From the course: Supply Chain and Operations Careers: Certification Tips and Tricks (2019)

Supply chain overview

From the course: Supply Chain and Operations Careers: Certification Tips and Tricks (2019)

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Supply chain overview

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- What exactly is supply chain management? Well, it depends on who you ask. The Association for Supply Chain Management defines it as the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally. But the Council of Supply Chain Management Professionals says, supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Wow, that's a mouthful. Some of the definitions focus on supply chain processes. For example, the Supply Chain Operations Reference Model breaks a supply chain into the processes of plan, source, make, deliver, return, and enable. Some definitions focus on flows. Most often, you'll see references to the flow of money, materials and information between companies. Some definitions focus on the nodes, the way that there are facilities all around the world that make up a network. And some definitions focus on functions. In particular, procurement, logistics and operations. These are all parts of a supply chain, and they're all valid definitions, and if you are focused on passing a certification exam, then you will need to memorize an official definition. But as a professional, you are going to have to deal with the fact that there are actually many different definitions for supply chain management. And I think it's useful to have a definition that's broad, accurate, and easy to remember. So here's the definition that I use. A supply chain is a complex system made up of people, processes, and technologies that's engineered and managed to deliver something of value to a customer. For me, the key to understanding supply chains is to focus on who your customers are and what they value. Then, you need to design a system that meets your customers' needs while earning your company a profit. For example, if your customers need your product right away, then your supply chain should be designed to get it to them quickly. If your customers need products that are highly customized, then your supply chain needs to be flexible, and if your customers prefer products made using sustainable ingredients and ethical processes, well, those requirements can be built in your supply chain too. Every decision that you make about your supply chain can impact your customers' experience and affect how much it will cost to meet their needs. No matter how you define supply chain management, the goal is to make business decisions that help you make a profit while giving your customers something that they truly value.

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