Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose of satisfying customer requirements as efficiently as possible.
The main aim of SCM is to reduce costs while maximizing customer satisfaction levels and improving organizational performance. SCM involves managing all activities related to sourcing, procurement, conversion, and logistics. In other words, it encompasses all aspects of a company’s operations that are involved in providing a product or service to its customers.
Some of the key components of SCM include:
– Sourcing: This is the process of identifying and selecting suppliers who can provide the materials or services required by the company at the best price.
– Procurement: This is the process of negotiating contracts and terms with suppliers, placing orders, and managing supplier performance.
– Conversion: This is the process of transforming raw materials into finished products. It includes manufacturing, assembly, packaging, and other steps involved in bringing a product to market.
– Logistics: This is the process of managing the transportation and storage of goods from suppliers to customers.