Supply Chain Management (SCM) is the broad range of activities required to plan, control and execute a product’s flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible.
SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and financial capital in the areas that broadly include demand planning, sourcing, production, inventory management and storage, transportation — or logistics — and return for excess or defective products. Both business strategy and specialized software are used in these endeavors to create a competitive advantage.
Supply Chain Management is an expansive, complex undertaking that relies on each partner — from suppliers to manufacturers and beyond — to run well. Because of this, effective supply chain management also requires change management, collaboration and risk management to create alignment and communication between all the entities.
In addition, supply chain sustainability — which covers environmental, social and legal issues, in addition to sustainable procurement — and the closely related concept of corporate social responsibility — which evaluates a company’s effect on the environment and social well-being — are areas of major concern for today’s companies.
Supply Chain Management creates efficiencies, raises profits, lowers costs, boosts collaboration and more. SCM enables companies to better manage demand, carry the right amount of inventory, deal with disruptions, keep costs to a minimum and meet customer demand in the most effective way possible. These SCM benefits are achieved through the appropriate strategies and software to help manage the growing complexity of today’s supply chains.