What is a supply chain?

Submitted by Angela Reid-Regier, coordinator and professor - Supply Chain programs at Fanshawe

Recently, supply chain management (SCM) has been getting lots of recognition in the press. We are continually hearing about the supply chain disruptions caused by the COVID-19 pandemic, Suez Canal blockage, Russia’s invasion of Ukraine, cyberattacks on manufacturing companies, protests, labour strikes and so on. As a result of these disruptions, we are finding it difficult to find and buy things we want and need. Automobile availability and prices have been affected by the lack of semi-conductor microchips. Certain kinds of cereal are not available due to labour strikes. Toilet paper was difficult to buy early in the pandemic as a result of hoarding. Lumber prices increased due to lumber mills being shut down because of COVID-19. Fuel prices have increased due to the Russia-Ukraine conflict. Getting products from overseas has been difficult due to port congestion.

What is supply chain management (SCM)?

SCM can be defined as the entire process of making and selling products and services, including the supply of raw materials, manufacturing goods and the distribution and sale of products and services. Roles in SCM include material planning, sourcing, production, procurement, inventory management and transportation. 

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Here are a few ways experienced, educated supply chain professionals can help organizations prepare for and minimize disruptions:

Plan in real time

Disruptions can be dealt with much more efficiently when real-time planning is in place.

Use technology

Using automated end-to-end cross-functional processes can significantly improve efficiencies, reduce costs and provide visibility to predict and react to disruptions.

Build strong supplier relationships

Buyer-seller relationships need constant maintenance and communication in order to anticipate and respond to disruptions.

Implement risk management strategies

Use risk management tools to identify, monitor and react to risks to minimize the impact of disruptions.

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Identify backup suppliers

Have other suppliers on standby in other geographic locations if your current supplier can’t provide what you need.

Diversify the supply base

Supply bases need to be spread out between suppliers and geographical locations. Having suppliers in different geographical locations ensures that disruptions with one supplier or in one part of the world are minimized.

Evaluation of safety inventory

Determine the amount of excess material that can see an organization through disruptions while considering minimization of storage, interest and obsolescence costs.

Ethics and sustainability

Choosing supply chain practices and partners that are ethical and contribute to a sustainable environment help reduce disruptions due to poor working conditions and environmental disasters.

Major supply chain disruptions are occurring and will continue to happen. Having educated, experienced supply chain professionals will minimize the probability of these disruptions happening and minimize the impact of these disruptions even in these unprecedented times.