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 is also called the art of management of providing the Right Product, At the Right Time, Right Place and at the Right Cost to the Customer.
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 and/or logistics and return for excess or defective products.
Depending on the size of the organization and the number of products that are manufactured, a supply chain may be complex or simple. Supply Chain Management refers to the management of an interconnected network of businesses involved in the ultimate delivery of goods and services to customers. Supply chain management is a complex undertaking that relies on each partner; from suppliers to manufacturers and beyond; to run well.
Both business strategy and specialized software are used in these endeavours to create a competitive advantage. Supply chain management will include demand planning by involving the marketing, production planning, raw material sourcing planning, storage and warehouse planning, transport and logistics planning for goods movement etc. to achieve the overall strategic goals of business. SCM will involve planning at strategic level, tactical level and operational level.
Supply chain management creates efficiencies, raises profits, lowers costs, and boosts 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 the appropriate strategies and software to help manage the growing complexity of today's supply chains.
SCM processes for large companies can become very complex. Various ERP software systems offer a module on SCM and are used for effectively managing the supply chain management processes. Some of the leading SCM software package vendors include JDA, Oracle, SAP, JD Edwards to name a few.
SCM module offers functionalities for demand management, production management, logistics management, inventory management etc. Learn more about these in our Project Management Professional training course.
SCM has become one of the most important business functions in today’s competitive global businesses. Supplying the right product at the tight time with the right cost is the simple mantra for surviving. SCM practices help organizations to achieve these efficiencies with least wastage. Extensive use of software packages for SCM is in vogue now. Concepts like Just-in-Time, Kanban and Lean have gained momentum in SCM.
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