Supply Chain Management for Dummies Cheat Sheet

A supply chain is a complex system made up of people, processes, and technologies that deliver value to a customer. Supply chains connect the functional departments within a company, and they connect every company to its customers and suppliers. Supply chain management involves coordinating all the work that is required to profitably deliver a product or service to your customer.

5 functions of supply chain management

Supply chain management involves five main functions: aligning flows, integrating functions, coordinating processes, designing complex systems, and managing resources.

• Aligning flows: As money, materials, and information are passed between customers and suppliers, supply chain management keeps them flowing up and down a supply chain.
• Integrating functions: Supply chain management connects the activities of logistics, purchasing, and operations to ensure they focus on goals that benefit overall performance.
• Coordinating processes: Supply chain management increases profitability by aligning the processes used to plan, source, make, deliver, and (when necessary) return a company’s products and services.
• Designing complex systems: Simulation tools can predict how a supply chain will behave and show how small changes can cause major disruptions in the flow of materials.
• Managing resources: Supply chain managers are responsible for using people, processes, and technology to meet the needs of customers.

6 tasks of supply chain project leaders

Supply chain managers must know how to lead projects effectively, because doing so helps them lower costs, improve customer service, and reduce environmental effects. The DIRECT framework spells out the six tasks of a supply chain project leader:

• D (define the opportunity): Ensure the project team has a clear goal.
• I (investigate the options): Help the project team look at all of their alternatives for meeting the goal before they decide which ones to pursue.
• R (resolve to a course of action): Guide the project team to make a decision and create a plan.
• E (execute the plan): Monitor the team’s progress and manage risks.
• C (change the system): Consider how the project will affect other parts of the supply chain.
• T (transition the people): Prepare everyone for the impacts of the project
  

The supply chain operations reference model

The Supply Chain Operations Reference (SCOR) is a process framework maintained by the Association for Supply Chain Management. SCOR focuses on manufacturing supply chains but has been adapted for retail and service supply chains, too.

The SCOR Digital Standard (SCOR DS) organizes supply chain processes into seven groups. Orchestrate sits at the strategic level and guides the other six.

• Orchestrate: Set the supply chain strategy and put it into practice. This includes designing the network, managing data and technology, and overseeing risk and performance.
• Plan: Figure out what the supply chain needs to do, compare those needs with the resources available, and decide how to close any gaps.
• Order: Capture and manage customer orders, including what customers are buying, how they’ll pay, and when they expect delivery.
• Source: Buy the goods and services you need, schedule supplier deliveries, and receive what you ordered.
• Transform: Schedule and carry out work such as manufacturing, assembly, maintenance, and repair.
• Fulfill: Carry out customer orders. This can include picking, packing, shipping, installing products, and invoicing customers.
• Return: Manage what comes back and decide what to do with it. Depending on its condition, a returned product might be restocked, repaired, recycled, or disposed of.

The SCOR model defines the five key performance attributes of a supply chain:

• Reliability: Whether the supply chain can fill customer orders.
• Responsiveness: How long it takes to fill orders.
• Agility: How well the supply chain responds to changes.
• Costs: How much it costs to operate the supply chain.
• Asset management efficiency: How well the supply chain uses the assets it has.

Each attribute includes metrics that allow you to benchmark supply chain performance and track improvements over time.