The discipline of Supply Chain Management

The challenge with explaining the role of Supply Chain Management is that there are different understandings of the term, and on many occasions, Logistics and Supply Chain Management are used interchangeably.

The most common use of the term Supply Chain Management is the umbrella term for the different disciplines commonly seen as elements of Supply Chain Management. For example, these are Logistics, Manufacturing, Procurement, Materials Management, and even Quality Assurance, EHS (EHS: Environment, Health and Safety) or Security are sometimes subsumed under Supply Chain Management.

That's why in this respect, Supply Chain Management can be seen as a modern term for Operations Management. However, it is sometimes forgotten that Supply Chain Management is a discipline itself.

Value chains transform raw materials into final products for the consumer. This process is often enriched with service-elements, and it is the Supply Chain Management that deals with the planning and management of these value chains.

Typically, such value chains do not end at a company's factory gate; hence the Supply Chain manager always looks beyond the borders of entities.

When doing that, Supply Chain Management works on the integration of processes with suppliers and customers, deals with after-sales services and the returns-management plus the aspects of recycling. Recycling became a critical aspect in recent years, and Supply Chain Management will play a crucial role on our way towards a circular economy.

To summarize, successful Supply Chain Management requires close collaboration with external parties and all the internal supply chain-related disciplines mentioned above. On top of that, Supply Chain Management's specific tasks are to look after the value chain network design, which is the material flow and the network resources. Needless to say, that risk-management within the supply chain is a central element for a resilient value chain. Finally, the innovation in process-design and even the improvement of products/services through cost avoidance or adding value by changes in the Supply Chain design fall under the responsibility of Supply Chain Management.

Manufacturing looks after the production of goods; Logistics looks after the physical flow of goods and the transfer of associated information; Procurement buys the products and services that the company does not want to produce itself. Of course, all these disciplines plan, perform risk management, and ensure precise execution – this is not particular to Supply Chain Management. But each discipline does it with a focused perspective on its specific field, while Supply Chain Management looks after the whole value chain.