SUPPLY CHAIN MANAGEMENT (SCM) SCM is a cross-functional inter-enterprise system that

uses information technology to help support and manage the links between company’s key business processes and those of its suppliers, customers and business partners.

The goal of SCM is to create a fast, efficient and low-cost network of business relationships to get a company’s products from concept to market.

Eg . To build and sell a product to other businesses

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A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.

The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory and labor

Supply chain management involves coordinating and integrating of flows between suppliers -> manufacturers -> retailers -> customers both within and among companies.

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SCM Life Cycle & Components

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Plan Source Make Deliver

Internet

Shared Database

Supplier Manufacturer Retailer Custome

r

Return

Components Supply chain management (SCM) is the process of finding the raw

materials needed to make a product or service and deliver it to customers. The following are five basic components of SCM.

Plan - This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

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Source Companies must choose suppliers to

deliver the goods (raw materials) and services they need to create their product.

Supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships.

And then, SCM managers can put together processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments.

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Make This is the manufacturing step. Supply

chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery.

DeliverThis stage is also called as logistics,

where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

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Return

This can be a problematic part of the supply chain for many companies.

Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have problems with delivered products..

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Flow in SCM

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Benefits of SCM SCM systems can provide

More fasterMore accurate order processingReduction in inventory levelsQuicker time to marketLower transaction & material costsStrategic relationships with their suppliersHelps to meet the demands of customers

and business partners

Challenges of SCM It is a complex and difficult step in

information technology.

Lack of proper demand planning knowledge, tools and guidelines is the major source for SCM failure.

Inaccurate production, inventory and other data provided by other information systems are another cause for SCM failures.