What is Supply Chain Management (SCM)? Everything You Need to Know

what is concept of supply chain management scm logistics

Seventy-nine percent of companies with strong supply chains achieve more revenue growth than average within their industries. If you're not using supply chain management (SCM) to your advantage, it's likely your competitors are. 

With SCM, you can improve efficiency and start generating more profit. Though many companies are utilizing SCM to their advantage, there's a lot of people who don't understand.

Keep reading to learn everything you need to know about the concept of supply chain management. 

With this guide, you can develop a better understanding of the process and how it can work to your advantage. Discover the answers to SCM with this guide!


What Is SCM?

First, let's answer the question you're likely asking: exactly what is supply chain management?

SCM involves all activities necessary to plan, control, and execute a product's flow. That includes gathering materials, the production process, and distribution. Developing a supply chain management system allows companies to work in more economical ways.

To understand how the concept of supply chain management applies to your business, you'll need to consider:


  • The flow of materials
  • The exchange of information and capital
  • Demand planning
  • Sourcing
  • Production
  • Inventory management
  • Logistics (storage and transportation)

If you have a large inventory, you'll likely want to consider warehousing services, too. 

Many companies now utilize a business strategy paired with specialized software to improve their SCM. In fact, 94% of supply chain leaders say that digital transformation will impact supply chains. A strong supply chain management system can give you an edge with your competitors. 

More companies are considering supply chain sustainability, too. This involves environmental, social, and legal issues. Companies will need to evaluate their environmental and social well-being to improve their supply chain sustainability. 


The Benefits

Understanding the concept of supply chain management can produce:


  • New efficiencies
  • Higher profits
  • Lower costs
  • Increased collaboration

A strong supply chain will also make it easier for your company to:


  • Manage demand
  • Produce and carry the proper amount of inventory
  • Manage disruptions
  • Keep costs to a minimum
  • Meet customer demand effectively 

In order to experience these benefits of SCM, you'll need to utilize the right strategies and software. As companies grow, supply chains become more complex, requiring companies to develop better programs. 


The Significance

Supply chains impact both the company and the consumer. 

Proper SCM can improve the customer experience. When customers are happy, they're more likely to come back for more. As a result, you can improve customer retention and generate more business. 

SCM can also help you decrease operating costs. You'll spend less on purchasing, production, and the complete supply chain. As you improve costs, you can increase profit and cash flow. 

You can also use your supply chain to minimize the overuse of larger fixed assets, such as vehicles and warehousing. Instead, you can trust a supply chain expert to provide these services for you.


Understanding the Concept of Supply Chain Management: Your Road to Success

By understanding the concept of supply chain management, you can reduce costs and build your business. Otherwise, you're giving competitors a chance to get ahead!

Don't wait to make a change now that you know the concept of supply chain management! Explore the Startups section of the Bootstrap Business Blog today to learn more about company logistics and supply chains strategies.

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