Supply Chain Management (SCM)

Posted in Operations and Supply Chain Terms, Total Reads: 467

Definition: Supply Chain Management (SCM)

Supply chain management (SCM) refers to the management of the flow of goods and services in order to ensure optimality in a manufacturing firm. Supply chain management refers to the flow of materials and goods, right from buying the raw materials, followed by production, inventory management, storage, warehousing and then transportation, logistics & distribution to the end consumer. The main reason to have SCM is to create a flow of inventory that ensures greater availability and removal of surpluses. 


Keith Oliver of Booz Allen Hamilton coined the term and focused its integration with operations management, production management and project management.


Over the years, supply chain has given rise to the concepts of re-engineering or reverse logistics. Most e-commerce players round the globe and almost all online retail uses the concept of reverse logistics.

In addition to this, supply chain has various global applications like:

• Global sourcing

• Raw materials from low cost providers

• Sharing of service centers



The above diagram represents how a customer is surrounded by the supply chain.

SCM is consolidated by the domains of operations management, logistics, procurement, and I.T. in an integrated approach, for highest efficiency and minimum losses.


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