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What is supply chain management?

Supply chain management (SCM) is an integral part of any product-based business to better plan, control, and execute the flow of goods and services. While many think it revolves only around logistics, it in fact encompasses everything from product development to production to the systems and SCM software needed in supporting and coordinating these activities.

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 produce and sell products across multiple continents and time zones, need to stay compliant with international rules and regulations, and keep up with rapidly changing market demands, this process can get complicated and challenging.

Three challenges of supply
chain management

Globalization

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 inventory at the right time at the right place around the world—and help eliminate overstock and stockouts—your company needs to optimize its supply chain and increase inventory turns. And thus, increase cash flow and reduce costs.

Your supply chain managers will also need to 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.

Compliance

Finally, in addition to addressing globalization and rapidly-changing customer trends, you also need to produce safe, high-quality products that need to clear a host of regulatory hurdles before they can 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, licenses, 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 organization 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 optimizing your fulfillment process through synchronizing 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 centers that provide security and data privacy.

How SCM software is helping
companies grow

Copper State Bolt & Nut

Find out how this manufacturer and distributor used an SCM solution to grow while continuing to track and offer high-quality fasteners and parts for more than 6,500 customers.

Dr. Martens

Learn how this iconic British footwear brand transformed their e-commerce systems and supply chain to help them grow and expand into new global markets.

Twilfit

Discover how one of Sweden’s leading lingerie chains reduced unnecessary overstocks while adding more of what its customers want.

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 maximizing operational efficiency, product quality, and profitability.