warehouse in the country of origin, prior to being dispatched to a food processing facility overseas, which makes it into a consumable product that is transported to a retailer. Every stage in this process, including the means of transport, is a link in the supply chain. Farmers, manufacturers, freight companies, distributors and retailers are all links in a supply chain. A supply chain could be regional, national or international in scale. Effective supply chain management is vital to businesses, because in competitive markets it can make the difference between gaining an economy of scale or achieving greater profitability over a rival.

Unveiling the Three Key Supply Chain Types

Supply chains management is commonly associated with mass production and taylorism in the early 20th century. There are three main types of supply chain model: continuous flow, fast chain and flexible, all of which are suitable for different businesses and industries and designed to manage the flow of materials and goods from start to end.

Continuous flow

The continuous flow model of supply chain is for products where there is little or no variation in the volume of production or demand. Manufacturers know how much raw material they need for production, and distributors are fairly sure how many products they are going to be dispatching to the next stage in the chain. These kind of supply chains are generally lean, with just enough flowing through the production process at any one time. While continuous flow supply chains can be vulnerable to shocks, such as geopolitical changes, natural disasters or pandemics, they can be extremely cost efficient and can help encourage better communication and collaboration amongst the different stakeholders.

The fast chain model is ideal for companies that need to get their products in the hands of consumers quickly. Prioritising speed and responsiveness, fast chains seek to deliver maximum returns in the minimum delivery time. The latest trends and consumer demands don’t wait for long, so these businesses rapidly move from prototype to production to shopfloor. There may be shorter distances involved in this type of supply chain.

Flexible or efficient

Ideal for businesses governed by seasonality, flexible supply chains ensure that products are available while demand is still high. Companies and organisations involved in flexible model chains need to ensure that the raw materials, inventory and transportation are all in place at the right time, so planning in advance and inventory management is crucial.

The Vital Role of Effective Supply Chain Management

Supply chain management is the creation, planning, processes, and management of a network of suppliers, manufacturers, retailers and logistics providers that can take a product through its journey from raw material to the end user. The goal for supply chain management is to minimise wastage and cost, add value and optimise efficiency at every link in the supply chain. Good supply chain management will also anticipate potential problems and develop solutions accordingly to maximise revenue and reduce costs.

As supply chains have become more global in nature, businesses have come under greater pressure to ensure that the links in their supply chain reach certain ethical standards. This might mean protecting workers' rights, particularly in the territory where the raw materials are sourced, or the social and environmental practices of suppliers. Visibility and disclosure are important for both you as a business and to your customers. Legislation like the Modern Slavery Act  can call companies to account for their actions, so good supply chain management must also make transparency a key consideration.

Don't miss our latest news

At MSC we can provide consultation and advice on optimising your supply chain and see where our range of shipping and logistics solutions may be beneficial. Contact us today to find out more.

Discover our Range of Solutions

Shipping Solutions

Digital Business Solutions

Inland Transportation & Logistics Solutions

Warehousing & Storage Solutions

Business Plan Template for Supply Chain Managers

• Great for beginners
• Ready-to-use, fully customizable Subcategory
• Get started in seconds

As a supply chain manager, you know that creating a solid business plan is the key to success in optimizing your supply chain operations. With ClickUp's Business Plan Template for Supply Chain Managers, you can easily strategize and manage every aspect of your end-to-end supply chain, from forecasting to customer service.

This template empowers you to:

• Streamline your procurement and production processes for maximum efficiency
• Optimize inventory management to minimize costs and ensure seamless operations
• Enhance logistics to ensure timely delivery and customer satisfaction
• Drive business growth by identifying opportunities and implementing effective strategies

With ClickUp's Business Plan Template for Supply Chain Managers, you'll have everything you need to take your supply chain to new heights. Start planning for success today!

Business Plan Template for Supply Chain Managers Benefits

A business plan template designed specifically for supply chain managers offers a range of benefits to help streamline operations and drive business success. With this template, supply chain managers can:

• Strategically plan and align supply chain activities with overall business goals and objectives
• Identify and mitigate potential risks and bottlenecks in the supply chain process
• Optimize inventory levels and ensure efficient stock management
• Improve communication and collaboration with suppliers, vendors, and partners
• Enhance customer satisfaction through effective order fulfillment and on-time delivery
• Implement cost-saving measures and identify opportunities for process improvement
• Analyze and track key performance indicators to measure the effectiveness of supply chain operations
• Streamline procurement processes and negotiate better deals with suppliers
• Adapt and respond to changes in market demand and supply chain disruptions in a timely manner
• Drive business growth and maintain a competitive edge in the industry.

Main Elements of Supply Chain Managers Business Plan Template

ClickUp's Business Plan Template for Supply Chain Managers is designed to help you streamline and optimize your supply chain operations. Here are the key elements of this template:

• Custom Statuses: Track the progress of your tasks with statuses like Complete, In Progress, Needs Revision, and To Do, ensuring that every step of your supply chain plan is accounted for.
• Custom Fields: Utilize custom fields like Reference, Approved, and Section to add important details and categorize your tasks, making it easy to navigate and organize your business plan.
• Custom Views: Explore different views like Topics, Status, Timeline, Business Plan, and Getting Started Guide to gain a comprehensive overview of your supply chain strategy and progress, enabling you to stay on track and make informed decisions.
• Task Management: Leverage ClickUp's task management features, including assignees, due dates, checklists, and attachments, to effectively collaborate with your team members and drive successful supply chain initiatives.

How To Use Business Plan Template for Supply Chain Managers

If you're a supply chain manager looking to create a comprehensive business plan, the Business Plan Template in ClickUp can help guide you through the process. Follow these four steps to get started:

1. Define your business objectives and goals

Before diving into the details of your business plan, it's essential to clearly define your objectives and goals as a supply chain manager. Are you looking to streamline operations, reduce costs, improve efficiency, or expand into new markets? Knowing your goals will help shape the rest of your business plan.

Use Goals in ClickUp to set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for your supply chain management business.

2. Assess your current supply chain processes

Take a deep dive into your current supply chain processes and identify areas for improvement. Are there bottlenecks, inefficiencies, or outdated practices that need to be addressed? Analyze your current inventory management, procurement, logistics, and distribution processes to identify opportunities for optimization.

Use the Gantt chart in ClickUp to map out your current supply chain processes and identify areas for improvement.

3. Develop strategies and action plans

Based on your goals and the assessment of your current processes, develop strategies and action plans to achieve your objectives. Consider implementing technology solutions, optimizing inventory levels, improving supplier relationships, or implementing sustainability initiatives. Break down these strategies into actionable steps to ensure successful execution.

Use the Board view in ClickUp to create cards for each strategy and action plan, and assign them to team members for implementation.

4. Monitor progress and adjust as needed

Once your business plan is in motion, it's crucial to monitor progress and make adjustments as needed. Regularly track key performance indicators (KPIs) and metrics to evaluate the effectiveness of your strategies. Identify any roadblocks or challenges that arise and make necessary adjustments to keep your supply chain operations on track.

Use Dashboards in ClickUp to visualize and track your KPIs and metrics, and set up Automations to receive real-time updates on your supply chain performance.

By following these steps and utilizing the Business Plan Template in ClickUp, you can develop a strategic and actionable business plan to optimize your supply chain management operations.

Get Started with ClickUp’s Business Plan Template for Supply Chain Managers

Supply chain managers can use this Business Plan Template for Supply Chain Managers to strategically plan and manage their end-to-end supply chain operations.

First, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to streamline your supply chain operations:

• Use the Topics View to categorize different sections of your business plan, such as forecasting, procurement, production, inventory management, logistics, and customer service
• The Status View will help you track the progress of each section of your business plan, with statuses like Complete, In Progress, Needs Revision, and To Do
• Use the Timeline View to visualize the timeline of your business plan and set deadlines for each section
• The Business Plan View will give you an overview of the entire business plan, allowing you to easily navigate and make updates
• The Getting Started Guide View will provide step-by-step instructions on how to use the template and get started with your business plan
• Customize the template by adding custom fields like Reference, Approved, and Section to track additional information and make it more tailored to your needs
• Update statuses and custom fields as you progress through each section of your business plan to keep stakeholders informed and ensure smooth execution
• Business Plan Template for Market Intelligence Professionals
• Business Plan Template for Fundraising Campaigns
• Business Plan Template for Spotify
• Business Plan Template for Ice Cream Business
• Business Plan Template for Online Courses

Template details

Free forever with 100mb storage.

Free training & 24-hours support

Serious about security & privacy

Highest levels of uptime the last 12 months

• Product Roadmap
• Affiliate & Referrals
• On-Demand Demo
• Integrations
• Consultants
• Gantt Chart
• Native Time Tracking
• Automations
• Kanban Board
• vs Airtable
• vs Basecamp
• vs MS Project
• vs Smartsheet
• Software Team Hub
• PM Software Guide

• Contact sales

Start free trial

An Introduction to Supply Chain Management (SCM)

Table of Contents

What is supply chain management, what is a supply chain, supply chain management process, parts of a supply chain model, benefits of supply chain management, supply chain management faq.

Supply chain management (SCM) is the discipline that manages the flow of supplies through all of the stages of a production cycle. SCM applies to any organization that executes projects, produces goods or provides services, as those activities require a supply chain to maintain a steady flow of resources.  That’s where supply chain management comes in.

Supply chain management is very important in the business administration field because it affects other key business areas such as operations management, inventory control and quality management. But what really makes SCM so important is that it can also become an important competitive advantage for businesses.

The main goal of supply chain management is to make the most of the resources involved in a supply chain and be as productive as possible. People are managed and supplies require management as well . Whether those supplies are goods or services, they must be accounted for and carried through from start to finish with deliberate control. To better understand SCM, let’s define what a supply chain is.

A supply chain is a network that connects a company to suppliers of raw materials. It is also used to deliver a product to customers. The better the supply chain management, the more of a competitive advantage the company has.

Supply chains are steps that are required to get raw materials, products or services from the original state to the customer and improve customer relations. Large companies and projects usually have more than one supply chain, which is known as a supply network. Having supply chain managers and supply chain management is key to delivering customer value and maximizing the efficiency of your supply network.

Project management software can help you manage your supply chain and supply network. ProjectManager is a cloud-based work and project management software that has visual workflow features, such as kanban boards, that help keep your teams working at capacity without excess raw materials that need storage space. Get started with ProjectManager today for free!

The supply chain process is fundamental to good supply chain management. It is used by companies to make their supply chain as efficient and cost-effective as possible and deliver customer value and give them a competitive advantage. There are five steps to the supply chain process. They are as follows.

1. Planning

In order to control inventory and the manufacturing process companies must plan to match demand with supply, which is known as supply chain planning . This prevents overspending on warehouse space or not having raw materials needed for your manufacturing and slowing down delivery of product.

2. Sourcing

This step involves finding those vendors who can get the goods and services you need when you need them. Sourcing is how you get supplies when you need them and meet the demand of your customers .

Here is where those raw materials you procured are made into the products that meet your customers’ demand. This is where assembling, testing and packing occurs. Getting customer feedback is key to delivering customer value.

4. Delivering

Getting your finished product to the customer is the next crucial step in the SCM process. If you’re not able to get what you make to your customers all the previous steps are for naught. This makes delivering key to supply chain performance.

5. Returning

Returning or reverse logistics is part of what’s called post-delivery customer support process. It is important to have a clear channel for returns or risk tarnishing your brand. The company can then take these low quality, defective or expired materials and return them to their suppliers.

Related: 10 Free Manufacturing Excel Templates

To get the most out of SCM requires looking at the big picture in terms of an organization’s management. No longer is managing an individual company function enough. The integration of all activities involved in the supply chain is necessary: that means integration between different departments, such as purchasing and marketing.

Supply chain management also needs integration and collaboration between buyers and suppliers, joint product development, common systems and shared information. Here are the most important parts of any SCM system or model.

• Customer-Relations Management: There must be a managed approach to interacting with the company’s current and potential customers in order to understand what they want and expect.
• Customer-Service Management: This differs from customer-relations management in that it focuses on the interactions between the customer and the company instead of a more strategic management process. It helps facilitate a mutually satisfying goal for both customer and the company, as well as eliciting customer feedback and maintaining communications between the two parties, so there are positive feelings from both parties.
• Demand-Management Style: A methodology to forecast, plan for and manage the demand for products and services. This can address both macro-levels, as in global economics, but also micro-levels within the company.
• Order Fulfillment: The order fulfillment process that encompasses everything from point-of-sale interest to delivery of that product or service to the customer. It is the way a company responds to customer orders.
• Manufacturing-Flow Management: Manufacturing is a process, and supplies feed that process based on historic data surrounding how it has been done and what was needed historically. But that process needs flexibility as quantities change. Therefore, one must manage all activities related to planning, scheduling and managing the manufacturing process.
• Supplier Relationship Management (SRM): Supplies likely are coming from a third party, and those interactions must be strategically planned for. SRM is key to a healthy supply chain.
• Product Development and Commercialization: To reduce time to market, customers and suppliers are integrated into product vision and the product development process. Shortening the product life cycle keeps the company competitive. This process includes coordinating with customer relationship management to know customer needs, selecting materials and suppliers with procurement and developing a production technology in the flow of manufacturing to integrate the best supply chain flow for the product and market. When successful, this has a positive impact on cost, quality, delivery and market share.
• Returns Management: There will always be returns and the better they’re managed, the more productive and competitive the SCM process. Management of this aspect of the SCM means fast and easy returns management, automation and deciding how to process returned materials. Make sure information is visible to capture early in the process. Then control the flow of product, including receipts and reconciliation, noting if there are any quality issues.

Supply chain management is a hefty task with hefty rewards. Here are a few ways that well-executed SCM can benefit your business or project.

Keeps Businesses Competitive & Paces with Technology

The simple answer to why SCM is important to any business is that it helps them remain competitive. Markets change, and as the marketplace becomes increasingly global, the need for better efficiency is crucial. As management goals change, too, there is a move away from the past traditional relationships to incorporate and organize all business processes throughout a value chain of multiple companies.

Advances in information technology and the increasing use of outsourcing has also added to the expansion of the supply chain. This has created a need for a more collaborative network, so different enterprises can work harmoniously together.

Creates Productive Environments

These changes in how businesses are managed have led to the development of supply chain environments. Multinational companies, joint ventures, strategic alliances and other partnerships, as well as technological advancements, have contributed to more cooperation among those in the supply chain network. As supply chains become more holistic and cooperative, companies must adapt.

Proactive Strategy

But supply chain management is not merely reactive, it also helps to stimulate innovation and productivity by assisting companies with organizational learning. The more extended a company is in terms of its supply chain, the more adaptive it has to be. That leads to creative thinking, which results in innovation and increased productivity.

Satisfies Customers While Reducing Operating Costs

Customer service also benefits. Customers demand quality and they expect products to be available where and when they want them or delivered when on time. Supply chain management will also help with sale support after they’ve made the purchase.

But it’s not just the customer who benefits. As noted, SCM is instrumental in cutting operation costs. When smartly applied it can decrease purchasing, production and total supply change costs. This improves a company’s financial position by adding to profit leverage, reducing fixed assets and increasing cash flow.

SCM is a complex topic and you might have even more questions about it. Here are some quick answers about supply chain management topics.

What are the Components of Supply Chain Management (SCM)?

The 5 components of the supply chain management process are planning, sourcing, making, delivering and returning.

What Is Supply Chain Analysis?

Supply chain analysis is the process of auditing all the different steps of the supply chain to identify any possible areas of improvement.

What Is a Supply Chain Strategy?

A supply chain strategy is a roadmap that a company uses to source information, materials and equipment from its suppliers to create products and deliver them to its customers.

Supply chain management is just one more screw that can be tightened on the ship of business to help it sail better through the turbulent waters of industry. But it’s a complicated process, one that benefits from having robust project management tools to plan, monitor and report on the many aspects of the supply chain that need control. ProjectManager is a cloud-based software that has the tools to make you manage more efficiently and effectively. See what it can do by taking this free 30-day trial.

Deliver your projects on time and on budget

Start planning your projects.

7 Steps To Efficient & Responsive Supply Chains (2024)

Verified & Reviewed

Last updated on October 21, 2023 Written By Kristina Lopienski

Subscribe for More

Table of Contents

What is supply chain efficiency?

What is supply chain responsiveness, how to improve supply chain efficiency in 7 steps, 4 supply chain management efficiency best practices, supply chain efficiency examples with shipbob, shipbob unlocks supply chain efficiency for ecommerce, supply chain efficiency faqs.

When it comes to your ecommerce supply chain , complacency is the enemy of growth.

No matter how efficient your supply chain is running, finding ways to improve your supply chain is something you should always be doing. 

But knowing how to improve and optimize your supply chain can be a challenge — not only for small brands but also for established ecommerce businesses.  

In this article, you will learn best practices on how to improve supply chain efficiency and how a third-party logistics ( 3PL ) partner like ShipBob can help. 

Supply chain efficiency is a business’s ability to use resources, technology, and expertise in order to minimize logistics costs and maximize profits. The goal of an efficient supply chain is to save money and maximize profits by optimizing the processes and stages in the supply chain.

What’s the difference between supply chain efficiency and supply chain effectiveness?

Supply chain efficiency is defined as the internal standard of performance of an organization, while supply chain effectiveness is the external standard of performance. 

In other words, supply chain effectiveness focuses on meeting the demands of groups outside your organization; and supply chain efficiency refers to meeting those demands as quickly and cost-effectively.

Supply chain responsiveness refers to the ability to react quickly to sudden changes in the environment that affect your logistics processes. 

Examples include the ability to scale up when the COVID-19 pandemic hit (i.e., meeting demand for more than double the amount of typical online orders when lockdowns went into place), or getting inventory shipped quickly during the period of time when some of the busiest ports in the world were completely overloaded with container ship congestion.

Components of a responsive supply chain

What separates out typical supply chains from responsive supply chains? While you could argue that luck is often on the side of responsive supply chains, there’s a lot more that goes into it behind the scenes, from diversifying suppliers and carriers, to implementing connected technology that enables real-time tracking across the supply chain.

Flexibility is at the core of a responsive supply chain, which is not just reacting to changes but being proactive as well.

The objectives of a responsive supply chain include:

• Meeting customer demand (delivering on time and at the expected cost)
• Being able to scale up or down when demand forecasting goes awry
• Managing costs during volatile times
• Continuously improving processes and workflows to fit the current needs and situation
• Reducing risk through diversification, planning, and by establishing the right partnerships

There are several key stakeholders (and often third-parties) involved in ensuring a responsive supply chain runs smoothly, including:

• Your company leaders
• Your manufacturers and suppliers
• Your fulfillment center(s) and 3PL
• Your technology providers
• Your shipping carriers
• Your customers

All of these stakeholders must be responsive communicators, with communication going both ways.

Efficient vs responsive supply chain

Supply chain efficiency is focused on doing more with less, where supply chain responsiveness is focused on agility and keeping business afloat when things don’t go according to plan. But really, supply chain efficiency and supply chain responsiveness work together by managing continuous chaos, as supply chains are some of the most volatile and delicate things in business.

At the end of the day, it’s not about having an efficient vs. responsive supply chain but a cohesive supply chain that can move quickly and adapt without losing money. Efficient and responsive supply chains have common metics to monitor, like on-time fulfillment, profit margins, shipping speeds, lead times , and more.

Together, they have the same end goal of meeting customer expectations.

Whether you’ve just started your ecommerce business, or it’s already well-established, improving supply chain efficiency can seem like a monumental task. If you don’t know where to start, here are seven steps towards greater supply chain efficiency:

Step 1: Expand your supply chain visibility

The first step in improving supply chain efficiency is to increase your visibility over logistics operations .

The best way to do this is to implement inventory management strategies that allow you and your team to track inventory levels as they move through stages, from receiving to warehousing , to being packed, picked, and shipped to customers. 

A modern inventory management software (IMS)  can provide more visibility, as well as the ability to access real-time inventory tracking , so you can avoid stockouts , backorders , and overpaying carrying costs .

By implementing an IMS, you’re also given access to data and analytics to help you make informed business decisions, such as inventory forecasting . 

Step 2: Develop a good relationship with your suppliers

Communication with your suppliers is key! When you have a good relationship with your suppliers , you can plan better and avoid any shortages, delays, or issues early on.

A dependable supplier is responsible for tracking the work-in-process inventory phase (i.e., the movement of raw materials being processed into finished goods), which impacts the quality of the products you sell and how quickly you can obtain more inventory.

Suppliers that are inconsistent in delivering a quality product can slow down your supply from the very beginning, so it’s important to be selective and weed out suppliers that are consistently causing issues or delays to your sourcing.

Once you have discovered suppliers that are both responsible and flexible, you’ll need to continually foster those relationships through clear and open communication and conflict resolution. 

Step 3: Automate your supply chain processes

Finding ways to automate supply chain processes is one of the best ways to improve efficiency, reduce human error, increase supply chain performance and velocity , and save time and money in the long run.

Automating time-consuming tasks, from order processing to automated shipping, doesn’t necessarily replace the need for human effort, but it does help you streamline your operations and increase productivity. 

Warehouse automation  reduces the time, effort, and errors that are common in logistics. Some business owners even employ logistics automation in their own warehouse, using their own technology and tools.

However, since automation technology, equipment, and robotics can be costly, many ecommerce businesses rely on a tech-enabled 3PL that have made investments in automation to optimize their supply chain.

This way, businesses can invest more in product development , marketing, and other important initiatives.

Step 4: Implement supply chain software

With so many processes taking place simultaneously across your supply chain, it’s important to use implement the right software and technology that allows your team to work as efficiently as possible. 

If you manage a warehouse inventory across locations, you might want to consider using a warehouse management system (WMS) that connects with your IMS, which can help you automate order processing , get real-time inventory tracking, order management tools, and data reporting and analytics.

Of course, implementing a robust tech stack can become costly. Fortunately, many direct-to-consumer (DTC) brands partner with a 3PL that already has the technology necessary to optimize supply chain efficiency.

For instance, ShipBob’s fulfillment centers are powered by a proprietary tech stack, including a WMS that lets you know what’s going on in every fulfillment center you have inventory stored in and where your products are stored at all times.

Step 5: Cultivate supply chain experts

Once you’ve made the decision to implement all of the changes above, the next step is to create a training plan for your employees. 

Remember, your supply chain is only as efficient as the people who manage it. Warehouse associates, order fillers , and logistics managers should all be trained on standard operating procedures to provide consistency, efficiency, and accuracy in their decision making.  

If an employee has been at the company for a long time, be sure to ask for feedback on how your warehouse team can improve operations. If you lack a logistics team, a 3PL can provide the expertise needs to manage your supply chain. 

Step 6: Establish green initiatives across your supply chain

Going green is business value that more customers these days are looking for. Your customers are becoming extremely aware of the steps that companies are taking (or not taking) to reduce their carbon footprint , so it’s important to consider ways to reduce waste. 

One great cost-effective way is to utilize SIOC packaging whenever possible — which can also reduce shipping costs — or strive for eco-friendly packaging that utilizes biodegradable materials and minimizes waste by cutting back on unnecessary filler materials. 

If you’re looking to outsource fulfillment , partner with a 3PL that invest in eco-friendly initiatives or allow you to use your own sustainable custom packaging.

For example, ShipBob partners with Ecocart so you can purchase carbon credits by allowing your customers to choose (and optionally, pay for) carbon offsets on a per-order basis, and allowing you to offset the carbon impact of product manufacturing and even last-mile delivery . We also partner with experts in eco-friendly shipping and packaging .  

Step 7: Optimize your supply chain regularly to remain efficient

Improving your entire supply chain is not a one-time fix. It’s a process that needs to be reviewed and optimized as often as possible.

It’s important to continuously collect and analyze warehouse inventory management performance to identify areas of improvement where further efficiency and higher order accuracy can be achieved. This can be done by investing in technology, automating processes, or hiring logistics experts to help. 

For instance, ShipBob looks at several different aspects of their fulfillment operations to find ways to become more efficient, such as assigning pickers optimized routes, opening more fulfillment center locations to cut down on shipping times, and improving warehouse picking and packing processes.

Investing in supply chain efficiency improvements allows ShipBob merchants the ability to provide a better customer experience, save on costs, and spend less time worrying about logistics.

It’s one thing to make your supply chain more efficient — but keeping it that way is another matter altogether. To maintain an efficient supply chain, here are four supply chain management best practices to consider.

1. Implement an effective inventory management process

Keeping track of your inventory at all stages of your supply chain requires an investment in technology to improve inventory management processes. There are several inventory apps on the market that can you help you: 

• Optimize stock control .
• Avoid inventory stockouts .
• Set automatic reorder points .
• Improve demand forecasting .
• And much more.

Many 3PLs like ShipBob offer order fulfillment technology with built-in inventory management tools to help you better manage inventory, as well as offer direct integration with robust inventory management solutions. 

“We utilize ShipBob’s Inventory API, which allows us to programmatically retrieve real-time data on how many units of each product are currently stored at ShipBob’s warehouses. We currently use this API to generate custom reports to tie this inventory data into our accounting platforms.” Waveform Lighting Team

2. Use a warehouse management system

By using a warehouse management system (WMS), you can manage inventory storage, track inventory in real time, and boost productivity to efficiently fulfill orders. 

A WMS is designed to monitor the daily operations of your warehouse, so you can decided what areas need improvement, how to save on costs, and how to become more efficient. 

For instance, ShipBob’s entire fulfillment network is powered by a proprietary WMS, which provides visibility and transparency into performance such as fulfillment speed, orders fulfilled on time, error rates, orders shipped claim-free, and much more.

“With ShipBob, you see exactly what is picked. With the new [previous 3PL] fulfillment network, we had to rely on our rep for everything. It doesn’t give you the ability to be self-sufficient. Because of a lack of ownership of the entire fulfillment stack, it’s been difficult to rectify, unlike ShipBob who owns the entire stack: inventory and order management system, warehouse management system, and their fulfillment centers.” Gerard Ecker, Founder & CEO of Ocean & Co.

3. Create a returns management system

Implementing a smooth returns management system is important for two main reasons:

1) It allows you to keep track of damaged inventory that needs to be returned to the supplier.

2) It maintains customer satisfaction by making sure that any damaged or wrong products are returned as swiftly, cost effectively, and easily as possible. 

To preemptively prevent ecommerce returns  and to keep returns controllable and to a minimum, try including clear product descriptions, increasing the return time window, conducting regular quality testing, and identifying trends in commonly return items. 

“Returns were taking a lot of time and resources to process on our end, but ShipBob was super helpful and critical in creating a solution for us.” Nikolai Paloni, Co-Founder of Ombraz Sunglasses

4. Use real-time data for continuous improvement

When you have access to the right data from an analytics reporting tool , you can make better-informed decisions for supply chain planning . 

Inventory turnover rate , order accuracy, time to ship, warehouse capacity used, and average cost per unit for storage, fulfillment, and shipment are all critical metrics to track, as they provide insight into which areas of your supply chain are thriving and which require improvement. 

With ShipBob, you have access to all these distribution metrics and can swiftly identify where, when, and how your orders are being fulfilled across the supply chain.

“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.” Oded Harth, CEO & Co-Founder of MDacne

ShipBob is a best-in-class 3PL with the fulfillment infrastructure, technology, support and, expertise to help you optimize supply chain efficiencies, eliminate bottlenecks , and boost the bottom line through cost and time savings.  

Here are a couple of customer stories from ShipBob demonstrating how 3PLs can help create a leaner supply chain , from inventory management to warehousing , to fulfillment and shipping.  

Driving down costs with economies of scale

Navigating supply chain efficiency is especially difficult when your business experiences significant growth spurts. The leadership at TB12 , a health and wellness brand co-founded by seven-time Super Bowl winner Tom Brady, discovered this first-hand when their sales began to take off. 

But after utilizing ShipBob’s nationwide network of fulfillment centers , TB12 expanded across the country while also reducing shipping and fulfillment costs . 

In addition, ShipBob’s software fit in seamlessly with their existing tech stack, which saved them the struggle of working between multiple incompatible platforms. 

Through their partnership with ShipBob, TB12 grew a staggering 75% and can now continue to provide best-in-class products with high-quality ingredients that are important to their active customers without having to worry about inefficiencies during growth.

“As we started to hit that first inflection point of growth, it became apparent we needed to look for a 3PL that could help us expand geographically in the US and also drive down shipping costs and expenses. Since switching to ShipBob from our previous 3PL, our fulfillment cost on comparable orders went down by 25%.” Michael Peters, VP of E-Commerce Operations at TB12

Save time and speed up fulfillment

After growing The Finer Things 1920 from 50 subscribers to thousands, founder Andrea Hamilton knew she could not keep fulfilling orders from her basement. 

To improve her supply chain efficiency, she turned to ShipBob — and one phone call with an account executive later, she had an outsourcing partner for fulfillment just in time for busy holiday season that could handle everything from inventory management, to automated fulfillment and shipping. 

By partnering with ShipBob, The Finer Things 1920 team can spend more time expanding their customer base and adding perks such as bonus boxes, as the stress, time, and trouble of fulfillment is off their hands.

“Last time we shipped our own packages, it took us 3 weeks. It took ShipBob less than 2 days. I couldn’t wait to delegate this business over, because the stress level was through the roof. I am just so grateful for ShipBob.” Andrea Hamilton, Founder of The Finer Things 1920

As experts in global supply chain logistics for online brands, ShipBob employs best practices in our operations to ensure that every stage from receiving inventory to shipping orders is done as cost-effectively and efficiently as possible. 

Our warehouse teams are trained to receive and store your inventory quickly and accurately, utilize our storage space, and have us pick, pack, and ship your orders with maximum efficiency, resulting in a high order accuracy rate. 

ShipBob also employs logistics automation , from automatically generating picking list to box selection algorithms for consistent packaging, to automated sorting and the ability to automatically optimize shipping routes.

We also provide access to fulfillment performance data for our merchant with our   data and analytics reporting tool , which also includes inventory allocation , shipping, and demand forecasting insights.

ShipBob’s extensive global fulfillment network allows ecommerce businesses to compete with larger brands and marketplaces like Amazon. We also have partnerships with major shipping carriers to negotiate discounted shipping rates, so you can pass the savings on to your customers (e.g., free shipping options). 

ShipBob does more than just improve ecommerce supply chain efficiency — rather, we help you save time, money, and energy by taking all-things logistics off your plate, so you can focus on growing your business. 

To request a fulfillment quote from ShipBob, click the button below.

Achieving supply chain efficiency is a complicated task, as multiple factors are involved in minimizing cost while also meeting customer demand. Here are just a few of the most common questions merchants ask about supply chain efficiency.

What is an efficient supply chain strategy?

Because every business model and supply chain is different, there is no one strategy to build an efficient supply chain. The most efficient supply chain strategies optimize every stage of the supply chain (including warehousing, fulfillment, and shipping) and rely on technology and expertise to deliver time and cost savings. 

What is the definition of supply chain efficiency?

Supply chain efficiency refers to a business’s ability to harness the resources at their disposal in the best way possible, so as to minimize costs and maximize profits. This is different from a supply chain’s “effectiveness,” which refers to a business’s ability to meet the demands of groups outside the organization.

How do you measure supply chain efficiency?

To measure supply chain efficiency, merchants should track several supply chain metrics that relate to inventory, orders, fulfillment, and shipping. Inventory turnover rate, order accuracy, and average cost per unit for fulfillment and shipping are just a few key metrics to track that can help you find ways to improve your supply chain.

How can you improve supply chain efficiency?

While there are many ways to improve supply chain efficiency, almost all methods boil down to having the right tech stack — one that offers insights into your inventory data and deploys automation, along with the right logistics team. The combination of technology and expertise can transform your supply chain efficiency into a competitive advantage, and ultimately foster your business’s growth.

What is responsiveness in supply chain performance?

Supply chain responsiveness is how quickly a business is able to react to sudden changes in the logistics landscape. Think back to when the COVID-19 pandemic hit, and demand for certain products quadrupled overnight. Companies that were able to deliver more inventory to customers faster came out as winners.

What are the characteristics of a responsive supply chain?

All responsive supply chains have a few characteristics in common, including flexibility, diversification, technology adoption, and strong working relationships with their partners and stakeholders. A responsive supply chain also stays focused on meeting customer demand by adapting to the situation at hand.

Can supply chains be both efficient and responsive?

Yes! While supply chain efficiency is focused on doing more with less, supply chain responsiveness is about agility and keeping business afloat when things don’t go according to plan. However, name a supply chain that isn’t constantly volatile and delicate! Rather than thinking it’s either a supply chain that’s efficient vs. a responsive supply chain, you need both to move quickly and adapt without losing money by focusing on key metics such as on-time fulfillment, profit margins, shipping speeds, lead times, and more.

Your supply chain 'easy' button

With shipbob.

Order fulfillment services

You omnichannel fulfillment partner that's an extension of your brand, from unboxings to 2-day shipping.

Warehouse management

Have your own warehouse? Get ShipBob WMS to reduce mis-picks, save time, and improve productivity.

Global scalability

Grow into new geographies with ShipBob's international presence in the US, UK, EU, Canada, and Australia.

Written By:

Kristina Lopienski

Kristina is the Sr. Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business.

Read all posts written by Kristina Lopienski

Subscribe to our blog

Join tens of thousands of ecommerce brands to get more articles like this and our latest resources delivered to your inbox.

Just for you

Latest tips to improve ecommerce logistics.

Using Shopify Analytics to Boost Customer Loyalty [2024]

Guide to Offering Fast & Affordable 2-Day Shipping For Your Ecommerce Site

Package Stuck in Customs? Learn Why, How to Get It Out, & How to Make Sure It Never Happens Again

Shipbob offers outsourced fulfillment and a wms if you have your own warehouse. request a quote by filling out the form..

A fulfillment expert will get back to you shortly.

Loading Job...

Job description:.

Supply chain risk management is back

Today’s complex and long supply chains are almost inevitably subject to disruption. But the stakes seem to have risen, whether due to intensifying trade disputes and political upheavals (of which Brexit is only one example), or to high-cost natural disasters plaguing more of the world.

About our research

As a result, we hear more global companies questioning how to assess and manage these risks and prepare their supply chains accordingly. Which precautionary measures make sense, and how much do they differ by industry? We conducted research by interviewing supply-chain managers across Europe to understand how they assess risks, what they do to prepare, and how they respond to disruptions.

Stay current on your favorite topics

Risks on the rise.

Natural disasters are particularly dramatic illustrations of the difficulties facing supply-chain managers. Even in a comparatively benign year, such as 2019, global losses due to earthquakes, floods, fires and the like reached $150 billion. But dramatic spikes are happening more often, with nearly $350 billion in losses recorded in 2017 (marked by Hurricanes Irma in the continental US and Maria in Puerto Rico) and in 2011 (Thai floods and the Fukushima earthquake-tsunami).

These high costs, in combination with long recovery times, have triggered many companies to reassess their supply-chain strategies and footprints to make them more resilient to any kind of disruption (Exhibit 1).

Geopolitical uncertainty has further accelerated the need for thoughtful, regular review of supply chains. Over the past two years, new tariffs have been imposed with scant notice, raising input costs by 15 percent or more almost overnight. Unsurprisingly, in the quarterly Economic Conditions Snapshot survey by McKinsey, “changes in trade policy” spent most of 2019 as the single greatest threat respondents perceived to economic growth, both globally and for their home economy.

Accounting for 54 percent of imports and 49 percent of exports, the EU is the most important trade partner for the UK. Brexit discussions are especially relevant for companies with complex international trade flows. The impact of longer lead times due to border delays, additional administrative burdens, and inventory buildups may multiply, as the automotive example below shows (Exhibit 2). The end customer will not only have to pay for an increase in tariffs, but also for additional costs accumulated throughout the supply chain (such as for stock-holding costs).

How companies are preparing for Brexit and trade disputes

We noticed a difference in the measures that companies are taking to prepare for the potential impact of Brexit in comparison to the evolving US–China trade negotiations. In short, Brexit is seen as a less-fundamental risk compared to proposed trade regulations. For many companies, the UK market is simply not large enough to dedicate significant resources to prepare for Brexit. They believe that the consequences of Brexit will be short-lived operational issues that will ease within a few weeks or months. These businesses are focusing on short-term measures such as setting up alternative transport routes and preparing for new customs requirements.

Other companies are simply ready to accept the risk of longer lead times due to customs, stating that they “don’t care; customers will simply have to wait longer and pay a bit more; it affects the entire industry.” Companies with time-critical lead requirements (as with certain medical products) will try to limit the impact on final consumers by building up inventory and securing local supply. Most of them also report that they are launching cost-cutting projects to mitigate increases to end-customer prices.

We also hear that the long, unpredictable Brexit process has had one unexpected advantage: by now, everyone either is well-prepared or has consciously decided to take a wait-and-see approach.

Would you like to learn more about our Operations Practice ?

We can see clear differences in the supply-chain impact of Brexit and other trade regulations by industry.

• Pharma companies operate in a highly regulated environment, so a hard Brexit—in which Britain and the EU do not secure a trade agreement—would cause major disruptions. They must secure multiple weeks’ supply for critical drugs and need to stock up accordingly. Many pharma companies have already transferred EU market authorizations, such as the retesting and accrediting of products, to EU entities, anticipating the post-Brexit risk.
• For the fast-moving consumer goods industry, border delays of several days could cause major damage, especially for fresh and perishable products. Almost 30 percent of food imported to the UK currently comes from the EU. A large consumer player has established customs-accredited warehouses to manage Brexit-lengthened lead times, while a retailer has opened new distribution centers in the EU and return centers in the UK to decrease duties on returned products. More generally, many consumer-goods companies feel the need to shorten their reaction times: “We need to become more agile to react faster. Currently, our supply chain is a large tanker rather than a speedboat,” said one industry representative.
• Players in the discrete manufacturing industry—characterized by just-in-time production systems, such as in automotive—are reviewing various measures to minimize the potential impact of production delays. Many are assessing different transport routes and reviewing logistics contracts, or have decided to build up stock and extend warehouse capacity. Some automotive manufacturers are even considering changing their manufacturing setup, such as relocating production facilities from the UK to mainland Europe or establishing complete knock-down (CKD) plants in the UK to minimize possible tax burdens.

For most of our respondents, the supply-chain impact of the US–China trade disputes—and the related introduction of new tariffs—is seen as a more profound and systematic threat than Brexit. In reassessing their supply-chain structures, some companies have decided to localize their footprints or even to relocate their production facilities. Others are moving parts of their manufacturing capacity from China to Southeast Asian countries to limit tariff exposure.

Some of the effects could turn out to be positive, at least in the longer run. A supply-chain manager told us that the tariffs are perceived as a “chance […] to shake up [the] supply chain and increase agility.” As in their response to Brexit, automotive companies are evaluating CKD plants to overcome the risk of high import tariffs. But the majority of companies are still in the analysis phase, waiting for more clarity before making any major investment decisions (Exhibit 3).

How advanced companies manage supply-chain risk

The degree of professionalization of supply-chain risk management varies widely. Many companies still follow a more-reactive approach in responding to supply-chain disruptions. That said, almost all of the companies that we surveyed diversify their operations and implement multi-sourcing strategies wherever feasible and economically justifiable. Working closely together with their suppliers and performing regular supplier audits is part of their general business practice. On an ongoing basis, they monitor the most relevant risks—such as regulatory changes or changing customer demand.

But relatively few invest much time and money in automating any of these activities. When hit by sudden supply-chain disruptions, they build temporary task forces to manage the issue on an ad hoc basis. In some cases, precious time is lost due to insufficient preparedness.

More advanced companies have permanent supply-chain risk-management teams and processes in place. The leading automotive OEMs, chemicals, and electronics companies with very complex global supply chains generally belong to this group. The information cascade between the supply-chain risk-management team and other functions such as marketing, IT, and legal is well-established, with clearly defined interfaces. In the case of disruptions, these teams exchange information on the fly and react quickly.

Furthermore, these companies continuously monitor trends and events that might cause disruptions in the global supply chain. They work to increase transparency throughout even multitier supply chains, with leaders in supply-chain risk management setting up databases of suppliers across tiers, including each supplier’s location, performance, and audit results. And they use external software and data sources to receive push notifications about the latest incidents, together with the possible implications on their supply footprints.

By developing and assessing scenarios with different probabilities for pre-identified risks, the most advanced organizations can make high-level impact calculations that enable better prioritization. Accordingly, prioritization is based not only on financial factors, but also on business-specific factors such as regulatory and strategic considerations and the company’s specific risk appetite. Supply-chain risk leaders develop a set of reactive and proactive response strategies, and foster general risk awareness among their employees, by creating an openness to address potential shortages and failures.

Creating supply-chain resilience

In light of increasing business complexity and growing overall uncertainty, establishing a systematic supply-chain risk-management approach becomes more and more relevant. Many companies relying mostly on reactive measures today want to improve their supply-chain risk management capabilities—and say they are willing to invest more time and resources to do so. Multiweek supply-chain disruptions causing significant financial burden have triggered a revival of risk management in operations. Advanced companies aim to prepare for new risks, including cyberattacks, or environmental challenges, such as decarbonization of the overall production footprint.

Digital supply-chain transformation with a human face

Increasing supply-chain resilience is a leading theme for many globally operating companies with complex operations. Based on our experience, we suggest a four-step process that can be tailored to a company’s needs based on its individual starting position. Less-advanced companies will typically start by concentrating on establishing an end-to-end process first; their more-advanced counterparts may instead focus more attention on advancing steps 3 and 4.

• Identify the most relevant events and risks threatening to disrupt the company’s supply-chain operations.
• Define possible outcome scenarios and assess their high-level impact. Depending on the level of exposure and magnitude of the impact, the company prioritizes risks for targeted attention.
• Develop response strategies for prioritized risks. It is essential to create an unbiased process to decide where to invest and how to prepare. A systematic calculation of business cases is the foundation for these investment decisions. The trade-off between investing in prevention versus taking the risk of being hit when unprepared—resulting in severe disruptions and losses—needs to be quantified. Different dimensions important to the company need to be incorporated to create a meaningful business case, otherwise it is difficult to get the required funding for risk management.
• Finally, supply-chain risk management needs to be incorporated into regular decision-making and planning processes. Embedding risk-management capabilities as a regular ingredient of business decisions in operations is the first step towards creating a true risk culture and a resilient company.

A systematic classification of risks, and development of a related response strategy, is essential to improve supply-chain resilience strategically—while keeping required investment to a minimum. A simple framework can help by classifying risks on two axes: the vertical estimates to what extent a risk can be anticipated, while the horizontal quantifies the risk’s expected impact (Exhibit 4).

• “Manageable surprises” are difficult to anticipate but manageable in terms of impact.
• “Black swans” are hard to anticipate and severe in terms of impact.
• “Brewing storms” can be anticipated and will have a high impact once they materialize.
• “Business challenges” are typically low-impact risks that can be both anticipated and managed quite easily.

For each of the quadrants, a specific set of response strategies can be developed. A reactive risk-management approach should be taken for risks that are difficult to predict, and a more proactive approach for those with higher predictability (Exhibit 5).

• Low-impact risks that are hard to anticipate , such as the bankruptcy of an individual supplier or a localized conflict in a country without major operations, can be accepted or avoided to a certain extent by diversifying operations. Systematically implementing a dual-sourcing strategy, through nominating new suppliers or negotiating a second source of supply from the same supplier, help mitigate this risk category.
• High-impact risks that are hard to anticipate , including natural disasters, terrorist attacks, or cyberattacks, can be managed by building strong crisis-management capabilities and resilience throughout the system. A supply-chain risk-management team can introduce a systemic risk-monitoring process which can be enhanced by regular scenario-planning exercises. Through keeping healthy reserves for parts with long recovery times, companies can prevent some supply-chain disruptions. Another way to mitigate risks which are difficult to anticipate is transferring risk to other parties: taking out insurance and introducing risk-related contract language are possible answers.
• Low-impact risks that are relatively easy to anticipate , such as labor disputes, regulatory changes, or changes in customer preferences (for minimal plastic usage or increased product sustainability, for example) can be managed proactively by increasing the robustness of the supply-chain system. The most important single measure, though, is solid training of the workforce to handle everyday risks. Encouraging employees to voice concerns about possible defects and disruptions helps create a general risk awareness as a first step to managing disruptions. IT systems and tools can then help to continuously monitor disruptive trends and events.
• High-impact risks that are relatively easy to anticipate , including Brexit, US–China trade regulations, or decarbonization targets, need the most attention. A systematic review of the supply-chain setup may be advisable. Possible response strategies include redefining the sourcing strategy by, say, raising the share of local suppliers, or revisiting the manufacturing footprint by moving some manufacturing operations out of certain areas. Establishing CKD operations in countries with high import taxes on finished products can be another option. The review of the inventory build-up strategy helps optimize service levels by increasing safety-stock levels for critical components which cannot be sourced from alternative locations. In some cases, preparing for changes in demand can be an appropriate answer.

In an increasingly volatile world, companies are putting supply-chain risk management back on the agenda. They are not only confronted by permanently changing customer requirements and increasing geopolitical risk, but also risks related to the environmental concerns such as decarbonization, decreasing plastic usage, and overall product sustainability—all of which increase stress on existing supply chains. Ignoring these shifts could result in severe penalties, whether enforced by government or the market. Cybersecurity risks are gaining ever-more-disruptive potential. Incidents are occurring more and more often, with attacks against businesses almost doubling in five years, raising the total impact of these kinds of risks. A proactive approach, combined with a vibrant risk-management culture, will be a game changer for companies, helping them avoid and manage future disruptions in their supply chains.

Knut Alicke is a partner in McKinsey’s Stuttgart office, and Anna Strigel is an associate partner in the Berlin office.

Explore a career with us

Related articles.

Managing your external supply system for innovation

The coming shakeout in industrial distribution

Dynamics 365 Supply Chain Management pricing

Supply Chain Management pricing

Dynamics 365 supply chain management, dynamics 365 supply chain management premium.

Dynamics 365 Licensing Guide

Take the next step

Chat with a Dynamics 365 specialist

Request a call

Follow Dynamics 365

• Chat with sales

Available M-F 6 AM to 3 PM PT.

Does the US have a planned economy? You might be surprised

University of Tennessee

Disclosure statement

Daniel Pellathy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Tennessee provides funding as a member of The Conversation US.

View all partners

During the Cold War, a heated debate arose over the role of economic planning. Did the “planned” economy of the USSR or the “free market” economy of the U.S. allocate resources more productively?

Arguments against planned economies centered on the limits of information processing , the feasibility of production forecasts and the inflexibility of centralized plans .

The Soviet Union’s collapse seemed to relegate the economic planning concept to the dustbin of history. But issues raised in those debates are still relevant today.

New research finds that the top 1% of American companies control 90% of U.S. production-related assets and account for 80% of sales revenue . This means a relatively small number of companies are responsible for the majority of U.S. economic activity.

For these companies, planning – particularly the coordination of activities across global supply chains – represents a significant strategic focus. Americans rarely think about the importance of planning, but it plays a crucial role not only in the availability of consumer products but the economy overall.

Thousands of products, millions of transactions

As a professor who teaches about supply chain issues , I have worked to understand the implications of planning.

Supply chain planning refers to the set of iterative, interconnected decisions aimed at continuously aligning company capacity, inventory and other assets to maximize profits. It integrates a range of decisions across different time horizons, from longer-term optimization of global supply networks to near-term scheduling of deliveries.

Planners also decide how much product to make or buy based on shifting consumer demand. And perhaps most importantly, they manage the time required to ensure that products arrive at the right time, in the right place and in the right form. They do this not just once but across thousands of products and millions of transactions each day.

Consider a typical Walmart store, which offers roughly 120,000 different products – technically known as stock-keeping units, or SKUs – at any given time. These products must be made available in over 10,000 stores worldwide – as well as online and at homes – 24 hours a day, seven days a week.

And they must be made available in an assortment that changes continuously, sometimes dramatically, based on consumer preferences and outside events. Products must be competitively priced, fueling a relentless search for lower input costs. Planners attempt to coordinate this vast network of people, products and places to profitably match supply and demand.

The best-laid plans

Sometimes plans work; sometimes they don’t. The most obvious signs of planning dysfunction are empty shelves and long wait times. Less obvious are billions of dollars in excess inventories . And even more deeply hidden are innovation delays and massive waste across the supply chain.

These dysfunctions are pervasive in most companies. But it took the COVID-19 pandemic to expose what many planners already knew: Dated planning technologies, gaps in talent and overstretched supply chains keep companies from delivering the goods.

For decades, planners have relied on enterprise resource planning systems – a form of business-management software – to integrate companies’ core business processes from raw material purchase to point of sale. Developed in the 1990s but often based on models from the 1960s, these systems can be rigid and have numerous built-in flaws .

What’s more, companies often use dozens – sometimes hundreds – of different systems to manage workflows and databases. As a result, planners must cobble together incomplete information from multiple sources to determine dynamic supply-and-demand requirements.

Automation’s potential

Automation, especially when it incorporates learning algorithms, has enormous potential for overcoming technological challenges. But the data requirements are daunting.

Those of us with a pantry full of toothpaste because we subscribed to a set-it-and-forget-it delivery service will appreciate the dangers of automating decisions based on a forecast. Solving that problem for a global supply chain requires extremely high-quality data coupled with sophisticated analytics. Most companies aren’t there yet .

And even if the systems are available, it isn’t clear that the people needed to operate those systems are ready. Businesses are increasingly turning to planners to direct supply chain processes.

But the knowledge, skills and attitudes that today’s planning professionals need are very different than what was needed just a few years ago. Planners today must be far more comfortable managing ambiguity, leading change and adapting to new technologies .

The need for planning talent comes at a time when labor shortages and training issues plague the supply chain. While innovative educational programs have emerged, it will take time to develop the needed talent.

Challenges and solutions for supply chain management

Finally, the global scope of today’s supply chains creates daily challenges for planning. Even assuming a company has the systems and people to optimize inventories for future demand, it still needs to move that inventory around the world.

So, in addition to solving a complex demand-supply matching problem, planners must execute that solution with planes, trains, trucks and ships. Even a passing glance at the headlines will give you a sense of how difficult that can be. Risks include global conflicts and infrastructure breakdown .

Companies are slowly shifting their supply chains to lower-risk places and establishing more regional networks . But creating new facilities and adding business partners takes time. It also takes systems and talent, because it’s planners who will make these decisions.

A brave new-ish world

The challenges facing companies today mirror the economic planning debates of the Cold War, with many of the same issues returning. There are clear differences with Soviet-style centralized planning. But an increasingly consolidated set of companies plan huge swaths of the U.S. economy.

For individual companies, planning failures can easily lead to business failure. And at the economy level, planning dysfunctions produce both excess and scarcity. That means too much stuff, but not the right stuff people need to improve their lives.

As the U.S. economic system faces its own challenges, the question may be whether it’s possible to plan our way to prosperity.

• Supply chains
• US Companies
• Drug supply chain
• Blood supply chain
• economic planning
• Supply chain management
• Cold supply chain
• Food supply chain
• business planning
• Supply chain issues

Head of School, School of Arts & Social Sciences, Monash University Malaysia

Chief Operating Officer (COO)

Clinical Teaching Fellow

Data Manager

Director, Social Policy