Supply Chain Management: Career path and salaries
What is a Supply Chain?
A supply chain is the sequence of activities that need to happen to turn raw materials or components into finished products.
Supply chains can be straightforward. For example, a local farmer who grows vegetables and sells them to local shops, who then sell to the end-user.
But they can be incredibly complex as in automotive production. Hundreds of suppliers worldwide have to coordinate their activities to deliver sub-assembly parts directly to the production lines at precisely the right time. Factor in each company holding minimum stock levels to keep their costs as low as possible, and even minor disruptions to the chain can have enormous consequences.
What is Supply Chain Management (SCM)?
In simple terms, it’s handling the whole flow of goods from the raw material stage through to final delivery to the customer.
Although it sounds straightforward, supply chain management is one of the most complex disciplines in modern industry. A successful supply chain professional employs a wide range of skills and abilities to be effective in their role.
You’ll need overall business management and leadership skills, as well as a sound knowledge of manufacturing processes and transportation methods.
Very often, you’ll be juggling both customer and supplier requirements, so being able to communicate effectively and confidently at various levels is another crucial skill.
The Core Divisions
With SCM being such a large subject, it’s easier to break it down into its core divisions, which are:
What is Supply Chain Planning (SCP)?
SCP involves breaking down each part of the process needed to take a raw material through to a finished product. It sub-divides into the following four categories:
- Demand Planning – Forecasting or predicting the future volumes of a product the customer will require. Once the demand level is determined, the demand planners will work out how much stock needs allocating within each stage of the system.
- Supply Planning – Taking the demand plan and calculating how best to achieve the supply of volumes required.
- Production Planning – Allocating resources (people and machinery) to produce the amounts of products required.
- Sales & Operations Planning (S&OP) – Brings together all the plans for each department of the business (sales, purchasing, manufacturing etc.) into one integrated program.
As you can see, each of these sectors requires specific roles and skills.
Typical positions and approximate average salaries within Supply Chain Planning include:
|Production Control Manager
|Senior Materials Planner
|Senior Production Planner
What is Procurement and Purchasing?
Very often (and incorrectly), the two terms are used interchangeably. Procurement is the strategic activity that involves sourcing suppliers to provide the products a company needs to fulfil its objectives. The procurement team will carry out supplier assessments, negotiate terms and create the structure required by the purchasing team. The procurement team’s focus is on delivering value, which is not the same as finding the cheapest supplier.
Purchasing is the act of placing orders and managing incoming products. The purchasing department is responsible for the company’s spend on raw materials or sub-assemblies in line with the terms agreed. They carry out the day-to-day management of suppliers and focus on price more than value.
In some respects, you could view procurement as a proactive process and purchasing as a reactive one. Depending on the company’s size, these roles could be carried out by the same individual, but they tend to be divided among a procurement and purchasing team.
Typical positions and approximate average salaries in Procurement include:
|Head of Procurement
|Sr Procurement Manager
What is Logistics?
Logistics is how raw materials, sub-assemblies, and finished goods are stored and transported along the supply chain.
Logistics management involves the physical transporting of goods (distribution) via land, sea, and air freight. And it also includes inventory management, making sure that each element of the supply chain has sufficient stock to fulfil its needs. For example, a supermarket displays a small amount of stock on the shelves. This stock is replenished from its internal stores, which is then filled from a regional warehouse, then a national warehouse then the suppliers. It is incredible to think that when a shopper removes a tin of beans from the supermarket shelf, a whole sequence of logistical activities is triggered.
Typical roles and approximate average salaries in Logistics include:
|Warehouse Operations Manager
|Warehouse Project Manager
|Warehouse Shift Manager
Finally, the executive-level supply chain roles and approximate average salaries include:
|VP Supply Chain
|Supply Chain Director
|Supply Chain Manager
As you can see, Supply Chain Management offers a wide variety of roles for a broad scope of skillsets.
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