Introduction to supply chain management

A supply chain is a system that converts raw materials and components into finished products that are eventually delivered to customers. This system is composed of multiple organizations and activities, including suppliers of raw materials, manufacturers, distributors, retailers, and customers.

Supply chain management involves coordinating these networks, which includes the procurement, management, and storage of raw materials, the manufacturing process, as well as the transportation, delivery, and storage of finished products and services. The goal of supply chain management is to achieve maximum efficiency, reduce costs, and create net value.

Supply chains: From linear to network

To fully appreciate the significance of supply chain management, it's important to understand the fundamental role of a supply chain. A traditional supply chain operates in a linear fashion, where the output of one stage is the input for the next stage.

For example, raw materials are provided by suppliers to manufacturers, who then use these materials to create products. Any disruption in any stage of this linear chain can cause significant disruption throughout the entire process.

In contrast, modern supply chains are more intricate and dynamic, and function as comprehensive networks that are flexible and efficient. This allows for the delivery of sustainable, customized products with fast delivery times that cater to the specific needs of customers.

Supply chain management - basic components

While supply chains can differ depending on the company and industry, they typically consist of several interconnected disciplines and generally have seven fundamental components at a high level.

The structure of supply chains can differ based on the industry and company involved. However, they usually comprise of several related disciplines and typically include seven fundamental components:

Inbound Logistics: The transportation of goods into a business is managed under this component.

Engineering: This involves designing and creating new products that align with customer preferences and demands.

Sourcing and Procurement: Identifying and procuring the necessary components that make up a product while ensuring that they meet quality standards and are cost-effective.

Service Management: This component is concerned with maintaining or repairing the product to ensure customer satisfaction.

Manufacturing: Manufacturing enough products to meet demand and maintain inventory levels.

Planning: Anticipating and optimizing supply chain events by having visibility within each step of the supply chain.

Fulfillment and Delivery: Delivering the product to the customer quickly and efficiently.


The strength of a supply chain lies in the interdependence of its various components. The output of one component serves as the input of the next, and each link relies on the others to form a cohesive chain.

For instance, Sales and Operations Planning can inform product innovation based on real-time sales results, leading to repeat business. Procurement is responsible for sourcing and purchasing the correct parts and ensuring their timely delivery to the appropriate location to meet production schedules.

Finally, the timely manufacturing and shipping of products are crucial to ensure that customers receive what they have been promised.

Intelligent supply networks function similarly to traditional supply chains, but with one significant difference - they utilize digital tools and technologies to enhance supply chain optimization and provide greater visibility across the ecosystem.

This allows for faster delivery of deeper insights and increased value. As a result, the shift to intelligent supply networks has a ripple effect on the seven core components of supply chain management and the skills required for each.

Strength of a supply chain lies in the interdependence of its various components

Effective supply chain - management strategies

Many companies' supply chains rely on outdated technologies, which hinder end-to-end visibility and real-time decision-making, making it difficult to deliver strategic business value. With slow response times, waste, conflicting priorities, delays, and rigidity, these supply chains are struggling to meet increasingly granular customer needs in a digital world.

Moreover, traditional supply chain organizations typically optimize a specific aspect of the supply chain, rather than the entire value chain. Instead, organizations should break down silos and share data to optimize the supply chain as a whole.

Reinventing supply chains - AI assisted

Generative AI is a significant milestone in the history of artificial intelligence that holds great promise for the future of supply chains across various industries.

When combined with analytics capabilities, it provides supply chain professionals with a new level of hyper-intelligence, allowing them to achieve more than ever before.

As generative AI becomes the norm and humans work alongside AI colleagues, every role in the supply chain can be transformed, from vendor selection to product design and customer service interactions. This breakthrough technology has the potential to accelerate onboarding of supply chain partners and introduce new sustainability to end-to-end operations.

Supply chain leaders need to understand and adopt this technology now to secure future competitive advantages.

Provides supply chain professionals with a new level of hyper-intelligence

Sustainable supply chains

Supply chains are responsible for approximately 60% of global carbon emissions. To address this issue, companies are making significant efforts to create more responsible and resilient supply chain networks. There are several ways in which companies can improve their supply chain sustainability. These include:

To increase supply chain sustainability, there are various opportunities that companies can explore. These include product design, where companies can develop products with sustainability in mind, considering factors such as the environmental impact of materials and production processes. In planning, companies can work to reduce waste by matching supply and demand more accurately.

In sourcing and procurement, companies can ensure that their suppliers follow ethical and environmentally friendly practices, as well as ensuring transparency across the entire supply chain. This can involve implementing sustainability standards and certifications, and monitoring supplier performance. In manufacturing, companies can work to make production more efficient, reducing waste and energy consumption, as well as ensuring ethical labor practices.

In logistics, companies can optimize distribution and transportation, reducing fuel consumption and emissions. This can involve using more sustainable transportation options such as rail and sea freight, as well as optimizing routes to reduce emissions. By implementing these measures across the supply chain, companies can increase their sustainability and reduce their environmental impact.


There are three categories of greenhouse gas (GHG) emissions known as scopes.

Scope 1 includes emissions that come directly from a company's owned sources.

Scope 2 includes indirect GHG emissions.

Scope 3 emissions result from an organization's value chain but are not owned by the organization. It is possible to reduce carbon emissions throughout the supply chain.

Supply chains - Digital transformation

Implementing intelligent supply chains that leverage data, analytics, and AI is essential to overcome the challenges posed by outdated supply chain systems. Cloud-based technology is a critical component to enable these intelligent supply chains.

Cloud technology allows companies to process vast amounts of data from multiple sources across the supply chain at unprecedented speeds and volumes.

This deeper analysis of more data, faster, enables critical business insights and smarter decision-making, which is essential for optimizing the supply chain.

Additionally, the cloud is more affordable and flexible, making it an attractive option for companies looking to improve their supply chain operations. Building resilient and responsible operations is also possible through cloud-based technology.

In addition, transforming supply chain organizations can lead to benefits beyond profitability, as it shifts the focus to creating value across growth, sustainability, and trust, with the supply chain playing a key role in positively impacting society and the planet.

Digital technologies and data form the basis for creating customer-centric, service-oriented, self-learning, intelligent, and agile supply chains. To implement a successful intelligent supply chain strategy, there are five essential keys to consider.

To create an intelligent supply chain, it is important to break down barriers between functions. Traditionally, some roles in the supply chain operate in separate timeframes and do not collaborate effectively with other teams. To overcome this, an intelligent supply chain requires everyone to work closely together.

A digital foundation is also essential for an intelligent supply chain. This involves creating transactional layers of real-time data visibility and ensuring that the insights derived from the data are easily digestible for quick decision-making by leaders.

To successfully transform the supply chain organization and implement digital technologies such as artificial intelligence, digital twins, the internet of things, and cloud, it is crucial to transform talent as well.

This includes putting employees at the center of the transformation and providing the necessary skills and support to adapt to the changes. This requires building new digital skills and involving everyone in the implementation of new tools and processes, fostering a sense of ownership and innovation opportunities.

Creating partnerships and collaborating in new ways is another key to building an intelligent supply chain. This involves sourcing technology partners who can help improve operational efficiency, increase yield, or innovate products.

Finally, automating routine work is important to free up staff to focus on strategic analysis and innovation. This helps to build an intelligent supply chain that improves customer experiences, increases competitive advantage, and drives profitable growth.

Cloud-based technology is a critical component to enable these intelligent supply chains