6 Trends Shaping the Importance of Supply Chain Management

Q: What are the key components of Supply Chain Management?

The key components of SCM include: Sourcing and Procurement: Acquiring raw materials or products. Production and Manufacturing: Transforming raw materials into finished goods. Inventory Management: Monitoring and controlling stock levels to avoid overstocking or stockouts. Logistics and Distribution: Moving products from warehouses to customers. Demand Forecasting: Predicting future demand to plan production and inventory levels. Supplier Relationship Management (SRM): Managing interactions with suppliers to ensure timely delivery and quality.

Jaro Education
26, February 2025
4:00 pm

Supply Chain Management (SCM) is the very lifeblood of an organization’s operational strategy. It encompasses the moving parts underlined by activities from the procurement of raw materials to the final delivery of products to consumers. It may be defined more precisely as involving goods, services, and information, in storage, and movement management in coordinated activities between all stakeholders. In today’s globalized economy, the need for SCM cannot be exaggerated. Given the growing complexity of customer demands and sourcing for products along with rapidly changing technologies, most companies must have a structurally defined, quick-response, and value-adding importance of supply chain management which must remain competitive.

This blog goes beyond just talking about what importance supply chain management holds but also gives broader scopes on various aspects regarding SCM and how organizations can capitalize on it, especially the organizations that have registered for supply chain management online courses such as IIM Kozhikode. It also discusses some top trends including what logistics and supply chain management salaries could look like, the scope of supply chain manageme nt, and the types of supply chain management existing in this business world.

Supply Chain Management and Logistics Trends for 2025

It is also not just what we say but the global perspectives of executives that prove there is still much to learn about the importance of supply chain management as it even moves in 2025.

As an example, in the 2025 Importance of Supply Chain Management Outlook report, a logistics real estate company Prologis analyzed the views of more than 1000 business leaders, including executives and decision-makers from the US, UK, and Germany. Their study also revealed that the immense pressure they feel in managing supply chains is due to cybersecurity risks (50%) and rising costs (41%). Things like labor shortages, fast-changing regulations, and transportation woes also affect supply chains.

But probing a little deeper into the security and rising concern issues shows that pressure is connected to aligning investments with the importance of supply chain management with strategic aims such as supply chain automation, sustainability, and AI enablement initiatives.

These trends tell that the trend toward importance of supply chain management in 2025 will probably be focused on the following:

1. Automation and efficiency
2. Digital security and ethical innovation adoption
3. Sustainability
4. Employee wellbeing
5. Visibility and resilience

The importance of Supply chain management trends comprises six serious pillars that shape today’s contemporary logistics.

1. AI-Powered Demand Forecasts: A Solution to Uncertainty

*LinkedIn

Scenarios like growing competition on one side, and rising customer expectations on the other, add up to the complexity of today’s types of supply chain management frequent transportation delays, demand pattern volatility, and supplier disruptions. Hence, the importance of supply chain management leaders need agile foresight into possible scenarios and scientific decision-making by analyzing various scenarios against unfolding events.

They’re expected in 2025, augmentation of actual historical-data-based demand forecasting methods with AI-enabled ones and cutting-edge details of forward-looking-demand forecast modeling.

They’re also continuously adaptive and learning new environments from everywhere in this AI progression. It promotes cross-department contribution even in areas where prediction is concerned owing to its really broad pooling of factors considered in building the forecasts-and these are the main reasons demand forecasting enables greater accuracy and reliability.

Dmytro Ivanov, ML Engineer at Trinetix

Cited in a recent report by McKinsey, AI-predictive capabilities towards the importance of supply chain management could reduce forecasting errors by 30 to 50 percent, decrease lost sales due to stockout occurrence by 65 percent, and lower warehousing costs by anywhere between 10 and 40 percent.

Already, global brands with strong reputations have tapped such an intelligent demand management solution. Brands like IKEA, Waitrose, P&G, and Heineken benefit from this method of demand prediction. However, the momentum is rather low for the logistics and transport side largely because of integration complexities into existing systems, challenges related to data quality and availability, and a lack of internal resources with the requisite talent to efficiently manage and interpret insights from AI.

2. Key components of advanced data technologies fueling supply chain predictability

*Acropolium

Among many other conclusively defined importance of supply chain management is the application of predictive analytics in assessing and mitigating real-time transportation and logistics risks. Just as demand forecasting does, predictive analytics empowers the scope of supply chain management to prepare for continuous disruptions by sealing up risks in all types of supply chain management. Most of those risks point to performing an analysis on supplier performance, be it delivery times, quality issues, or finances;

determining how much safety stock should be held by evaluating variations in demand and lead times;

production planning; predictive maintenance to forecast failures of equipment; customer sentiment analysis on social media and other sources to detect early signs of potential problems.

In general, predictive analytics focuses on historical data analysis and, according to the Harvard Business School, answers the following questions:

What has happened?
Why has this happened?
What could happen in the future?
What should the next action be?

But this is a challenge: data is still one huge weakness in the importance of supply chain management as of 2025. According to KMPG, importance of supply chain management predictability in the context of constant disruptions mainly depends on the following factors: availability, quality, reliability, cadence, and consistency of data. This means that organizations will turn to future technological solutions such as digital twins, low-touch planning, and control towers for combative progress against data insufficiency.

3. Prioritizing supply chain sustainability and ESG

This will continue to be one of the most vital logistics trends in the year 2025. Prologis said that nearly 88% importance of supply chain management executives consider whether or not their organizations achieve some long-term environmental, social, or governance (ESG) goals. The company’s many answers drive them to build sustainable scope of supply chain management, some of which are:

– Changing regulations and geopolitical instability;
– Increased investor demand for transparency in and compliance with ESG;
– Improving brand reputation and fulfilling customer expectations; and
– Resource efficiency-sourced cost cuts.

It is the technical feature scope of supply chain management sustainability: environmental impact reduction, social impact reduction, and economic impact reduction to the movement of goods from production to consumption.

4. Rethinking Supply Chain Visibility Beyond Tier

As stated by KPMG, there are a lot of developing trends that will still emerge in the coming times for the importance of supply chain management. It is studied that in 2024, nearly 43% of organizations will have limited or no visibility of Tier 1 supplier performance. This means that most delivery companies will track only their immediate supplier, Tier 1, and will have hardly or no insight into whose Tier 2 suppliers are and so on.

Wider visibility right beyond Tier 1 permits the entire control of the organization regarding supply chains; this puts the whole spectrum into the hands through root cause analysis mapping hidden risks alongside ESG goals of progress on traceability and transparency.

Everyone knows that the importance of supply chain management visibility is huge, but there is usually a big gap when it comes to understanding what it means in practice. I think visibility relies on four pillars: data integration and consolidation; real-time monitoring; centralized document management and reporting; and data analysis.

-By Volodymyr Horovyi, RPA Architect/Consultant at Trinetix.

5. Increasing omnichannel automation to solve workforce-related issues

The idea of automation in logistics encompassed isolated tasks such as picking or basic inventory tracking in earlier times, but the niche has evolved into industry-wide strategic issues by 2025.

The acute talent shortages, lifted by high demands for operational efficiency, have made the new role of omnichannel automation in the growth and resilience importance of supply chain management highly visible to companies. The most important of these key technologies and approaches that influence this shift are the trends currently taking place in the importance of supply chain management.

Integration of teleoperations for remote workforce enablement. Teleoperations allow workers to oversee and operate warehouses, fleets, and customer support functions from virtually any location. This trend provides an avenue for companies to tap into a broader labor pool and flexibility of management in constraining workforce areas.

Along with port and warehouse automation robotics and artificial intelligence, robots, as well as autonomous mobile systems, handle almost all functions from palletizing to real-time inventory sorting in distribution centres and ports, driven for fast, accurate decision-making by artificial intelligence. This is the scope of automation that evaluates errors, turns up productivity, and ensures that warehouses and ports established at the pace of the fast-moving environment meet omnichannel demands.

Real-time Monitoring Driven by IoT: Internet of Things (IoT) sensors across all logistics facilities and fleets are used to provide real-time input data to central control towers for monitoring conditions and spotting inefficiencies instantly. Such visibility through live data continuously improves the resilience of the supply chain by giving managers early insight into delay issues as well as optimized routes and resource reallocation.

6. XaaS replacing off-the-shelf supply chain management software

Different kinds of software have been created over the past few years that now apply to almost all logistics tasks warehouse management importance of supply chain management visibility or inventory optimization as “everything”-as-a-service (XaaS).

Wrapping up on these emerging trends in the importance of supply chain management, this would be yet another firm trend for the past few years that continues to project sense towards the year 2025.

What Is The Importance Of Supply Chain Management?

Every organization would struggle to stay afloat without the availability of types of supply chain management. It is probably the solitary thing that keeps drawing a business toward commercial success and content consumers.

Improve Customer Services

*Forbes

Ensuring the Right Product, at the Right Place, at the Right Time

Delivering the right product to the right customer, in the right quantity, at the right time, is the key to customer satisfaction. Product availability at the right location is crucial—delays can significantly impact customer experience.

For example, customer satisfaction nadirs if an auto garage requires one day or two to fix a car because it doesn’t stock the particular spare parts needed. Similarly, the right date for delivery is the date when the goods are expected to be delivered. (i.e., customer satisfaction decreases when pizza comes two hours late, or when holiday presents arrive on December 26). Ensuring quick and efficient Post-Sale Support enhances the overall customer experience. Servicing is expected to occur almost immediately on products sold. (ex: customer satisfaction declines when a household furnace breaks down in winter and is out for days).

Decrease in Cost for Operation

*Hotel News Report

Lower purchasing prices are involved. Supply chains are primarily relied on by retail outlets to deliver their expensive products quickly so that they can avoid holding costs for as long as possible. An example is the prompt delivery of 60″ flat-panel plasma HDTVs to electronic stores to avoid high inventory costs.

- Lower production cost: Manufacturers are dependent upon the importance of supply chain management to deliver their materials in a timely fashion to assembly plants to avoid material shortages that would shut down production. For example, the average dollar loss for an auto assembly plant triggered by an unexpected shipment of parts delay would be $20,000 per minute and millions of dollars a day in lost wages.
- Lower total supply chain expenditures: Most manufacturers and retailers rely on supply chain managers to design networks that meet total cost objectives. Well-designed and efficient importance of supply chain management allow a firm to be more competitive in a market. Dell’s radical change in the supply chain for computers involved building each computer on a specific customer request before shipping it directly to that customer.

What Dell has thereby succeeded in doing is to avoid the large computer inventories that would otherwise sit in warehouses and retail stores, saving them a lot of money. Nowhere was Dell carrying stocks of computers that might become technologically obsolete, a fate that other manufacturers suffered as the years went on and computer technology evolved rapidly.

Sharpen Financial Results

*iStock

- Multiplier Effect for Riding Profits – The importance of supply chain management cannot be overstated– it plays a critical role in optimizing costs and driving profitability. By effectively managing and reducing supply chain costs, companies can significantly impact their bottom line.
  For example, a mere one-cent reduction in supply chain costs for the U.S. cereal industry, which sells 2.7 billion packages annually, would result in a $13 million savings. Over five years, with 13 billion boxes of cereal, an optimized supply chain could lead to even more substantial cost savings and increased profits.

- Reduced Fixed Assets – Supply chain managers are largely credited with minimizing the usage of plants, warehouses, and transportation assets in the importance of supply chain management. If a chain model can be influenced better to serve U.S. customers with six warehouses rather than ten, then four very expensive buildings will not need to be constructed.
- Increased Cash Flow – Supply chain managers are typically valued in a firm for accelerating customer product flow. Now, say, if a company takes just 10 days to produce and deliver a product instead of 70, it has the opportunity to bill the customer 60 days earlier than the date it would have otherwise done.

Types of Supply Chain Management

Different types of supply chain management could guide businesses in determining the right way of managing their operations. Here are the main types:

*SketchBubble

Scope of Supply Chain Management

Importantly, the scope of supply chain management has been growing, especially now that technology and globalization are transforming businesses. The SCM scope includes the following:

- Finding suppliers, negotiating contracts, and acquiring raw materials or components are included.
- Production Planning: Laying down a close schedule and definition of the manufacturing process to allow operations to go as planned with quality control at play.
- Inventory Management: Tracking research, works in progress, and finishing products.
- Logistics and Distribution: Channeling the delivery of products from the production site to the retail or opportunity customers.
- Demand Forecasting: This gives information on what the customers require from the articles thereby assisting organizations to make decisions about their course of activities in the supply chain.
- Supplier Relationship Management (SRM): It has been found to maintain and build up maintenance relationships with suppliers so that everything is kept constant with regard to quality, cost, and timely delivery.

On the other hand, the scope of SCM is widening in sustainability practices such as reducing carbon footprints and greening supply chains in several organizations. For example, these practices include green logistics, waste reduction, and sourcing of sustainable materials.

Supply Chain Management Online Courses: A Path to Expertise

One good way of taking a step on an online learning path for professionals interested in taking up the importance of supply chain management as their future career option is this wonderful course called Supply Chain Management Online Course by IIM Kozhikode. This course revolves around the basics of SCM and gets students acquainted with current technology tools for SCM applications in real life.

Ranked 3rd by NIRF 2024, IIM Kozhikode has designed this course to introduce students to the fundamentals of SCM and familiarize them with the latest technological tools used in SCM.

Program highlights:

Eligibility Criteria:

Graduates (10+2+3) from a recognized university (UGC/AICTE/DEC/AIU/State Government/recognized international universities) in any discipline.
A minimum of 03 years of work experience after graduation.

Programme Details:

Duration: 10-12 months / 120-150 hours of learning
Delivery: Direct-to-Device

Programme Fee Structure:

Application Fee- INR 2,000/- + GST
Total Fees (Excluding Application fee)- INR 2,81,000/- + GST

Certification:

Conclusion: How Jaro Education Bridges Supply Chain Management Skill Gap

As the importance of Supply Chain Management (SCM) becomes more complex, it becomes critical to keep pace with the emerging trends that drive success. Jaro Education gives maximum guidance for professionals willing to negotiate their way through this dynamic terrain to get ahead in their careers. It prepares one with the relevant skills, knowledge, and experience necessary in today’s tempo of supply chains with specialized courses such as the Executive Programme in Supply Chain Management.

Expert Faculty and Industry Exposure: Through partnerships with esteemed institutions like IIM Kozhikode, Jaro Education provides access to distinguished faculty and industry experts. The curriculum covers Sustainable Supply Chain Management, Big data analytics, Digital Supply Chain Strategy and Transformation, ensuring participants gain insights into current trends and their implications for the supply chain sector.
Assessing and Bridging the Skill Gap: To help professionals identify and address their skill gaps in supply chain management, Jaro Education offers tools like the Quick Skill Assessment and free resources to equip professionals with the right upskilling path. This assessment allows individuals to evaluate their current competencies and determine areas for improvement, ensuring targeted learning and development.

By leveraging the IIMK ASSCTM programme and resources, professionals can effectively bridge skill gaps in supply chain management, positioning themselves for success in this dynamic field.

Frequently Asked Questions

What is Supply Chain Management (SCM)?

Supply Chain Management (SCM) refers to the coordination and management of activities involved in sourcing, production, and logistics. It includes the flow of goods, services, and information from the raw material stage through to the delivery of the final product to consumers. SCM aims to optimize the efficiency of supply chain operations, reduce costs, and ensure customer satisfaction.

Why is Supply Chain Management important?

SCM is crucial because it directly impacts a company’s ability to deliver products on time, manage costs, and stay competitive in the marketplace. The importance of supply chain management ensures that companies can meet customer demand, optimize their resources, reduce waste, and navigate potential risks, making it an essential function for business success.

What are the key components of Supply Chain Management?

The key components of SCM include:

- Sourcing and Procurement: Acquiring raw materials or products.
- Production and Manufacturing: Transforming raw materials into finished goods.
- Inventory Management: Monitoring and controlling stock levels to avoid overstocking or stockouts.
- Logistics and Distribution: Moving products from warehouses to customers.
- Demand Forecasting: Predicting future demand to plan production and inventory levels.
- Supplier Relationship Management (SRM): Managing interactions with suppliers to ensure timely delivery and quality.