What is Supply Chain Management
Supply Chain Management (SCM) is a business system of enterprise strategies, business processes and information technologies for improving
the planning, execution and collaboration of material flows, information flows, financial flows and workforce flows in the supply chain.
SCM is supported by modular software applications that integrate activities across organizations, from demand forecasting,
product planning, parts purchasing, inventory control, manufacturing, product assembly to product distribution.
A System of Supply Chain Management
SCM is a social or soft system which has goals, components, processes and boundary.
Goals of SCM
- to reduce inventory cost,
- to increase sales
- to improve the coordination and the collaboration with suppliers, manufacturers and distributors.
Components of SCM System - The components of an supply chain system consists of 1) supply chain software and hardware,
2) supply chain business processes and 3) users of SCM system.
- SCM Software and Hardware - The core of an SCM system is SCM software. Supply chain software is module based application. Each software module
automates business activities of a functional area in the supply chain. UNIX is the most common operating system for running SCM software
- Business Processes - Business processes of supply chain includes supply chain planning, execution and collaboration.
and operational control.
- Users - The users of SCM systems are workers of supply chain participants at all levels.
Processes of Supply Chain Management
- Demand Planning and Forecasting - A critical success factor to supply chain management is accurate demand forecasting. Supply chain software
systems utilize sophisticated mathematical models for predicating future demand from historical data.
- Procurement - This is the process of choosing the suppliers that will deliver the goods and services you need to manufacture or assembly your
products or create your services. It involves price negotiation, receiving, and verifying the shipments.
- Manufacturing and Assembly - Raw components are assembled into final products or raw materials are
manufactured into finished goods.
- Distribution - This is the process of delivering your products or services to consumers. Distribution involves warehousing, delivering,
invoicing and payment collection.
- Return - Return and refund are important parts and also the problem parts of supply chain management.
Boundary of the SCM Systems - The boundary of a SCM system is the boundary of extended enterprise which includes the company, suppliers,
partners, distributors and customers.
Related Topics
Supply Chain Management Overview - Participants and Processes
Supply Chain News Portal
Supply Chain Planning
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