The Future of Supply Chain Management
Marie-Kristin Schürmann
March 24, 2021

Supply Chain Management 101 

Supply Chain Management, in essence, deals with the production and delivery of goods to customers at the right time, place, and price. With so many stages involved in the upstream and downstream of the value chain, having a well-managed supply chain aids companies in differentiating themselves from their competitors.

Roles and tasks related to supply chain management include raw material sourcing, price negotiations, product development, quality control, logistics, inventory management, sales, and after-sales services.

All of these tasks are considered across different tier levels. While each company has its unique process, the tier levels will vary in number and tasks. If we look at a typical fashion supply chain, we start with the lowest tier, i.e. tier 4, that is supplying the wool (raw material). This then will be processed into yarn (tier 3), made into a fabric (tier 2), then a garment (tier 1), and lastly delivered to a store, warehouse, or office, and eventually sold to the customer (tier 0).

Today, with heightened competition around supply chain performance, the following two key factors are taken into account: (1) the customers increasing power in their choice of consumption and (2) faster consumer cycles fuelled by the vast numbers of SKUs available not only offline but also online.

In 2004, Hau L. Lee coined the term ‘Triple-A-Supply-Chain’ highlighting three key qualities a supply chain must have to be resilient over a longer period: agility, adaptability, and alignment.  

This theory should be revisited in the current post-pandemic world, considering how the complexity of the supply chain networks led to a supply chain shock in the early months of Covid-19. Many companies were unable to adapt fast enough, facing unpredicted challenges and disruptions, thus unable to avoid the negative impact the fragile and rigid supply chains had on global trade and the global economy.

After the collapse of the global supply chains in 2020, companies are now revisiting their supply chain strategies and operation systems. Resilient supply chains that stand the test of time are more desirable than ever and what we have learned is that there is more to supply chains than speed and cost optimisation.

Moving from linear to closed-loop supply chains

Successful supply chain solutions need to be resilient, yet agile, efficient and aligned, fast and flexible. They must provide a continuous flow of products, be accurate with the data they provide, optimise performance, and improve the process along every step of the supply chain.

Moreover, companies need better demand planning and product lifecycle tools to allow a more circular supply chain flow, eliminating waste and ‘closing the loop’. Decreasing the consumption of resources and lessening the negative social and environmental impact is what sets a closed-loop supply chain apart from the traditional linear model, supporting the creation of a regenerative economy.

Reversed logistics, on the other hand, refer to a structure in which the manufacturers or responsible entities accept previously delivered materials and products for recycling and re-manufacturing, adding to the idea of cradle-to-cradle design which defined itself by only using raw materials that are biologically or technically recyclable.

However, to achieve this, supply chain visibility needs to improve allowing for better traceability and transparency. In some industries, for example the food industry, this can be crucial to delivering fresh produce in time for consumers to purchase before its shelf life expires. The opposite would result in a financial downturn and the waste of raw materials and time. This process is also known as supply chain mapping.

A supply chain map offers a full picture of all stakeholders involved within the supply chain across all tiers and levels. It enables better collaboration, verification via data, GPS and satellite, and real-time data availability.
In today's data economy, it is not the lack of data that keeps businesses from performing at their best, but the inability to use it in ways that benefit the company. This is referred to as digital (data) waste resulting from poor data management and capturing.

This point has been outlined in the SCOR model, first developed in 1996, highlighting the six basics steps of supply chain management: plan, source, make, deliver, return, enable (Dec 2012), as part of the latter ‘enable’.
How can we make use of the right kind of data so that it is available at the right time, to the right person, in real-time, on a vast scale, and still cost-efficient?

Supply Chain 4.0

The fourth industrial revolution, Industry 4.0 is all about smart manufacturing, data, IoT, automation, and decentralisation. Leveraging modern innovations, i.e. autonomous vehicles, wearable technologies, 3D printing, and QR codes.

Supply Chain 4.0 applies the same principles throughout the complete supply chain, using data chips, sensors, robotics, IoT, blockchain, automated data analysation, the list goes on. Furthermore, the use of supply chain clouds creates a digital network between companies, suppliers, and even customers with access to real-time information.

On the customer's side, this information could be made accessible via product QR codes. For example, the QR code could tell you the exact origin and route every part of your laptop took up until the day you decided to purchase it. The information stored in this cloud would be endless and customisable, i.e. it could tell you about the environmental impact this product had during its lifetime or if part of it came from recycled materials. The possibilities are endless.

‘Verify, trace, share’ (Markus Mutz, 2020), the three steps we must take to create transparency and trust for internal and external relations, for suppliers and consumers, for regulation purposes and efficiency. A faster, safer, and more cost-efficient flow of physical goods, increased productivity and performance, real-time planning and order processing, better forecasting, and demand planning are all areas that are already being positively impacted by Supply Chain 4.0.

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