What the Heck is Supply Chain Management?

I am a Supply Chain Management consultant.  The trouble is that no one knows exactly what that means!  The subject matter is so broad that it covers nearly everything involved in the day-to-day operation of a business. 

In my ‘elevator speech’ I try to encompass the essence of the business with the following description:

“Supply Chain Management looks at the internal operations of a business in relation to its customers and suppliers.  We seek to align those operations with the company’s business partners to reduce overall cost and mitigate risks.”

This usually gets me a nod or some grunt of comprehension.  However, when pressed for examples of clients I am working with, I usually describe a start-up company in Philadelphia that, with my help, has begun importing a food product from Israel.  My audience usually walks away with the conclusion that I am an Import/Export consultant.

If I describe arranging warehouse space and delivery of product to the customer, they conclude that I am a Logistics consultant.

So how is Supply Chain Management consulting different from Operations Management consulting and Import/Export consulting, etc.?  I think that the key is really about focus.  Like all ‘consultants’ we seek out efficiencies and cost savings in the business operation, however, by focusing on the supply chain, we look to gain those efficiencies by strengthening the relationships with all the stakeholders in the chain.

When sitting with a client, we usually start by looking forward, down the supply chain, towards the ultimate consumer of the product or service.  What, we ask, do they need?  Assuming that the consumer is not their direct customer, the next question is, what does the customer need to most efficiently meet that need?

Few clients know the answers to these questions and the task is to develop a strong relationship with their customers and later to find ways to integrate the client’s internal operations with their customer base.  This can take many forms, including package design, computer systems integration, delivery schedules, etc.  Eventually, procedures must be put into place to monitor the relationship and make the necessary course corrections when conditions change.

Of course, once our clients are equipped with the knowledge of what their customers want and need, the next step is to look backwards along the chain and get the suppliers to adjust their internal operations to bring them into alignment with those of the client and their customers.  This involves strengthening the relationships with the suppliers and making them true partners in the process.

Often our clients’ requirements extend well beyond the traditional supplier / procurer relationship.  Bringing a key supplier in to during product design can reduce the likelihood of expensive customization of the supplier’s products to meet the design criteria. 

A strong supply chain allows other initiatives to be promoted and implemented across the chain.  One focus involves sustainability.  Most companies do not want their product to be associated with child labor abuses, global warming, water pollution and the like.  Most will implement initiatives internally to make certain that they are socially responsible.  Clearly, however, the need for initiatives goes well beyond the 4 walls of the business.  Managing the supply chain gives the business the ability to monitor its suppliers and assist them in implementing similar initiatives in their business.

Supply chain management, although primarily focused on manufacturing and distribution, can also be applied to service based businesses.  Every company, benefits from getting a fuller understanding of their customers and finding ways to more closely meet their needs.

So ultimately, supply chain management is all about building strong relationships and integrating business partners more closely.