What Does Supply Chain Management Mean?

Supply Chain Management (SCM) is the handling of the flow of goods and
services from the raw manufacturing of the product through to the
consumption by the consumer. This process requires an organisation to have
a network of suppliers (that serve as links in the chain) to move the product
through each stage.

Why Is Supply Chain Management Important?

Effective Supply Chain Management improves the financial position of an

organisation by delivering value linked to the organisations corporate
strategy. Supply Chain Management plays a significant role in customer
satisfaction through the delivery of products and services. Good supply chain
management is critical at reducing operating costs from Procurement
activities, through operations and logistics functions and throughout the
whole supply chain. The scale of profitability for large organisations is
relative to the management of an organisations supply chain.

Supply Chain Management also has a lesser publicised societal role –

ensuring that the basics necessities humans depend on like, food, energy,
medicine and modern infrastructure are flowing and available.
What Are the 6 Components of Supply Chain Management?

 Planning – Make vs buy decision to understand whether you will

manufacturer or buy domestically or internationally.
 Sourcing - Identifying, evaluating and building relationships with
suppliers that will provide goods and services
 Demand/Inventory - Managing inventory and manufacturing
schedules to meet consumer demand.
 Production - Ensuring the right volumes and quality of production.
 Warehouse & Transportation - Storing and delivering the product
effectively.
 Return of Goods - Ensuring an effective returns process for customer
satisfaction.

These six components enable to you provide effective Supply Chain

Management.

CIPS Knowledge-related topics, best practice guides and white papers

include: Guidance to support the development of organisations supply
chain activities, from setting strategy through to operational
developments, supporting organisations to build efficiencies into their
supply chains to develop supply chains of the future
KEY TAKEAWAYS

 Supply chain management (SCM) is the centralized management of the

flow of goods and services and includes all processes that transform raw
materials into final products.
 By managing the supply chain, companies can cut excess costs and
deliver products to the consumer faster.
 Good supply chain management keeps companies out of the headlines
and away from expensive recalls and lawsuits. 
 The five most critical elements of SCM are developing a strategy, sourcing
raw materials, production, distribution, and returns.
 A supply chain manager is tasked with controlling and reducing costs and
avoiding supply shortages.