how supply chain management scm works
scm represents an ongoing effort by companies to make their supply chains as efficient and economical as possible typically scm attempts to centrally control or link the production shipment and distribution of a product by managing the supply chain companies can cut excess costs and needless steps and deliver products to the consumer faster this is done by keeping tighter control of internal inventories internal production distribution sales and the inventories of company vendors scm is based on the idea that nearly every product that comes to market does so as the result of efforts by multiple organizations that make up a supply chain although supply chains have existed for ages a lot of companies didn t pay attention to them as a value add to their operations until recently 5 phases of supply chain management scm a supply chain manager s job is not only about traditional logistics and purchasing they have to find ways to increase efficiency and keep costs down while also avoiding shortages and preparing for unexpected contingencies typically the scm process consists of these five phases to get the best results from scm the process usually begins with planning to match supply with customer and manufacturing demands companies must try to predict what their future needs will be and act accordingly that means taking into account the raw materials or components needed during each stage of manufacturing equipment capacity and limitations and staffing needs large businesses often rely on enterprise resource planning erp software to help coordinate the process effective scm processes rely very heavily on strong relationships with suppliers sourcing entails working with vendors to supply the materials needed throughout the manufacturing process different industries will have different sourcing requirements in general scm sourcing involves ensuring that scm is especially critical when manufacturers are working with perishable goods 