Supply Chain Management (SCM): How It Works and Why It Is Important

What Is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.

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 and more efficiently.
• 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.