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Aperson in a warehouse using a tablet, presumably using S C M to control the flow of goods and services

What is supply chain management?

Supply chain management (SCM) helps product-based businesses better control the flow of goods and services, encompassing everything from logistics, to product development and production, to SCM software and systems.

What is a supply chain?

At a fundamental level, a supply chain is the process you undertake to get your product or service to the customer, and supply chain management is the management of this process. A simple version of a supply chain includes you, your suppliers, and your customers. Here’s an example of a supply chain:

  • Raw materials producer
  • Manufacturer
  • Distributor
  • Retail store
  • Customer

While this may look simple, when you need to produce and sell products across multiple continents and time zones, stay compliant with international rules and regulations, and keep up with rapidly changing market demands, this process can become complicated and challenging.

Three challenges of supply chain management


Despite the increased complexity, the pressure remains to maintain fast delivery lead times to customers who want to receive their products worldwide and on schedule.

To help ensure you have the right stock at the right time at the right place around the world—and help eliminate overstock and stockouts—your company needs to optimise its supply chain and increase stock turns. And thus, increase cash flow and reduce costs.

Your supply chain managers should also have detailed risk management plans in place, since they are at greater risk of being affected by global events.

Fast-changing markets

Another challenge is the rapidly-changing preferences of your customers. You’re under pressure to keep up with the latest trends and introduce new, innovative products, while still keeping your total manufacturing costs down.

These fast-changing market demands lead to shorter product life cycles and a need for constant innovation. In addition, the pressure is on to regularly and rapidly update existing products with new features. All of these trends require your business to have a flexible supply chain that can adapt well to fluctuating demand and production needs.


Finally, in addition to addressing globalisation and rapidly-changing customer trends, you also need to produce safe, high-quality products that clear a host of regulatory hurdles before they make it to market.

You need to ensure that your products comply with various regional, national, and international regulatory standards in the manufacturing, packaging, handling, and shipping of your products. These include safety laws, environmental protection laws, and inclusivity and accessibility guidelines.

To meet these requirements, you’ll need to pass a variety of quality control and safety tests, and complete numerous compliance documents such as permits, licences, and certification. All of this can quickly overwhelm your supply chain management system.

Three advantages of SCM software

While you might already have a supply chain management system in place, you may find it can’t keep pace with the common supply chain challenges your growing organisation faces. You need the latest SCM software—featuring AI, mixed reality, and Internet of Things capabilities—that grows with you and gives you competitive advantages.

Connected experience

When your business’s supply chain spans multiple countries and time zones, you can’t afford to have your supply chain management system out of sync. SCM software offers a connected, cohesive experience that gives you visibility into every aspect of your supply chain, including sales, purchasing, logistics, production, and warehouse management.

Reduced costs

Help reduce the costs of managing a global supply chain with software that streamlines the procurement process with automated procure-to-pay processes. You’ll also be able to reduce costs by optimising your fulfilment process through synchronising logistics across sites, warehouses, and transportation modes.

Reduced risk

Integrated SCM software helps you stay compliant with regulations and stay up to date with frequently changing legal requirements for regulatory reports, electronic invoices, payment formats, and tax rules. In addition, you’ll typically get built-in security features like identity and access management, encrypted connections, and data centres that provide security and data privacy.

Streamline your supply chain with Dynamics 365

Get all the advantages of an SCM software solution with Dynamics 365 Supply Chain Management. Learn how it can help solve your supply chain challenges while maximising operational efficiency, product quality, and profitability.