Supply chain management (SCM) is the process of overseeing the flow of goods and services from producer to consumer, encompassing everything from raw material acquisition to product delivery. Effective SCM enables companies to reduce costs and improve efficiency while maximizing customer value, ultimately maintaining profitability and minimizing risks. Notable examples of successful SCM include Walmart and Procter & Gamble's collaboration, as well as Walgreens' investment in technology to streamline inventory management.

1. WHAT IS SUPPLY CHAIN
MANAGEMENT (SCM)?

2. A supply chain, or logistics chain, is a system of processes, people, activities,
information, and resources needed to get a product or service from producer to
consumer.
Most manufacturers understand the importance of the supply chain, which is
that connected network of organizations, resources, technologies, and
individuals involved in the manufacture and sale of their products. Supply chain
management (SCM) is the management of the flow of these goods and services
and includes every process that converts raw materials into final products.

3. SCM embodies an effort by supply chain firms to create and implement supply
chains that are efficient and economical. Its ultimate goal is to streamline a
company’s supply-side activities to maximize customer value and achieve a
competitive advantage in the marketplace.

4. In most cases, SCM is looking to control and link the production, shipment, and distribution
of a product. When they can manage the supply chain, manufacturers can cut costs and get
products to the consumer faster. They accomplish this by maintaining tighter control of
internal inventories, production, distribution, sales, and also the inventories of their vendors.
Supply Chain Management is based on the notion that every product comes to the market
as a result of the work of the organizations that comprise a supply chain. Even though
supply chains have been around for a long time, it’s only recently that companies have
started paying attention to them as something that adds value to their operations.
How Does Supply Chain Management
Work?

5. There are five primary components of a supply chain management system.
All of the organizations that constitute the supply chain are joined together through both
physical flows and information flows.
Physical flows are the transformation, movement, and storage of goods and materials.
Information flows allow the various supply chain partners to coordinate their long-term
plans, and to control the day-to-day flow of goods and materials up and down the supply
chain.
In SCM, it’s the responsibility of the supply chain manager to coordinate the logistics of all
aspects of the supply chain, which consists of five parts:

6. 1. The plan or strategy: Every organization must plan and manage all the resources
needed to meet customer demand for their product or service. They must also design
their supply chain and determine which metrics they will use so that they ensure the
supply chain is efficient, effective, delivers value to customers, and meets the company’s
goals.
2. Sourcing: It’s essential to choose suppliers that can provide the goods and services that
are needed to produce their product. Once the suppliers are under contract, the supply
chain manager can use various processes to monitor and manage supplier relationships.
Some of the critical processes are ordering, receiving, managing inventory, and
authorizing supplier payments.

7. 3. Manufacturing: Once again, the supply chain manager will direct the activities that involve
accepting raw materials, manufacturing the product, inspecting the product for quality,
packaging for shipping, and scheduling deliveries. Most manufacturing companies measure
quality, production output, and worker productivity to ensure that the company is making
products that meet all quality standards.
4. Delivery and logistics: This component entails coordinating customer orders, scheduling
deliveries, dispatching loads, creating and sending invoices, and receiving payments.
Shipping products to their customers could require a fleet of vehicles, or, as many
companies do, outsourcing the delivery process to companies that specialize in shipping
and delivery. This method is preferred if the product is large, requires special handling, or is
to be delivered to the consumer directly.

8. 5. The return system: Every supplier needs a network that is quick to respond and flexible to take
back defective, extra, or unwanted products. If the product is faulty, it must be repaired or
scrapped. If the product is either excess or undesirable, it should be returned to the warehouse
for sale.
The supply chain manager is tasked with reducing shortages and keeping costs down. The job
entails making recommendations to boost productivity and improving quality, in addition to
purchasing inventory and the various logistical duties of the role.
Excellent supply chain management is what helps keep companies profitable while mitigating
expensive lawsuits and recalls.

9. Walmart and Procter & Gamble
Walmart and Procter & Gamble offer a classic example of supply chain collaboration. Before
the companies started connecting their supply chains, few retailers and manufacturers had
ever shared information. After they showed that sharing information could reduce costs,
other retailers became willing to consider the possibility at least. In the early 1990s, Walmart
enacted its Retail Link system and persuaded other retailers to connect.
Here are two examples of successful
supply chain management

10. Eventually, the Walmart Point of Sale (POS) system began to amass sales of individual P&G
products at each store. When the POS indicated that inventory for a particular product had
fallen to a predetermined threshold, the system notified the Walmart distribution center to
ship additional products to the store. When stock in the Walmart distribution center fell to
its limit, the system automatically alerted the P&G distribution center to ship the additional
merchandise.

11. Walgreens
Walgreens Boots Alliance, Inc., which operates one of the largest pharmacy chains in the
United States, focused on transforming its supply chain in 2016. Realizing the importance of
SCM to its business, the company decided to efficiently manage and revise its supply chain
so it could stay ahead of the ever-changing trends and continues to add value to its bottom
line.
Walgreens has invested in the technology portion of its supply chain by implementing an
SCM that synthesizes relevant data and uses analytics to forecast customer purchase
behavior. It then works its way up the supply chain to meet that expected demand.

12. The company can anticipate things such as flu patterns, which allows it to forecast needed
inventory for over-the-counter flu remedies accurately. Their forward-looking SCM helps the
company to create an efficient supply chain with a minimum of waste. Walgreens can reduce
excess inventory and all of its associated costs, such as warehousing and transportation.

13. • 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.
• Managing the supply chain gives companies the means to cut costs and deliver products
to the consumer faster.
• Proper supply chain management keeps companies profitable and helps them to
expensive recalls and lawsuits.
Summing things up

15. https://manufacturing-software-blog.mrpeasy.com/supply-chain-
management/
https://www.mrpeasy.com/