What Is Supply Chain Management?
Supply Chain Management (SCM) is the management of supply chain activities to increase customer value and achieve a sustainable advantage over your competition.
Managing your supply chain is key for any successful business. SCM can refer to a number of different components in your supply chain, such as logistics, production, sourcing, product development and the systems you need to coordinate it all.
Supply Chain Management Concept
Every product created that ends up in your customer’s hands are a joint effort of multiple companies. These companies make up the supply chain.
Just a few decades ago, not much was known about managing the supply chain. Supply chains have existed for a long time, but few companies have the ability to manage their whole supply chain. It wasn’t until the mid 1990s that supply chain management began to surface,
By definition, supply chain management is a cross-functional approach that includes managing the movement of materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and to the end customers.
Supply Chain Management Versus Logisitcs
A lot of people often get supply chain management and logistics confused or use it together.
While logistics is a component of the supply chain, it focuses on moving the product to the appropriate destinations. It manages activities such as packaging, transportation, distribution, warehousing and delivery.
As for supply chain management, it focuses on an expanded set of activities. SCM involves activities such as getting the best prices on goods and materials, as well as, coordinating supply chain efforts across the supply chain network of partners.
Benefits Of Supply Chain Management
There’s a wide range of benefits you can get utilizing supply chain management.
It boosts collaboration, increase profits, lower cost and help your company become more efficient.
Managing your supply chain helps you better manage demand, focus on carrying the right inventory and deal with disruptions efficiently. Entrusted with the right strategies, systems and software, supply chain management can help you in a lot of areas.
Complex Supply Chains
While supply chains can be complex, the most basic supply chain only includes your company, your suppliers and your customers.
Complex supply chains can include a number of different suppliers, such as market research providers, software providers, 3PL companies or financial companies.
The complexity of your supply chain depends on the goals you have for your company.