Supply chain management (SCM) is the practice of coordinating the flow of goods, services, information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. This process includes order generation, order taking, information feedback and the efficient and timely delivery of goods and services. In order for a business to be successful, the chain must remain as uncluttered as possible to insure the most productive working environment possible. In the simplest terms, supply chain management lets an organization get the right goods and services to the place they're needed at the right time, in the proper quantity and at an acceptable cost. Efficiently managing this process involves overseeing relationships with suppliers and customers, controlling inventory, forecasting demand and getting constant feedback on what's happening at every link in the chain.
The supply chain involves several elements:
* Location. It's important to know where production facilities, stocking points and sourcing points are located; these determine the paths along which goods will flow.
* Production. An organization must decide what products to create at which plants, which suppliers will service those plants, which plants will supply specific distribution centers, and, sometimes, how goods will get to the final customer. These decisions have a big impact on revenue, costs and customer service.
* Inventory. Each link in the supply chain has to keep a certain inventory of raw materials, parts, subassemblies and other goods on hand as a buffer against uncertainties. Shutting down an assembly plant because an expected parts shipment didn't arrive is expensive. But inventory costs money too, so it's important to manage deployment strategies, determine efficient order quantities and reorder points, and set safety stock levels.
* Transportation. How do materials, parts and products get from one link...