Supply Chain Management (SCM) is a concept that involves the design, planning, execution, control, and monitoring of all activities required to transform raw materials into finished goods and deliver them to the end customer. It is defined as the process of planning, implementing, and controlling the operations of the supply chain to satisfy customer requirements as efficiently as possible.
The term Supply Chain Management was first coined by British logistician Keith Oliver in an interview with the Financial Times on June 4, 1982. The concept emerged to solve the problem of fragmented management of processes like procurement, logistics, and manufacturing, which were previously handled in isolation. The goal was to integrate these activities into a seamless process to achieve a competitive advantage and optimize the flow of materials, information, and capital.
SCM works through the integration and coordination of five core mechanisms, often summarized by the SCOR model (Supply Chain Operations Reference). These mechanisms are Plan, Source, Make (or Produce), Deliver, and Return. Plan involves demand forecasting and inventory management; Source is the selection and management of suppliers; Make covers production and quality testing; Deliver includes logistics, warehousing, and distribution; and Return manages reverse logistics for damaged or end-of-life products.
SCM connects directly to related concepts like Logistics Management, which focuses on the movement and storage of goods, and Operations Management, which deals with the production process. It also relies heavily on Enterprise Resource Planning (ERP) systems and Information Systems to monitor and integrate all activities.
The field has changed recently with a shift from a focus solely on cost and speed to prioritizing resilience, sustainability, and visibility. While the core five mechanisms remain the same, the execution is being amended by the adoption of new technologies like Artificial Intelligence (AI) for demand forecasting, Internet of Things (IoT) for real-time tracking, and Digital Twins for scenario planning. This digital transformation aims to create more agile and transparent supply chains to mitigate risks from global disruptions.