7 Principles of Supply Chain Management - MIT School of Distance Education
                     MIT School of Distance Education
7 Principles of Supply Chain 
Management
 Supply chain refers to the processes that are involved in 
moving the products from the supplier to consumers. It is a 
network of organizations, people, resources, activities and 
information involved in upstream and downstream. Supply 
chain management (SCM) is the process of handling the flow 
of goods or services. The activities involved from acquiring 
raw materials to the final delivery of the product to consumers 
come under SCM. Supply chain management minimize the 
waste, cost and time consumed in the production process.
Principles of supply chain management
 1.  Adapt Supply Chain to Customer’s Needs
 The businesses and supply chain professionals understand 
customer’s needs. Customers are divided into different 
groups called ‘segments’ in order to understand them better. 
On the basis of sales volume or profitability, the primitive way 
to segment customer is ABC analysis. It can also be done by 
product, trade channel and industry. Anticipating the 
customer’s needs is also very important. Once the needs of 
the customers are anticipated, the supply chain should be 
aligned to cater to the needs.
 2.  Customize Logistics Network
 After the segmentation of the customers based on different 
requirements, SCM managers have to tailor logistics 
networks to serve different segments. The SCM manager 
has to prioritize the deliveries and make suitable provisions 
to quickly distribute those goods that are marked as urgent.
 3. Align Demand Planning Across Supply Chain
 Supply chain professionals are trained to share data with 
trading partners in order to avoid the unnecessary stock. The 
demand data must be used wisely by the SCM managers.
 4. Differentiate Products Close to Customers
 Standardization and differentiation are two completely 
opposite things. Some cosmetic companies manufacture 
only 1 SKU that can be sold throughout Asia instead of 1 
SKU per country. Due to the economy of the sales, 
standardization can drastically bring down the cost.
 5. Outsources Strategically
 Though outsourcing is all the rage, the managers must 
outsource strategically. The core expertise should not be 
outsourced ever. This principle stands the test of time.
 6. Develop IT that Support Multi-Level Decision Making
 The IT projects should not be done in isolation and before IT 
projects, the business process reengineering should be 
done. This provides a proper understanding of process 
insufficiencies and helps to determine the kind of innovation 
needed.
 7. Adapt Both Services and Financial Metrics
 The activity-based costing (ABC) is applied to determine the 
customer’s profitability. It is even better to exploit Time 
Driven Activity Based Costing in order to understand 
changes in activities, process, product and customers.
 So, these were seven principles of supply chain management 
given by the experts of the field. A manager can be successful 
if he follows these principles in supply chain management. 
At MIT School of Distance Education (MIT-SDE), we offer 
Post Graduate Diploma in Business Administration (PGDBA) 
and Post Graduate Diploma in Management (PGDM) courses 
in Supply Chain Management equivalent to MBA distance 
education. 
 Our course is a mix of practical and theoretical knowledge. 
We train all our candidates to effectively apply the 
concepts and principles in real life. So, if you want to 
enhance your employability skills then pursue distance 
MBA equivalent courses from MIT-SDE.
        
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