Supply Chain Management (SCM) encompasses a wide range of activities required to plan, control, and execute the flow of product from materials to production to distribution in the most economical way possible.
SCM involves the integrated planning and execution of the processes needed to optimize the flow of materials, information, and capital across functions that broadly include demand planning, sourcing, production, inventory management, and logistics – or warehousing and transportation. Companies utilize business strategy and specialized software in these endeavors to create a competitive advantage.
Supply chain management is a broad and complex undertaking that relies heavily on each of its partners – from suppliers to manufacturers and beyond – to function well. For this reason, effective supply chain management also requires change management, collaboration, and risk management to create coordination and communication among all participants.
Furthermore, supply chain sustainability – encompassing sustainable sourcing, environmental, social, and governance issues – and the closely related concept of corporate social responsibility – which assesses a company’s impact on the environment and social well-being – are areas of major concern for today’s companies.
Benefits of Supply Chain Management
Supply chain management creates benefits such as new efficiencies, higher profits, lower costs, and increased collaboration. SCM enables companies to better manage demand, carry the right amount of inventory, cope with disruptions, minimize costs, and meet customer demand in the most effective way possible. These benefits of SCM are achieved through selecting effective strategies and the right software to manage the growing complexity of today’s supply chains.
