Supply chain management (SCM) is a business’s effort to improve its competitiveness and cost-efficiency by optimizing the acquisition and use of raw materials and by initiating processes that affect or are affected by market delivery of revenue-generating goods and services.
SCM requires orchestration of complex “chains” of suppliers and events so that an optimal amount of a resource is available at the optimal time. SCM software supports these efforts by tracking complex upstream and downstream exchanges and predicts sub-optimal conditions before they occur so that corrective action can be taken.
While SCM originated as a way to coordinate materials inventories, purchases, and deliveries, today, SCM manages many ancillary processes that are affected by variances in the supply chain. For example, SCM can help an organization know when to reach out to its customers to communicate about product availability. It can also predict when outsourcing may be needed to supplement workforce or production shortfalls.
The primary benefit of SCM is cost savings. The conditions and factors that affect a company’s ability to maximize revenue from its efforts are legion: energy costs, raw materials costs, workforce shortages, political instability, publicity successes or mishaps, and on and on. SCM tracks variances in all these conditions in order to minimize disruptions that will raise the cost of bringing goods and services to market.