So what actually is Supply Chain Management? And what have we learned in the last 2-3 years, the COVID crisis and its impact on global supply chains?

The common definition of supply chain talks about connecting the customers’ customer to the suppliers’ supplier. We need to sense where the market demand is going and translate that all the way up to the critical components and raw materials at direct or indirect suppliers (the suppliers’ supplier).

The more common struggle I have seen in supply chain management is to balance a triangle of Service, Cost and Cash. Sales departments are often service-driven, they want to improve the service to delight the customer and boost sales. Operations departments are often cost-driven. They are focused on efficiency and want to get the maximum out of the production and logistics assets. Finance is often cash-driven, they want to keep a steady and healthy cash flow to be able to reward investors (dividends) and keep investing in growth.

COVID has given a huge blow to the above ‘supply chain triangle’. In the post-covid recovery, many companies have been faced by important shortages of raw materials. Those companies that are able to order the raw materials are often confronted with higher prices, a shortage of transportation capacity to bring them in, rising transportation prices etc.

At the same time, in many sectors, companies face an increased customer demand. With insufficient production or transportation capacity and or insufficient raw materials this has led to a service crisis with many companies not being able to deliver all of the customer demand and certainly not in time.

When companies face service issues, we see a lot of operational firefighting trying to close that service gap. Firefighting typically further drives up the cost in the triangle and further reduces the efficiency in times where the capacity is already scarce.

So what have we learned in 2022? That supply chain management is more relevant than ever. Supply Chain Management is not just about managing the end-to-end flow of goods and information. Supply Chain Management is also about balancing the triangle of service, cost and cash.

In the presentation of Bram Desmet at the FINAT European Label Forum we will give more insights on which tools can be used to balance this triangle, why balancing is important, and how the company strategy affects the balance in the triangle.