What is supply chain management?

Supply chain management is the entire process that directs how goods, services, information, and money move from the initial order of a product or service to its final delivery to the customer.

According to Investopedia, supply chains include everything from the production to final product as well as the information systems to manage these processes.

Over the last several years, a multitude of new technologies have targeted improving the supply chain’s efficiency and effectiveness in nearly all industries.

Making Smart Decisions

Supply chain management is really about making clear, data-driven decisions throughout the production process. For example, strategic decisions may involve things like where inventory should be located and how it is transported. Tactical decisions look at what the production line might need in terms of inventory for the next week as well as forecasting for the near future.

Operational decisions involve the day-to-day management of people and processes to get the current work finished.

It’s All About Flow

One significant component of good supply chain management is understanding, tracking, and managing the flow of various parts of the system. Most obviously, you need to watch the flow of raw materials into your facility and through your production line. Product flow doesn’t end with final delivery; it must take into account damaged products or other items that are returned from customers and how those are re-integrated into the inventory.

Besides product flow, you have to manage all the information flow of the material orders, delivery updates, delay notifications, and other data when not only managing the raw materials coming into your facility but also on the final products going out of your plant.

The final component of supply chain management flow has to do with money. Data such as credit and payment terms, invoice schedules, transfer of ownership, and payment status must be managed through a supply chain management computer system such as a CMMS.