SCM: what is it and what advantages does it offer?

The supply chain allows to take any product from the factory to the customer or final consumer. Within this chain there are different processes such as distribution, warehousing, manufacturing or order preparation that must be efficiently managed to reduce costs and time, getting the product to the market sooner with an adjusted cost, always guaranteeing the quality level.

Next, we will talk about SCM, what it is, how it works and the benefits of supply chain management.

What is SCM or Supply Chain Management?

Supply chain management or SCM is the management and control of all processes and

resources within the supply chain, such as manufacturing, transportation, warehousing and other services.

SCM and its acronym stands for Supply Chain Management. If you did not know what SCM is in logistics, it is the process that is followed to optimally manage everything that happens to a product, from the time it leaves the factory until it reaches the end customer.

What is the Supply Chain process like?

The process that takes place during the supply chain follows a series of steps that must be optimized and improved in order to achieve excellence and embrace a culture of continuous improvement.

Let's see what the supply chain process looks like following one of the most widely used models globally (the SCOR model based on 5 processes).

  1. Planning. It is about finding or outlining the best plan to achieve logistic objectives (such as cost reduction, delivery time reduction, environmental objectives...).

  2. Procurement. For the efficient management of raw material suppliers necessary to produce the items (search for reliable suppliers).

  3. Manufacturing. Where everything planned is executed in order to implement the changes and improvements that will improve the operation and results of the production process.

  4. Distribution or delivery. This is the phase in which the product is ready to be delivered to the end customer.

  5. Returns. It consists of the handling of possible returns made by end customers for different reasons (do not match their expectations, defective product...). Reverse logistics is key to improve this whole process and obtain the best results.

Advantages of SCM

SCM is a system that seeks to enhance and improve all processes related to the supply chain.

Efficiently managing the supply chain provides very interesting advantages, among which we can highlight the following:

Improved profitability

One of the main advantages of the supply chain management system is that it improves the

profitability of the business. Optimal use of available resources, reduced shipping, production and warehousing costs, and the assurance that there are always products on the market make SCM an ideal way to improve a company's profitability.

Decision making

With SCM, the company works with reliable data obtained in real time, making it easier to make decisions immediately, with a higher level of accuracy and success.

Supply chain management facilitates the management, storage and analysis of a large amount of information, from which it is possible to obtain useful knowledge for the company.

Reduction of logistics costs

Although we have already commented in passing on the increase in profitability provided by SCM, the reduction of logistics costs is one of the most important advantages provided by this system.

It is estimated that by applying SCM a company can reduce its costs by 20 to 30%, spectacular figures that make it clear how interesting this management system is.

Other SCM advantages

There are many other advantages provided by supply chain management, some of the most

noteworthy are:

  • Increased productivity and competitiveness.

  • Improved end-customer satisfaction.

  • Increases customer loyalty to the company.

  • Facilitates product traceability.

  • Helps to optimize orders to suppliers.

  • Guarantees the delivery of products in a timely manner.

  • Optimize the entire warehouse management allowing a total control of the company's stock or inventory.

We talked about SCM, what it is and what it is for, as well as pointing out the main benefits

provided by this optimal supply chain management.

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