School of Information Systems

The important of Supply Chain Management (SCM) Part 1

In doing business, it’s very important to build relationship with supplier and also make sure the business process run smoothly from Supplier until end customers. Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. Company is using SCM software to interact with supplier and make sure that supplier can provide the raw materials or equipment needed for production process, and also monitor flow of finished product when go through distributor until end customers.

Supply chain management flows can be divided into three main flows:

  • The product flow

Includes movement of goods from supplier to customer, and also customer returns or service needed

  • The information flow

Involves transmitting orders and updating delivery status

  • The finances flow

Consists of credit terms, payment schedules, consignment and ownership title arrangement

The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.


Why SCM is very important for organization?

Supply Chain Management (SCM) is an important part of every organization, whether small or large. SCM is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage.

  1. SCM is necessary part of business

Consumers and producers are constantly communicating with each other, and a product goes through many hands before reaching its final destination. SCM deals with major issues such as the growth of multinational corporations, partnerships, global brand expansion and outsourcing.

     2.SCM integration important

SCM is necessary for the foundation of all societies. Supermarket operations for example, deal with a wide variety of producers, and are essential to providing goods to consumers. If a supermarket industry does not have a good supply chain management branch, this can affect a wide variety of citizens who need a supermarket in order to survive.

     3. SCM in business

Supply chain management has a huge impact on business. Good SCM can directly improve customer service. The right product and the correct quantity have to be delivered in a timely manner, to appease both producers and distributors. Consumers want to be able to know the location they have to go to in order to obtain the goods that they want.

Marisa Karsen