School of Information Systems

What is Supply Chain Management (SCM)? – Part 2

In part 1 of this SCM article, we already explain about SCM definition, activities, and benefits of SCM. So, in this article, we will continue to explain why company needs SCM? 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.

A supply chain is the connected network of individuals, organizations, resources, activities and technologies involved in the manufacture and sale of a product or service. A supply chain starts with the delivery of raw material from a supplier to a manufacturer, and ends with the delivery of the finished product or service to the end consumer. By using SCM, company can oversees each touch point of a product or service, from initial creation to final sale. With so many places along the supply chain that can add value through efficiencies or lose value through increased expenses, proper SCM can increase revenues, decrease costs and impact a company’s bottom line because we can serve customer better. SCM can make sure we deliver product on time, because we can monitor the product flow from Supplier until end customer.

  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.

There are several keys of supply chain processes stated by Lambert (2004) which are:

  • Customer relationship management
  • Customer service management
  • Demand management style
  • Order fulfillment
  • Manufacturing flow management
  • Supplier relationship management
  • Product development and commercialization
  • Returns management


Marisa Karsen