SUPPLY CHAIN MANAGEMENT: Meaning, Logistics, and SCM

jobs, salary, logistics and supply chain management

In the production cycle, effective supply chain management systems reduce cost, waste, and time. On the other hand, logistics and supply chain management coordinate the storage and shipping of goods and services. This piece guides you through the jobs and salaries of a supply chain manager.

What is Supply Chain Management?

Supply chain management (SCM), which controls the flow of goods and services, encompasses all procedures that turn raw materials into completed commodities. In order to improve customer value and obtain a competitive edge in the market, actively entails streamlining a company’s supply-side operations.

The Importance of Supply Chain Management

In the production cycle, effective supply chain management systems reduce cost, waste, and time. A just-in-time supply chain, in which retail sales automatically signal replenishment orders to producers, has become the industry standard. Retail shelves can then be replenished nearly as quickly as the product is sold. One way to improve this process further is to analyze data from supply chain partners to see where changes can be made. The post identifies three cases where effective supply chain management adds value to the supply chain cycle by analyzing partner data:

  • Identifying potential issues: When a customer orders more products than the producer can supply, the buyer has the right to complain about poor service. Through data analysis, manufacturers can be able to predict a shortage before the buyer is disappointed.
  • Dynamic price optimization: Seasonal items have a finite shelf life. These products are typically scrapped or sold at deep discounts at the end of the season. Airlines, hotels, and other businesses that sell perishable “products” usually adjust their prices dynamically to meet demand. Similarly, forecasting techniques, even for hard goods, can improve profits by using analytic tools.
  • Increasing the allotment of available to pledge stock: In order to dynamically allocate resources and schedule work based on sales estimates, actual orders, and promised raw material deliveries, analytical software tools are used. When an order is placed, manufacturers can validate the product delivery date, considerably lowering the number of orders that are improperly filled.

How Does Supply Chain Management Work?

There are five classes of supply chain management.

#1. Planning

SCM typically begins with planning to match supply with customer and production demands in order to achieve the best results. Firms must predict their future needs and act accordingly. This also relates to the raw materials required at each stage of production, the ability and limitations of equipment, and the staffing needs all across the SCM process. Large companies usually rely on ERP system modules to collect data and compile plans.

#2. Sourcing

Select suppliers to provide the goods and services required to produce the product. Then, create processes for monitoring and managing supplier relationships. Ordering, receiving, managing inventory, as well as authorizing supplier payments are all critical processes.

#3. Manufacturing

A company must be mindful of waste as well as other controllable factors that may cause deviations from original plans. The final product is the ultimate goal of the production process.

#4. Delivering

A company must get its products into the hands of its customers once they have been produced and sales have been completed. Because the customer has not yet interacted with the product, the distribution process is always viewed as a contributor to brand image. A company with strong SCM processes also has strong logistical skills and delivery channels to ensure timely, safe, and low-cost product delivery. This includes having a backup or diverse distribution methods in case one mode of transportation becomes temporarily unavailable. For example, how might record snowfall in distribution center areas affect a company’s delivery process?

#5. Returning

The support for the product and customer returns marks the end of the supply chain management procedure. Many people view customer returns as communication between the client and the business. Inter-company communication to identify faulty products, expired products, or non-conforming goods, however, is a crucial component of client returns.

Logistic and Supply Chain Management

Logistics and supply chain management coordinate the storage and delivery of goods and services. The practice begins with raw materials, progresses to production and/or distribution, and concludes when a company delivers finished goods to a customer or returns products to their final destination.

Is Logistics and Supply Chain Management the Same Thing?

In the supply chain, logistics is concerned with the transit and storage of commodities. SCM, on the other hand, is more extensive and includes all of the network’s partners’ coordination, including sourcing, producing, transporting, storing, and selling.

Additionally, the ultimate objective of SCM is to identify procedures that guarantee a seamless, effective flow of goods, delivering a superior customer experience and advancing the business. While logistics is concerned with the internal flow of commodities, supply chain management deals with interactions between various entities. Furthermore, SCM covers all facets of product production, distribution, and buying. In the meantime, logistics moves and stores items at various points along the supply chain.

Relationship Between Logistics and Supply Chain Management

Both SCM and logistics are concerned with the movement of goods from their source to the point of destination. Both fields need careful coordination of supplies, labor, and facilities to ensure that items move through the supply chain as needed. Logistics is an important aspect of SCM, but it is only one part of the puzzle.

Similarities of Logistics and SCM

Logistics and supply chain management work to move, store, and deliver goods as efficiently as possible. Supply chain management provides strategic guidance for both inbound and outbound logistics. Both also revolve around the same flow of goods and services from supplier to producer to consumer.

Difference Between Logistics and Supply Chain Management

Managing the planning, sourcing, production, distribution, and handling of returns for products is all covered under supply chain management. The correct products must be delivered at the proper time and location, on the other hand, according to logistics. While logistics focuses on fulfilling customer demands and expectations, SCM strives to improve processes to create competitive advantages.

Planning for labor, materials, and facilities management as well as the creation and delivery of goods and services are all included in SCM. SCM also includes planning for production and inventories. The goal of logistics is to deliver products to customers in an effective and economical manner.

Responsibilities of Logistics in SCM

In supply chain management, logistics is in charge of the shipping and storing of goods and services as well as the records and reports that track these activities throughout a product’s route to the consumer. Logistics describes the several forms of transportation that are used to move inventory from one place to another. It is essential for effective SCM that this component determines where items can be housed at each stage until they are required elsewhere.

The management and tracking of the personnel and resources required to keep and transmit goods and services make logistics a crucial link in the supply chain. Logistics make ensuring that supplies and goods move dependably, on schedule, and within budget. They can lower expenses, boost productivity, foster greater customer loyalty, and keep customers.

Supply Chain Manager Salary

The salary of a supply chain manager is determined by a variety of factors, including education, experience, as well as job location. The salary of a supply chain manager is around $84,194 to $117,405 on average in the US, depending on experience, location, skills, and other factors. Below is the salary of a supply chain manager based on working experience according to BLC.

Level of experienceSalary
Less than 1 year$58,610
1 to 4 years$72,895
5 to 9 years$92,611
10 to 19 years$115,311

Below is the salary of a supply chain manager based on location according to BLC.

CityAverage Salary
Denver, CO$118,017
San Francisco, CA$112,824
Philadelphia, PA$110,683
Seattle, WA$109,680
Nashville, TN$86,092
Tampa, FL$81,254
Salt Lake City, UT$79,076

Jobs Of Supply Chain Manager

Supply chain managers typically hold a bachelor’s degree in Supply Chain Management, Logistics, Business, or a related field. They have a thorough understanding of supply chain processes as well as a working knowledge of relevant software and ERP systems. Overall, supply chain manager jobs and responsibilities necessitate strong project management and problem-solving abilities. When creating your own supply chain manager job description, make sure to include these as requirements.

Jobs and Responsibilities of a Supply Chain Manager

Below are the jobs and duties of a supply chain manager

  • Create the supply chain strategy for the company.
  • The supply chain manager’s job also includes analyzing data from the shipping and delivery processes to identify bottlenecks and other problems.
  • Evaluate and report KPIs.
  • Keep an eye on logistics to ensure they run smoothly.
  • Keep track of supply chain inventory and records.
  • Educating and directing employees is also included in their duties.
  • Discover cost-effective supply chain solutions.
  • Resolve any issues that arise (e.g., delays in delivery, accidents).
  • Collaborate with other departments to develop coordinated business growth plans.
  • Create and implement safety policies for all aspects of the supply chain (e.g. use of trucks, and forklifts)
  • They also ensure that supply chain processes adhere to legal and industry standards.
  • To arrive at more profitable deals, communicate with and negotiate with suppliers and vendors.

Requirements and Skills of a Supply Chain Manager

Below are the skills a supply chain manager needs:

  • Firstly, they must have previous experience as a supply chain manager or in a related field.
  • Excellent understanding of supply chain processes.
  • Working knowledge of relevant software (e.g. SAP MM)
  • Excellent communication abilities are also needed.
  • Outstanding organizational and project management abilities.
  • Paying close attention to detail
  • Problem-solving Creativity
  • An analytical and strategic mind
  • A bachelor’s degree in supply chain management, logistics, or a related field is also needed.

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FAQs on supply chain management

What are the 5 basic steps of supply chain management?

This model’s top level contains five distinct processes, sometimes referred to as supply chain management components: plan, source, make, deliver, and return.

What are the main role of supply chain management?

Supply chain management, or SCM, is the central control of the distribution of goods and services, and it encompasses all of the procedures that convert raw materials into completed commodities. By optimizing the supply chain, businesses can reduce costs and deliver goods to customers more quickly and effectively.

What are supply chain challenges?

The three critical challenges confronting global supply chains: are labor shortages, equipment availability, as well as the global bottleneck ripple effect of how businesses are dealing with a climate of continual confusion.