Sometimes, SCM is confused with logistics management process or service. SCM is the system as a whole, while logistics management is for the movement of materials in SCM or supply chain management.
The Business Dictionary defined it as “the management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost.” Having said that, the companies who provide services for the SCM work in partnership with several other providers to ensure proper order generation, order taking, and order fulfillment. They are the producers work skeleton, especially when products or goods needs to be transported from several points of origins and destinations.
The Objectives of SCM
Basically, SCM has three main objectives: To Reduce Inventory, To Increase Speed of Transactions with Real Time Data Exchange, and To Increase Revenue by Satisfying Customer Demands Efficiently. It controls the process and movement (logistics) of products from the supplier to manufacturer, from the manufacturer to the distributor, from distributor to retailer, and from retailer to the customers.
The Core Ideas of SCM
According to Mr. Robert Handfield, a professor of Supply Chain Management, he stated that there are two main core ideas that SCM has: The first is that every product that reaches an end user represents the cumulative effort of multiple organizations. And the second one, is that while SCM has existed for a long period of time, most of the organizations only paid attention to what was happening within their “four walls”. Looking just within the walls may result to disjointed or ineffective supply chains.
He also said that the physical and non physical flow in the supply chain are both equally important. They are linked together and as to how important the transformation, movement, and storage of goods and materials is, so is the flow of information or data to various SCM partners.
Every business or organization relies on effective supply chain or network in order for them to cope up with the competition in the market and networked economy. Larger businesses know how SCM can make a great impact on their companies, so they work in partnership with the best and leading SCM Service Provider. They stick on the basic principles and objectives of SCM to have that raising revenue while providing satisfaction to their customers.