How Supply Chain Management Works?

What Is Supply Chain Management (SCM)? What is the example of supply chain?

How Supply Chain Management Works?

Typically, Supply Chain Management (SCM) seeks to centrally control or link the production, shipment, and distribution of a product. By maintaining a supply chain, companies are able to reduce additional costs and deliver products faster to customers. This is done by keeping strict control of internal inventory, internal production, distribution, sales, and listing of vendors of the company.

Supply Chain Management (SCM) is built on the idea that almost every product that comes to market comes from the efforts of different organizations that create a supply chain. Although supply chain has existed throughout the ages, most companies have recently focused on their activities as value addition.


At SCM, the supply chain manager integrates the logistics of all aspects of the supply chain into five parts:

  • Plan or strategy
  • Source (raw material or service)
  • Manufacturing (focusing on productivity and efficiency)
  • Delivery and logistics
  • Return system (for defective or unwanted products)
The supply chain manager tries to reduce shortages and keep costs low. The work is not just about logistics and purchasing lists. According to, supply chain managers, "Recommend improving productivity, quality, and operational efficiency".

Improvements in productivity and efficiency go directly to the bottom line of any organization and have a real and lasting impact. Good supply chain management keeps companies out of the headlines and away from costly recalls and lawsuits.

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