Supply chain management
Supply chain management coordinates every process from raw material sourcing to final delivery. That includes the physical movement of goods as well as the information and financial flows that connect them.
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 consumer. 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
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.
Key tasks
- 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
- 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
Most of these objectives depend on knowing where stock is at any moment. The Global Inventory Hub gives retailers one real-time view of stock across warehouses, stores and suppliers.
SCM and Order Management
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.