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What Functions do Supply Chain Management Include?

Updated: Sep 24, 2022

There are many options if you are considering a career in supply chain management (SCM). There are different ways the SCM field can be divided. Although functions may be separated due to the large scope of the field, each specialization has a significant effect on the others. Optimizing decisions within one supply chain function does not necessarily result in the best decision for the company. Whether you are a small business owner or a professional in a large corporation, it is important to consider all functions within the supply chain function as well as other business departments when making a strategic business decision. For example, a marketing campaign may change demand in a way that requires an adjustment in inventory and in turn affect your purchasing strategy.

Supply Chain Management can be divided as follows:

Procurement and Supply Management – this function enables a company to acquire products and services it needs to produce its end product. This may be in the form of issuing a Request for Quote (RFQ) to obtain pricing for a simple Purchase Order (PO) or a complex Request for Proposal (RFP) involving multiple departments working together to complete a large project.

Operations and Process Management – this function enables a company to transform goods and services in its acquired state from vendor(s) to the end product for the customer. For example, a manufacturer may take agricultural goods to make finished food products for the consumer.

Transportation and Logistics – this function includes physically getting goods from one location to another. Goods may be transported using air (planes), water (ships), or land (trucks, trains, pipelines). Typically, companies manage transportation downstream in the supply chain (arranging shipping for customers) but coordination with upstream supply chain partners is also important if you want to optimize the supply chain.

Each of these functions is a study on its own but it is important to have a good understanding of all of them. The larger the organization you work in, the more likely you will focus on a specific area of SCM. I will expand upon each of these in later posts.

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