Supply Chain Management (SCM)

​Definition

The process of overseeing the flow of products, information, and finances, from raw materials to finished products.

Importance

​Why is supply chain management important?

It allows businesses to monitor the flow of raw materials to a finished product or service for the ultimate consumer.

When a supply chain is managed well, companies can cut unnecessary costs and deliver products to the consumer faster and efficiently.

The physical movement of goods from suppliers to manufacturers, distributors and retailers and ultimately to the end consumer.

Supply Chain Model

Raw Materials

Where does it start?

The first step in a supply chain model involves acquiring raw materials, which could involve mining, farming, or other extraction methods depending on the product.

Raw materials will be processed and transformed into finished goods.

Supplier

What does a supplier do?

In the supply chain model, the supplier is the organization or individual that produces and/or acquires raw materials for others to use to make goods.

Manufacturer

What does a manufacturer do?

In the supply chain model, the manufacturer transforms raw materials from the supplier into finished goods.

This is usually a factory or manufacturing facility.

Distributor

What does a distributor do?

In the supply chain model, the distributor  buys large quantities of finished goods from the manufacturer and sells them to retailers in smaller quantities at a higher price.

Retailer

What does a retailer do?

In the supply chain model, the retailer is the final point of sale.

They sell products directly to the consumer through brick-and-mortar physical stores and/or online platforms.

The supply chain processes involve planning, sourcing, manufacturing, delivering, and returning.

​Supply Chain Stages

Supply Chain Stages

Importance of the five stages:

The five stages of supply chain management are crucial for ensuring efficient product production, timely delivery, and effective customer service, allowing businesses to optimize costs, manage inventory levels, and maintain competitiveness in the market.

Planning

​What happens at the planning stage?

The planning stage of a supply chain refers to the initial phase where a company forecasts future demand, determines required inventory levels, allocates resources, and plans production schedules to effectively meet customer needs.

Sourcing

​What happens at the sourcing stage?

The sourcing stage of a supply chain is when a company identifies, evaluates, and selects suppliers to acquire the necessary raw materials, components, or services needed to produce their final product.

Manufacturing

​What happens at the manufacturing stage?

The manufacturing stage of a supply chain refers is when raw materials are transformed into finished products through production processes like cutting, assembly, and quality control.

Delivery

​What happens at the delivery stage?

The delivery stage of a supply chain is when finished products are transported from the manufacturing facility to the retailer, involving logistic planning and managing of inventory to meet customer demand.

Return

​What happens at the returning stage?

The return stage of a supply chain refers to the process of managing products that are being returned by customers back to the seller, which may involve repairing, restocking, recycling, or disposing of those returned items.

Learn about the supply chain management stages for a cell phone.

​Apply SCM to a Product

SCM for a Cell Phone

​Planning

This stage involves forecasting market demand for different phone models, determining production quantities, and identifying potential suppliers to meet those needs. 

Sourcing

Manufacturing

​Delivery

Returning

Acquiring the necessary raw materials and components like screens, processors, batteries, and casing from various suppliers, negotiating prices and delivery terms. 

The actual assembly of the cell phone, including attaching components, quality control checks, and packaging at a factory.

Transporting the finished phones from the factory to retailers, distributors, and ultimately to consumers through various logistics channels. 

Managing the process of receiving and processing returned phones due to defects, customer dissatisfaction, or warranty claims.

Learn about the supply chain management stages for sneakers.

​Apply SCM to a Product