Supply chain engineering (SCE) applies engineering principles, mathematical models, and specialized software to design and optimize supply chains. 

Supply chain engineering works in tandem with supply chain management practices to make your supply chain goals a reality. Not only does this improve accuracy and trim costs, but it can also cut down on timelines and give you the competitive edge you need to stay profitable. 

While supply chain engineering has its perks, it also has its limitations. In this post, we’ll discuss what supply chain engineering is, how it differs from supply chain management, and how you can overcome common challenges to effective supply chain engineering. 

What Is Supply Chain Engineering?

Supply chain engineering is related to industrial engineering and software engineering. It’s a newer engineering discipline that applies engineering principles and practices to complex supply chains. It does this by blending business strategy, IT, and engineering to analyze all of the components within a supply chain. 

The end goal is to optimize a supply chain according to a business’s goals and needs. This helps businesses find faster, cheaper, and better ways of moving goods and products to their customers. 

Supply chain engineers use statistical modeling for: 

• Forecasting
• Operations research
• Inventory management
• Routing

While these models often run manually, software can now leverage AI and machine learning to boost the speed and accuracy of these predictions. 

In practice, supply chain engineers have a hand in every aspect of the supply chain, including: 

• Logistics
• Production and manufacturing
• Pricing
• Financing
• Demand forecasting
• Inventory management
• Tracking

They specialize in the design and setup of supply chains, but some supply chain engineers can also help companies optimize their supply chains after the fact.

How Is Supply Chain Engineering Different From Supply Chain Management?

Supply chain engineering isn’t the same as supply chain management. Supply chain management is the overall strategy a business uses for its supply chain, while supply chain engineering makes that strategy a reality. 

For example, your supply chain managers might discover that you need a new fulfillment center. You would ask your supply chain engineers to run several models to find the perfect location for that distribution center. 

While they’re two different disciplines, they work in tandem to make the supply chain stronger, faster, and more profitable.

The Top 3 Challenges of Supply Chain Engineering

Many organizations invested in supply chain engineering after seeing the economic uncertainty resulting from COVID-19.  While it’s a useful tool, it isn’t without its drawbacks. Learn how your organization can overcome the three biggest challenges of supply chain engineering. 

Forecasting Accuracy

Supply chain engineers can create as many models as they want, but these models are simply predictions — they aren’t certainties. If your company makes big financial decisions based on inaccurate models, you risk betting it all on false predictions. 

SCE predictive models need to be as accurate as possible, which is why it’s a good idea to invest in AI and machine learning software for greater accuracy. While it won’t help you avoid every catastrophe, it can certainly enhance your SCE efforts by spotting trends early. 

Downstream Effects

While it can certainly help speed up timelines and reduce costs, supply chain engineering can only influence internal factors. If you rely on an upstream third-party supplier for raw materials, you can’t necessarily demand that they adjust their processes to fit your supply chain design. 

Supply chain engineering has limited control over what it can organize and optimize. If your suppliers are chronically late, that can have a negative impact on your models and performance, through no fault of your own. 

To solve this, look into vertical integration. By controlling upstream and downstream partners in the supply chain, you’ll have greater control over the supply chain itself. From there, the supply chain engineers can find even more opportunities for cost and time savings. 

Talent Shortages

Supply chain engineers are in short supply. Even if organizations wanted to invest more in supply chain engineering, the talent shortage makes this a monumental task. 

Companies need to find talented engineers who not only understand statistical modeling but also understand every aspect of the supply chain. These professionals exist, but it’s tough hiring for such a specific skill set. 

This is why many organizations are outsourcing their supply chain engineering and optimization. Supply chain engineering makes it possible for organizations to come out on top in today’s uncertain environment. In an age where supply chains need greater resiliency, organizations will likely need to invest in SCE to stay ahead. 

Instead of hiring expensive full-time engineers, your company can speed up time to value and decrease costs by outsourcing SCE to consultants like Argano. Argano’s experts offer in-depth knowledge of the field, understand the common supply chain engineering challenges and how to solve them, and have extensive experience helping companies develop and build a comprehensive digital platform to optimize resilience, agility, and visibility in supply chain management.  

However, SCE isn’t without its challenges. Instead of scaling up SCE internally, your company can overcome barriers to adoption and optimize your supply chain against future uncertainty. 

Argano helps organizations avoid delays and disruptions that derail supply chains. We solve businesses’ most complex requirements with intelligent solutions designed to build and optimize the supply chain at every turn. Contact us today to learn more about how we can help your business grow.