SCM attempts to centrally control or link the production, shipment, and distribution of a product by managing the supply chain, companies are able to cut excess costs and deliver products to the consumer faster. This is done by keeping tighter control of internal inventories, internal production, distribution, sales, and the inventories of company vendors.
SCM is based on the idea that nearly every product that comes to market results from the efforts of various organizations that make up a supply chain. Although supply chains have existed for ages, most companies have only recently paid attention to them as a value-add to their operations.
In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain which consists of five parts:
1) The plan or strategy,
2) The source (of raw materials or services),
3) Manufacturing (focused on productivity and efficiency),
4) Delivery and logistics, and
5) The return system (for defective or unwanted products).
The benefits of having a successful supply chain management system for business are various and sometimes it’s hard to understand how and where to start.