What is Supply Chain Management (SCM), and Why is it Relevant to Your Business?
While most new entrepreneurs know that "supply chain" is important, many don't fully understand what the term means and, more importantly, why effective supply chain management is integral to cost management and ultimately to the success of a company.
Definitions vary, but some good ones include:
"The system they [businesses] employ to get their products to end consumers; this is from obtaining raw materials till delivering the final product" (Megan Batchelor, CEOWorld Magazine). SCM "essentially means increasing the speed of getting a product from production to market" (Megan Batchelor, as paraphrased by Leon Teeboom, Houston Chronicle).
SCM "consists of a set of approaches to efficiently integrate the flow of materials, finances, and information from suppliers, manufacturers, wholesalers, distributors, retailers to the final customer, and back again" (University of Kansas).
In my own 30+ years of experience as a Buyer, Merchandise Manager, Commodity Manager, and Strategic Sourcing Manager for a discount retailer, hardware wholesaler, and Fortune 200 financial services provider, I've seen the evolution of SCM from just another administrative function (formerly known in some organizations as Contract Administration) to a strategically critical division with key visibility into the executive suite.
However, even in a small company, best practices in SCM will pay dividends in a number of ways including:
So How Do You Build an Effective and Impactful SCM Team at Your Company?
It takes effort and time to build your SCM skills and develop best practices, but if you do, you'll enjoy a competitive advantage versus the rest of the market. And from personal experience, I can tell you that supply chain management, when done effectively, is both rewarding and fun.
The Duquesne University SBDC provides free business consulting for entrepreneurs in the Greater Pittsburgh area. Click here to request free consulting, or contact the SBDC for additional help and information.
Paul Bucciarelli is a part-time business consultant with the Duquesne University SBDC and serves in the New Castle/Lawrence County Area. He recently retired from the PNC Financial Services Group after 19 years as a VP - Supply Chain Manager. Paul holds a Master's in Business Administration from Youngstown State University and a Bachelor's degree in Advertising and Journalism from Penn State. He is a part-time faculty member for the Penn State Shenango Campus, and he also serves on the Advisory Board for PSU - Shenango.