Definition‍

Supply Chain Management (SCM) covers the development and coordination of logistics chains, material and information flows, across the entire supply chain, from raw material extraction to final delivery to the customer. Its main task is to organize every process that contributes to delivering goods, products, or services in the most economical way possible.

‍

SCM vs. Logistics — What's the difference?‍

SCM and logistics are closely related but not the same scope. Logistics focuses on the physical movement and storage of goods. SCM is broader: it also covers the accompanying processes that make that movement possible — order processing, financial flows, and the coordination between procurement, production, and distribution. This connection is what allows planning data to flow seamlessly across the different stages, so that if a problem occurs in one area, it can be addressed before it affects the rest of the chain.

‍

Tasks of Supply Chain Management

• Planning all processes along the value chain
• Ensuring smooth material flow within and between processes
• Supporting suppliers and customers
• Continuously optimizing processes and process chains
• Developing cost-reduction plans

‍

Objectives of Supply Chain Management

• Reducing storage costs
• Reducing inventory levels along the supply chain
• Ensuring just-in-time deliveries
• Ensuring and improving delivery reliability
• Minimizing throughput times
• Shortening cash-to-cash cycles

‍

Where SCM and Order Management Intersect‍

While SCM covers planning across the entire chain, including procurement and production, which happen long before a customer order exists, an Order Management System (OMS) operates at the execution layer, once an order has actually been placed: deciding where it's fulfilled from and coordinating that delivery in real time. SCM sets the broader planning framework; an OMS acts within it at the speed individual orders require.

‍