The job of a supply chain manager can be boiled down to three words: supply chain optimization. But behind that simple phrase, there is a great deal of complexity in the global supply chain. Supply chain optimization includes demand planning, inventory management, procurement, and understanding your complete supply chain with real-time data. End-to-end supply chain management, which is essential for supply chain optimization, means optimizing every facet of your supply chain, down to the source and supply of the raw materials used in your manufacturing operations.
What is supply chain management?
The supply chain is composed of separate and, often, quite different elements that start with production and procurement and end with delivery to the end customer. The goal of supply chain management is to optimize each individual element of the supply chain as well as the connections between each facet of operations.
In most companies, at least some portion of the supply chain is outsourced. Third-party logistics companies may handle warehousing and fulfillment. Independent freight carriers take care of transportation from the factory to the warehouse and then distribution to the consumer. In many cases, even your manufacturing operations may be outsourced.
There is an art and a science to supply chain planning, especially when some or all of the suppliers are not in-house. Demand planning and procurement can be complicated by the competing demands on your suppliers and vendors, demands over which you have no control.
The best supply chain managers are experts in supply chain optimization. The goal is not to simply coordinate all the moving parts of the supply chain so they work smoothly together, but to find inefficiencies. The supply chain manager who can reduce time or costs with expert supply chain management has truly proved their worth: effective supply chain planning offers an invaluable competitive advantage.
Principles of end-to-end supply chain strategy
The best way to optimize supply chain management is the subject of debate. Luckily, that means that there is a great deal of research to draw from when you formulate a proposal to optimize your end-to-end supply chain strategy.
One of the advantages of getting an advanced degree in supply chain management, such as the MS in Supply Chain Management from the Haslam College of Business at the University of Tennessee, Knoxville, is that you develop a deep knowledge of best practices for supply chain management. You’ll also have the advantage of understanding where to go to seek out expert opinions to guide your demand planning and inventory management decisions. Here is a selection of supply chain optimization strategies. There are many more you will discover as you pursue a career in supply chain management.
Optimize logistics
A recent article in Supply Chain Management Review highlighted five principles developed by Gartner Supply Chain Practice to find cost savings in logistics. The advice from a Gartner analyst included these concepts:
- Use lean management principles or Six Sigma to reduce expensive logistics errors. Make full use of extra services available from your third-party logistics providers, such as labeling or kitting.
- Collaborate with other organizations to optimize cargo loads. If you can’t consolidate shipments into full truck loads, work with other companies who aren’t your direct competitors to avoid the cost of transporting less than full truck load shipments.
- Develop clear lines of communication between your logistics teams and the teams that manage other parts of your supply chain. When the logistics team has a good understanding of demand planning and procurement, they can plan ahead and make sure transportation is in place to meet the needs of the supply chain.
- Work with decision makers within the company to help them understand the impacts of their choices on logistics costs in particular and the supply chain in general. A decision to reduce costs in one part of the supply chain could increase logistics costs. This needs to be factored into end-to-end supply chain management decisions.
In addition, demand planning is essential to optimize the logistics element within a supply chain. Lack of advance planning can back you into a corner where you have to use rush shipping to get materials and goods delivered on time, often incurring a large additional cost. When you plan ahead to meet demand, you are better able to utilize less expensive shipping options.
Use dynamic decision making
A 2003 study, “A model predictive control strategy for supply chain optimization,” found that centralized supply chain management worked best in the context of a dynamic decision-making model. Because the global supply chain is dynamic and ever-changing, this model for continuous supply chain management improvement is ideal for supply chain managers.
To optimize a supply chain, you need to revisit decisions as circumstances change. But decisions made on the fly without a system in place can produce suboptimal results. The dynamic decision-making model gives you a process for making decisions in situations where change is happening quickly. This model is regularly employed by firefighters and other emergency workers.
The process of dynamic decision making follows predictable steps:
- Recognize the need to revise a prior decision about logistics, inventory planning, or demand planning in your supply chain;
- Use discernment to review all possible courses of action;
- Choose a course of action; and
- Execute that action.
There is one additional step in dynamic decision-making that informs the whole process: review and understand the results of your choice. This feedback is your most valuable asset in making future decisions about a dynamic supply chain with real-time data.
Know where your raw materials come from
End-to-end supply chain optimization requires you to have an understanding of all the elements of your operations that goes deeper than your direct suppliers and vendors. The suppliers who provide the raw materials for your production are crucial to supply chain optimization. If your supplier buys cotton from Texas, drought or floods in Texas could destabilize your supply chain, despite your careful inventory management. If you extend supply chain management to include these raw materials suppliers, you reduce the chance of disruptions.
Part of your job as a supply chain manager is to think ten steps ahead. That means factoring second- and even third-tier suppliers into your supply chain management and demand planning.
Inventory management should involve your suppliers
Communication about your inventory management priorities needs to be external as well as internal. Your suppliers are part of your supply chain management team. They’ll be able to coordinate better with you if you keep them informed of your demand planning. This allows your suppliers to anticipate your needs and prepare by staffing up and stocking up in time to meet your demand.
Understand consumer demand
Another external element that is key to supply chain optimization is consumer demand. Customers are the endpoint of the supply chain and the drivers of your demand planning, yet they are unpredictable and unmoved by your need for information.
Your job as a supply chain manager is to stay informed about consumer demand predictions. If you have pre-orders for a product, that’s a concrete data point to guide your demand planning. But you’ll also need to use sales records from prior years coupled with an analysis of the competition and the state of the market for a particular product. You may gather this information from sources such as economic outlook data, consumer confidence studies, data on buying habits, and trend reports. As an expert in supply chain management, your job is to apply the lessons of the past and the projections for the future to the challenges you face today.
Best practices for supply chain demand planning
Research has shown that demand planning is the most challenging aspect of supply chain optimization for most supply chain managers. If you are able to accurately forecast demand for the products in your supply chain, you can make decisions about supply chain management that will allow your operations to run smoothly while capturing the greatest cost savings. If your projections are not accurate, you can end up with inventory management overload, logistics backlogs, or procurement shortfalls.
Forecasting future demand can seem as unreliable as consulting a crystal ball. But, with slender profit margins in most industries, insightful demand planning is necessary for the fiscal health of your company. So how do you solve the puzzle of demand planning?
Start by limiting your predictions to a reasonable period of time. Most supply chain managers try to project demand no more than a year and a half into the future. The next important element is data. This includes both internal and external data on sales, market, and consumer trends. The collection and analysis of internal data is a great place to start.
Every supply chain manager needs to double as a data analyst, so you can assess the strengths and weaknesses of your operations and avoid repeating mistakes. Effective demand planning requires the harnessing of many data points to paint a complete picture. Choosing and implementing technology solutions to assist in demand planning are your responsibility as the supply chain manager.
One pro tip for demand planning: take it seriously. Don’t relegate this task to interns or staff who aren’t experienced or aren’t integral to your supply chain management team. Excellence in demand planning requires experience and expertise. It may cost more to hire data analysts with years of experience, but they will help you avoid costly inventory management pitfalls.
Careers in supply chain management
Supply chain optimization requires a high level of expertise and a broad set of skills. Supply chain management is a challenging and rewarding field. Increasingly, as companies recognize the central role that supply chain management plays in their ability to compete in a global marketplace, supply chain management positions are a route to upper management.
An advanced career in supply chain management can also be a well-paying one. According to the Bureau of Labor Statistics (BLS) the median annual salary for logisticians (the most relevant title for supply chain manager available in the BLS Occupational Outlook Handbook) was $74,600 in 2018. The typical education level in this field is a Bachelor’s degree. Supply chain managers with advanced degrees and certifications can expect to stand out and compete for higher-level and better-paying positions.
A search for “supply chain optimization” on Glassdoor yielded almost 7,500 open positions across the US. Job titles included senior analyst, supply chain optimization, inventory optimization specialist, supply chain analyst, and senior data scientist. Glassdoor estimates the top salary in this category at $284,600. If you have an affinity for data analysis, a specialization in supply chain optimization could be a great career choice.
There are many other career paths in the field of supply chain management. The title of supply chain analyst had over 9,000 open job listings on Glassdoor. The salary range extends to almost $190,000. Job titles include purchasing analyst, senior purchasing and operations supply chain manager, sales forecast analyst, and logistics coordinator.
The position of supply chain manager has almost 16,000 listings on Glassdoor. The estimated salary range for these positions is as high as $394,800. The job titles in this search ranged from simply supply chain manager to engineering manager – supply chain engineering, senior product manager, and manager, supply chain and materiel management.
This is just a small sampling of the supply chain management and optimization opportunities available to qualified supply chain management professionals. The greater your experience and education level, the higher the salary you’ll be able to command for one of these in-demand positions.
Certifications in supply chain management
There are several professional certifications available to supply chain managers. Professional associations like the Association for Supply Chain Management, Council of Supply Chain Professionals, and Institute for Supply Management offer a variety of certifications and endorsements. To get certified, you will need to pass an exam and renew your certification every few years. There are fees associated with each certification and renewal.
Each group offers different credentials for supply chain managers. The Association for Supply Chain Management (ASCM) uses APICS standards. You can get a certification, endorsement, or certificate. The organization offers a certificate in Sales & Operations Planning and in Supply Chain Risk Management. The endorsement demonstrates your SCOR Professional (SCOR-P) status. There are several certifications available through ASCM: Certified in Production and Inventory Management (CPIM), Certified Supply Chain Professional (CSCP), and Certified in Logistics, Transportation and Distribution (CLTD). To be eligible to take the exams for these credentials, you need several years of relevant work experience or a bachelor’s degree (or a degree from an institution outside the US that is comparable to a bachelor’s degree).
The Council of Supply Chain Management Professionals (CSCMP) has created a three-level certification program called SCPROTM Certification. Each level shows a higher level of professional knowledge and achievement. Level one is “Cornerstones of Supply Chain Management;” level two is “Analysis and Application of Supply Chain Challenges;” and level three is “Initiation of Supply Chain Transformation.” You must pass each level of certification before you can proceed to the next. All three levels have a prerequisite of a Bachelor’s degree or higher or years of experience (four years for level one, seven for level two, and nine for level three).
The Institute for Supply Management (ISM) has two certifications: Certified Professional in Supply Management® (CPSM®) and Certified Professional in Supplier Diversity® (CPSD®). The ISM certifications require relevant work experience. The number of years of experience required is less if you have a bachelor’s degree or higher.
These certifications can be helpful in confirming your level of knowledge of supply chain planning to potential employers. A certificate that demonstrates specialized expertise in areas such as logistics or inventory management can be beneficial if you want to focus your supply chain management career in one of those areas or demonstrate the breadth of your supply chain knowledge.
The most flexible and useful advanced credential, however, is an advanced degree, such as Haslam’s MS in Supply Chain Management. Getting an advanced degree is an investment in your future; the increase in earnings will add up over your lifetime. A CBS News report on careers where salary gets a boost from earning a master’s degree included management positions, which saw an almost 18% increase in salary for people with master’s vs. bachelor’s degrees. The salary bump for those earning an MBA was the highest on the list at 22%. These two results give an idea of the higher earnings that you can expect after you earn a master’s in supply chain management.
In addition, a master’s degree can help you ascend to the highest ranks of the corporate ladder. Advanced education can give you a competitive advantage as a candidate, opening doors to top management positions and even a C-suite role as a Chief Supply Chain Officer or CFO.
If you want to invest in a career in supply chain management, an advanced degree in supply chain management plus professional certifications from supply chain organizations is a great way to optimize your career path.
An online MS in Supply Chain Management from the Haslam College of Business
Haslam offers one of the top five supply chain management graduate programs in the US, according to U.S. News and World Report. Better yet, the MS in Supply Chain Management is an online degree, so you can continue at your current job while you prepare for a career in supply chain management.
A Master’s in Supply Chain Management from Haslam will teach you what you need to know to find a job in the dynamic field of supply chain management today. You’ll be ready to make your mark through supply chain optimization and end-to-end supply chain management on day one. Our program delves into the day-to-day issues that supply chain management professionals face on the job. You’ll meet leaders from some of the biggest and most influential corporations and get the opportunity to hone your supply chain problem-solving skills with case studies based on actual situations.
In addition, as a master’s student at Haslam, you’ll be guided by our distinguished faculty. You’ll join a community of students from a range of industries and backgrounds. The support doesn’t end when you graduate. Haslam has a strong industry relationships and a vibrant alumni community, so the network you build during your studies will travel with you into your career.
You can take classes full- or part-time and finish your course of study in 18 months to five years. The online classes are live sessions that last between one to two hours. There is one three-day immersion session. You’ll complete one capstone project and 30 credit hours to achieve your Master’s degree. An MS in Supply Chain Management is the boost that can launch you into an exciting career managing demand planning, inventory management, procurement, and supply chain optimization.