What is Supply Chain Management?

Supply chain management is the identification, acquisition, access, positioning and management of resources an organization requires, or anticipates they will, in order to meet their strategic goals.

The management of supplies is as important a function as finance, marketing, or human resources functions in terms of overall business success. Without the supplies you need, you can't produce; with too much surplus inventory, you're tying up valuable assets; by not getting the best prices for raw materials, you diminish company profits and increase costs to consumers. The supply management department may be responsible for spending 50-60% of the gross revenue in an organization, and thereby can exert significant leverage on profitability and operational success.

The management of supplies is as important a function as finance, marketing, or human resources in terms of overall business success. Without the supplies you need, you can't produce; with too much surplus inventory, you're tying up valuable assets; by not getting the best prices for raw materials, you diminish company profits and increase costs to consumers. The supply management department may be responsible for spending 50-60% of the gross revenue in an organization, and thereby can exert significant leverage on profitability and operational success.

The supply management field continues to evolve from basic contract management with suppliers and distributors to a more proactive, strategic process with business partners and suppliers to create shareholder value. With many the clerical tasks now automated, the purchasing professional is free to work strategically with management.

As a supply chain manager, you may have the opportunity to expand your duties into such areas as planning and policymaking, motivation, evaluation, product development, and inventory control. Depending on the size of the organization, you may have a variety of responsibilities or you may focus on just one area of the supply chain. Some supply managers are actively involved in product design and development, while others may focus on contract development and forecasting.

What You Need to Know to Become a Supply Chain Manager

According to McGraw-Hill'sPurchasing and Supply Management textbook, The nine major objectives of supply management* are:

1. To provide an uninterrupted flow of materials, supplies and services required to operate the organization Minimize inventory investment and loss
2. Maintain and improve quality
3. Create relationships with competent suppliers
4. Set standards for supplies
5. Get supplies and services at lowest cost
6. Achieve harmonious, productive working relationships with other departments
7. Keep purchasing administrative costs low
8. Improve the organization's competitive position

*Source: Leenders, Michiel R., Fearon, Harold E., Flynn, Anna E., and Johnson, P. Fraser, Purchasing and Supply Management, 12th edition, McGraw-Hill, Boston, 2002

What can you do with a College Major in Supply Chain Management?

Supply chain management offers a world of employment possibilities, because it is the backbone of so many different kinds of companies. It's important at all levels--from small businesses to Fortune 500 companies--to have reliable supply management professionals to ensure the most efficient, profitable, and competitive operations possible.

Supply chain management is also proving to be more appealing to people beginning their careers or looking for a change. Supply chain managers can focus on designing, auditing, researching, analyzing, budgeting, forecasting, buying or planning functions. There are countless opportunities for a bright, ambitious individual to fit into the supply management field.

The increasing ease of doing business online is having an impact on the supply management profession as markets take on a global scope. Supply managers may be asked to find and evaluate international sources of supply and to integrate and coordinate requirements across the globe, so you may be expected to bring cultural understanding and language skills to your position.

There are a variety of titles and careers in the supply management profession and some organizations will refer to the same job by different names to suit their needs. Here are just a few supply management-related job titles gathered by the Institute for Supply Management's (ISM) Information Center:

In December 2003, Purchasing magazine published the following average salaries for supply management professionals. Issues such as the business climate, your work experience, your chosen industry, your level of education, whether you have certification, and operating budget should be taken into account as you review these.