Supply Chain Management (SCM)

Supply chain management (SCM) is a business strategy to improve shareholder and customer value by optimizing the flow of products, services and related information from source to customer. SCM encompasses the processes of creating and fulfilling the market’s demand for goods and services. It is a set of business processes that encompasses a trading partner community engaged in a common goal of satisfying the end customer. Thus, a supply chain process can stretch from a supplier’s supplier to a customer’s customer.

At a high level, SCM software is segmented into planning, execution and procurement components. Planning typically deals with activities to develop demand forecasts, establish relations with suppliers, plan and schedule manufacturing, and develop metrics to ensure efficient and cost-effective operations. Execution functions manage the processes and activities to ensure completion of the plans, including creating purchase orders, taking customer orders, updating inventory, managing movement of products in the warehouse, and delivering goods to the customer. Procurement applications are used to help companies understand and improve the terms and conditions of trade to understand enterprise spending.