What is Supply Chain Management?

Supply chain management - SCM was a term invented by Keith Oliver, a consultant belonging to the firm Booz Allen Hamilton, in the year 1982, to describe the overall process of planning, implementing, and controlling what goes on at the supply chain in order to satisfy customers’ needs in a quick, efficient manner.

As carried out in practice, supply chain management can involve everything from overlooking the exchange and storage of raw materials, taking inventory of all work that is in process, as well as the movement of goods from their point of origin to the point where they will be consumed.

In other words, supply chain management is the process of overlooking and making the necessary arrangements for the sourcing, procurement, conversion, logistics and management of the supply chain. Those working in supply chain management must also collaborate and coordinate the movement of goods with channel partners. These might include anyone from customers to suppliers, from third party providers of specialized services to intermediaries in the supply chain. Essentially, the field of supply chain management overlooks all fields of supply and demand management within particular companies, while also working across different companies.

There is also a related field you should be aware of called supply chain event management, oftentimes abbreviated to SCEM. Supply chain event management takes in to consideration all the things that can go wrong in a supply chain. Supply chain event management professionals are able to take in to account potential problems and plan the solutions in advance, to make sure everything goes smoothly in the long run.

Supply chain management is in many ways an extension of the field known as logistics. Although some argue that the two fields are dissimilar, they are actually alike in quite a number of ways. There are also supply chain management software products available on the market.

Major Issues in Supply Chain Management

Those working in the field of supply chain management have to acquaint themselves with the following issues, which their SCM addresses.

The first is the issue of distribution. Supply chain management must keep account of the suppliers’ names and addresses, their facilities, centers of distributions, as well as their warehouses and customers. The entire distribution network configuration must be understood.

Once the distribution logistics are sorted out, there must be a planned strategy of distribution. There are many things to be decided when it comes to how this strategy will operate – whether it will be centralized, decentralized, whether shipping will be direct or not, etc.