For every box delivered to our doorsteps, every movie we stream before turning off the lights, and every breakfast that goes from the kitchen to the dining room table, there is a path. In business, it’s called the supply chain – the people, processes, materials, and technology that move a product from one place to another.
Managing the supply chain efficiently is what keeps modern business moving. Here’s a deep dive into how supply chain management works, what you need to learn to succeed, and which roles employers are eager to fill. Read on to learn more about this growing field and find out if it fits with your interests and career aspirations.
What Is Supply Chain Management?
In simplest terms, supply chain management is about getting the right products to the right place at the right time, and in business, at the right price. Imagine you are the owner of a T-shirt business and you need to place an order for a new product. The process of getting those shirts to your store involves multiple steps, including many you and your customers will never see. For example:
- Cotton is grown
- Cotton is shipped to a mill
- Fabric is sent to a sewing factory
- Garment is sent to a warehouse
- Warehouse ships garments to your store
There’s no limit on the number of steps involved. Supply chain management does not always involve physical products, and every business has different needs. The process, however, largely revolves around six core components, which are detailed below.
What Are the Core Components of Supply Chain Management?
Whether you are crossing counties, states, countries, or oceans, supply chain management requires organizational efficiency and oversight in the following areas:
- Logistics: The overall process of moving goods back and forth requires planning, coordination, and complex operational structures. Logistics is involved at every step of the supply chain; effective logisticians keep the chain connected.
- Procurement: Everything comes from somewhere, and procurement is the process for locating, evaluating, and purchasing the goods or services businesses need. Procurement doesn’t always involve finding the final product. In many cases, it’s about finding the ingredients or components, whether it’s shipping peanut butter to a grocery store or software to a company’s call center.
- Production planning: Once all the components have been identified, production planning is the next essential step to determine how a company’s products will be developed. This includes everything from organizing resources to scheduling and workflow.
- Transportation: To get products into the hands of consumers, they must be moved between suppliers, manufacturers, warehouses, and storefronts. Transportation is vital to ensuring the flow of goods is uninterrupted.
- Quality control: With so many processes and moving parts, quality control is crucial at every step in the supply chain, ensuring products don’t arrive spoiled, broken, or with missing parts.
- Warehouse operations: The super-charged growth of the warehousing market – projected to hit $1.73 trillion by 2030 – points to the critical importance of warehouse operations within the supply chain. Warehouses are connection points, and effective supply chain management involves overseeing how products are shipped, received, stored, and tracked within warehouses.
These core components are part of a larger, interconnected system that keeps products, services, and businesses moving. It is the role of the supply chain manager to ensure processes flow uninterrupted, with precision, coordination, and communication.
How Do Supply Chains Work?
To understand how the supply chain works, let’s imagine another scenario in which you place an order for an artificial holiday wreath via a major online retailer. When you click “Buy Now” and complete your transaction, it sets off a chain of events that ends with your new wreath on your doorstep.
But supply chain management is a continuous cycle, and organizations need to start preparing for you to order the wreath long before you make your selection. Here is a closer look at that cycle.
- Planning: This part of the process is ongoing, and retailers will have planned for seasonal demand long in advance. If the supply chain is running smoothly, they’ll have anticipated how many wreaths and other decorations they need to fill orders long before you place yours.
- Sourcing: An artificial wreath will be made up of multiple materials, including synthetic pine needles, wire frames, and ribbons. These may come from three different sources, perhaps in different countries, and the procurement team is tasked with locating those aforementioned resources from vendors.
- Manufacturing and production: Coordination is key when gathering the required materials for production. The components of each wreath are shipped to a facility where they’re assembled and ready for packaging. This stage in the supply chain involves several quality control checks to ensure the products are consistent, while keeping waste to a minimum.
- Distribution: The distribution phase will see the packaged wreaths shipped to warehouses throughout the world. In the case of an online purchase, your wreath will be shipped directly from the warehouse to your house. If you’re purchasing from a physical storefront, the wreath will go from the warehouse to the store.
- Returns and feedback: The supply chain doesn’t end when your wreath is in your hands. If there is a problem with the wreath, you may ask for a return. In this case, the product is sent back through the chain, with feedback companies will use when planning for next season’s holiday demand.
What Is the Role of Supply Chain Management in Business?
Effective supply chain management keeps products, services, information, and, importantly, money moving between organizations, their suppliers, and their customers. When distribution managers, shipping managers, production planners, logistics analysts, and others are doing their jobs correctly, it has a positive impact on the entire organization, notably:
- Competitive advantage: Sourcing materials from countries where costs are lower or working with faster transportation partners can help organizations outperform the competition.
- Operational efficiency: When performing at the highest level, supply chain teams can maximize time and resources while eliminating bottlenecks in the chain and reducing waste at every stage.
- Revenue: A smooth-running supply chain can keep costs down and revenue up, as profit margins are impacted by everything from transportation and manufacturing costs to quality control.
- Customer satisfaction: In a world dominated by online retail, companies have a responsibility to get their products into customers’ hands quickly and safely. Any disruption in the supply chain is going to impact customer satisfaction and the company’s overall reputation.
- Innovation: Technology has a tremendous influence on the supply chain, and organizations are constantly looking for ways to gain an advantage through technical advancements in logistics, packaging, transportation, and warehousing, among other areas.
Why Is Supply Chain Management Important?
Because all products and services must be moved from one location to another, and often via national and international networks, supply chain management is critical to the global economy. Consider the consequences of a disrupted supply chain during the COVID-19 pandemic:
- Global trade impact: Stress on the supply chain contributed to a 2.7% reduction in global trade during the pandemic. Supply chain management is necessary to survive such severe shocks to the system.
- Inflation and production delays: Longer delivery times, shortage of raw materials, and reduced manufacturing led to pandemic era price increases, and nations struggled to deal with inflation for years after.
- Manufacturing: Widespread factory shutdowns during the pandemic crippled the supply chain, proving that better-managed networks are necessary in order to maintain productivity during a global crisis.
- Consumer confidence: The pandemic led to empty store shelves, delivery delays, and price surges, lowering consumer confidence and reducing spending within the global economy.
What Are Some Common Supply Chain Management Tools?
Technology continues to advance and improve the supply chain, and organizations are constantly in search of tools, such as software, that can give them an edge on the competition. Some common supply chain management tools include:
- SAP Supply Chain Management
- Blue Yonder
- b2wise
- Oracle Supply Chain Management
- Kinaxis RapidResponse
- Infor SCM
What Skills Are Needed to Work in Supply Chain Management
With so many tools and stakeholders involved, supply chain management requires a number of technical and soft skills in order to maintain a competitive advantage. Among the most important skills, according to Indeed:
- Risk management
- Decision making
- Negotiation
- Time management
- Accounting
- Data analysis
- Communication
- Budget management
- Project management
- Logistics
In a BA in Supply Chain Management program like the one offered by the University of Arizona Global Campus (UAGC), you will hone transferable skills such as strategic thinking, leadership and teamwork, cross-network communication, and analytical problem-solving. In addition, you will sharpen important technical skills such as warehouse operations, logistics and procurement, data analytics and forecasting, and process optimization and cost control.
Developing, or refreshing, your skillset can be the key to standing out in a crowded workforce. This is what motivates professionals to pursue a bachelor’s degree in supply chain management.
What Is a Supply Chain Management Degree?
Offered at the undergraduate level, a Bachelor of Arts in Supply Chain Management prepares you to oversee and optimize the systems that move goods, services, and information from location to location around the world. A supply chain management degree will help you develop a foundation of business acumen with a focus on specific, industry-essential areas such as global sourcing, risk management, and regulatory compliance, among others.
What Do You Learn in a Supply Chain Management Degree Program?
When you enroll in the BA in Supply Chain Management program at UAGC, you will gain the leadership, problem-solving, technical expertise, and business acumen that companies need to maintain the flow of goods and services. You will be able to:
- Apply supply chain management practices to solve business challenges in areas such as logistics, operations, procurement, and others
- Understand the effects of globalization on supply chains and develop skills to manage international trade, cross-border logistics, and global sourcing challenges
- Apply critical thinking and decision-making skills to analyze supply chain models that reflect current industry standards
- Analyze how supply chain management impacts organizational success through greater efficiency, cost reduction, and value creation
- Utilize information technology tools to evaluate and enhance supply chain performance
- Apply strategic planning and leadership skills to align supply chain objectives with overall business strategy
What Can You Do with a Supply Chain Management Degree?
With your Bachelor of Arts in Supply Chain Management, you will prepare yourself for roles in supply chain, operations, project management, manufacturing, quality assurance, and facilities management. Here are some of the jobs you might consider upon graduation:
- Supply Chain Manager
Supply chain managers oversee an organization’s strategy and process for sourcing, storage, and delivery of goods to its customers. According to the U.S. Bureau of Labor Statistics, the agency that oversees employment data, supply chain managers may have bachelor’s degrees in fields such as business, transportation, or logistics, and some roles may require occupation-specific licenses.
Supply chain manager responsibilities include:
- Planning, organizing, and overseeing staff to ensure efficient operations
- Collaborating with sales, accounting, HR, and other departments
- Preparing and managing departmental budgets
- Overseeing purchasing and procurement
- Interviewing, hiring, and scheduling training for staff; evaluating staff to improve operational efficiency
- Monitoring operations to ensure compliance with safety policies and regulations
- Resolving problems related to transportation and storage, supply chains, or clients
Supply chain managers fall under the same occupational category that includes transportation, storage, and distribution managers, according to the BLS. Other job titles in the category include:
- Distribution manager
- Shipping manager
- Logistics operations manager
How Much Do Supply Chain Managers Make?
According to the Bureau of Labor Statistics, the median annual salary range for transportation, storage, and distribution managers was $61,200 – $180,590 in May 2024. The agency adds that hiring in this category is projected to grow by 6% through 2034, faster than the average for all occupations.
- Logistician
According to the BLS, logisticians oversee all activities related to purchasing, transportation, inventory, and warehousing. In other words, they manage “a product’s entire life cycle, from design to disposal.”
Logistician responsibilities include:
- Overseeing product acquisition
- Directing the allocation of materials, supplies, and products
- Forecasting and directing the alignment of a product’s demand and supply flows
- Monitoring and managing product risk
- Managing business systems, including their selection and implementation
Logisticians fall under the same occupational category as supply chain analysts, according to the BLS, and the job title can be interchangeable with several others, including:
- Material supply planner
- Transportation analyst
- Logistics analyst
- Production planner
How Much Do Logisticians Make?
The median annual salary range for logisticians and similar occupations in the supply chain analyst category was $49,260-$132,110 in May 2024, according to the BLS. The job is in high demand, as the agency projects 17% growth in the category through 2034, much faster than the average for all occupations.
What’s the Difference Between Supply Chain Management and Logistics?
Because the responsibilities appear to overlap, and both supply chain managers and logisticians have the same goal of ensuring the supply chain runs uninterrupted, it can be easy to confuse the two occupations.
The key difference is while supply chain management covers the entire journey of a product, from sourcing suppliers to forecasting demand to managing returns, logistics focuses on the day-to-day execution and how products get from one place to another.
Summary: What Is Supply Chain Management (and Why Study It?)
The supply chain is the backbone of worldwide commerce, connecting companies with people, products, and technology. As past disruptions have proven, a well-managed supply chain is essential to maintaining economic stability, controlling costs, and sustaining consumer confidence. As the industry expands and is further influenced by technology, an educated workforce will be necessary to provide strategic direction and leadership in roles such as supply chain manager, logistics manager, shipping manager and production planner. Professionals with a degree in supply chain management will be best equipped to join the supply chain workforce and solve the complex logistical challenges that come with a fully connected global economy.