Supply Chain Management
Supply Chain Management
Supply Chain Management
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.
The terms supply chain management and logistics are often confused or used
synonymously. However, logistics is a component of supply chain management. It
focuses on moving a product or material in the most efficient way so it arrives at the
right place at the right time. It manages activities such as packaging, transportation,
distribution, warehousing and delivery.
In contrast, SCM involves a more expansive range of activities, such as strategic
sourcing of raw materials, procuring the best prices on goods and materials, and
coordinating supply chain visibility efforts across the supply chain network of
partners, to name just a few.
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.
The most basic version of a supply chain includes a company, its suppliers and the
customers of that company. The chain could look like this: raw material producer,
manufacturer, distributor, retailer and
retail customer.
Technology is critical in managing today's supply chains, and ERP vendors offer
modules that focus on relevant areas. There are also business software vendors that
focus specifically on SCM. A few important areas to note include:
Supply chain execution software for activities such as day-to-day manufacturing operations.
Supply chain visibility software for tasks such as spotting and anticipating risks and
proactively managing them.
Inventory management software for tasks such as tracking and optimizing inventory levels.
Logistics management software and transportation management systems for activities such
as managing the transport of goods, especially across global supply chains.
Infor, JDA Software, Oracle and SAP are well-known vendors of supply chain software.
The increasingly global nature of today's supply chains and the rise of e-commerce, with its
focus on nearly instant small deliveries straight to consumers, are posing challenges,
particularly in the area of logistics and demand planning. A number of strategies -- such as lean
-- and newer approaches -- such as demand-driven material requirements planning -- may
prove helpful.
Technology -- especially big data, predictive analytics, internet of things (IoT) technology, supply
chain analytics, robotics and autonomous vehicles -- is also being used to help solve modern
challenges, including in the areas of supply chain risk and disruption and supply chain
sustainability.
As just two examples, IoT can help with transparency and traceability to help boost food quality
and safety by using sensors to monitor the temperature of perishable food while it's in transit.
And analytics can help determine where to put smart lockers in densely populated areas to cut
the number of single-item deliveries and lower greenhouse gas emissions.