What is SCM (supply chain management)?.
The short answer is that SCM is the management of the business supply chain, where the supply chain includes any function that's required to produce and deliver the final product to the customer. More specifically supply chain functions include: managing supply and demand, selecting sources for raw materials or parts, producing / assembling / packaging, warehousing, maintaining and tracking inventory, managing order entry, and providing distribution across all channels including delivery to the customer. SCM is the act of integrating any or all activities associated with supply chain flows that occur inside or outside the company. Two important objectives of supply chain management are (1) getting the right supply chain strategy to meet or exceed customer expectations, and (2) providing communication between suppliers and trading partners to enable collaboration. .
Figure 1 provides a simple example of a supply chain model. As shown in the Figure, the first event is when the retail store receives an order from the customer. At the same time the retail store gets the order, the supplier also receives information about the order. The supplier checks inventory and if inventory is low a message is sent to the manufacturer to build more product. The manufacturer builds the product and ships the product to the supplier via a distributor that is also a part of the supply chain system. Meanwhile the retail store has the available product shipped from the supplier's inventory to the customer via a shipping transportation company. The transportation company is also a part of the system, which enables the customer to track the order during shipment. Normally physical products flow downstream and demand information flows upstream in the supply chain. The time between when a customer makes the order and when the customer receives the product is called the customer cycle time.