Benefits of supply chain management

Supply chain management (SCM) is the broad range of activities required to plan, control and execute a product’s flow from materials to production to distribution in the most economical way possible.

SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and capital in functions that broadly include demand planning, sourcing, production, inventory management and logistics — or storage and transportation. Companies use both business strategy and specialized software to create a competitive advantage.

Supply chain management is an expansive and complex undertaking that relies on each partner — from suppliers to manufacturers and beyond — to run well.

Supply chain management produces 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, deal with disruptions, keep costs to a minimum and meet customer demand in the most effective way possible. These SCM benefits are achieved through choosing effective strategies and appropriate software to manage the growing complexity of today’s supply chains.

Supply chain management processes

Each major phase of a product’s movement through the supply chain — from materials to production and distribution — has its own distinct business processes and disciplines. Most of them began decades ago as paper-based methods but now are usually handled in specialized software.

Logistics part to play in the supply chain

Logistics is everything having to do with transporting and storing goods from the start of the supply chain, with delivery of parts and materials to manufacturers, to delivery of finished products to stores or direct to consumers and even beyond for product servicing, return and recycling — a process called reverse logistics. Inventory management is threaded throughout the logistics process.

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