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The Width Challenge of Supply Chain Management

Oct 2, 2014 2 min

To us supply chain professionals the importance of supply chain management is a given. However the potentially huge impact of supply chain in the profit potential of a company is not clear to everyone. I for one totally support the assertion that ‘Revenue and profit are first and foremost driven by effective sales’. However many companies have found it painfully clear that all their profit can easily be lost through an inefficient supply chain or a supply chain not clearly suited for its purpose.

Having studied, researched and worked in supply chain development for over twenty years I have found that the biggest challenge of supply chain management is the width that it covers. In building a fit-for-purpose supply chain one has to take into account issues such as forecasting and planning accuracy, handling costs, warehouse spaces and space cost, sourcing lines, transportation economics… and all the pieces should work together to provide the business results most important to that particular business. And to make things more difficult even the most important criteria for success differ from business to business and from situation to situation.

The case that different businesses need different attributes in their supply chains is well made in Marshall Fisher’s classic article – What is the right supply chain for your product. It of course cuts some corners, and most retail companies need both efficient supply chains and planning processes for the stable situations and products, and more responsive ones for changing assortment and sales exceptions like price promotions and sales seasons.

In this blog I will be exploring some of the many supply chain management issues my colleagues and I at RELEX encounter with our customers. The topics will cover inventory management, demand forecasting and automatic replenishment as well as other supply chain management issues. I hope that readers will get some new ideas to take to work, perhaps reinforcement for your current thinking and some support for disseminating your ideas further. Of course any feedback or discussion we might spark to increase supply chain management thinking would be great!

Written by

Mikko Kärkkäinen

Mikko Kärkkäinen

Co-founder & Group Chief Executive Officer