In today’s interconnected economy, Supply Chain Management (SCM) ensures that products move efficiently from raw materials to manufacturing, to warehouses, and ultimately to customers’ hands—sometimes within hours of ordering. SCM is made possible through the use of supply chain execution software. The right combination of which can make or break a business.
To help you better understand SCM, this article will cover:
- What is supply chain management?
- The history of supply chain management
- Why is supply chain management important?
- What is needed for supply chain management?
- What is supply chain management used for?
- Key components and functions of supply chain management
- Supply chain management software
What is Supply Chain Management?
Supply Chain Management (SCM) is the strategic coordination of processes, systems, and partnerships involved in moving products from raw materials to end customers. It connects sourcing, manufacturing, warehousing, transportation, and delivery into one cohesive operation—maximizing efficiency, minimizing cost, and ensuring customer satisfaction. Without supply chain management, that beautiful one-of-a-kind piece in Switzerland wouldn’t make it to your doorstep on the East Coast. Not in a timely fashion, at least.
The History of Supply Chain Management
Supply chain management has evolved from basic logistics and procurement functions to a sophisticated, tech-driven discipline. What began as manual inventory tracking and siloed operations has grown into an integrated system powered by automation, software, and real-time data. Today’s supply chains are global, connected, and more responsive than ever.
In the last 125 years, supply chain management has seen many phases:
- Pre-1900s: Supply chains were mostly local and restricted to regions
- 1900-1950s: Global supply chains began taking shape in the early 1900s, with companies like UPS emerging and the groundwork laid for mechanization, analytics, and transportation management.
- 1960s-1970s: DHL and FedEx joined the logistics scene as companies shifted toward truck-based freight and coined the term “physical distribution.”
- 1970s: The National Council of Physical Distribution Management was formed, while IBM built the first computerized inventory and forecasting system. JC Penney revolutionized retail with the first real-time WMS, turning inventory visibility into business growth.
- 1980s: The PC boom gave rise to supply chain planning tools, prompting the National Council of Physical Distribution Management to rebrand as the Council of Logistics Management.
- 1982: Keith Oliver introduced the term “supply chain management,” redefining logistics as an end-to-end, customer-focused process.
- 1990s: Global trade accelerated, driving demand for ERP systems and advanced planning and scheduling tools.
- 1996: The first cobot was invented, enabling robots to work safely alongside humans in warehouses and factories.
- 2010s: AI, IoT, and data analytics surged, ushering in Industry 4.0 and digital transformation across supply chains.
- 2020: COVID-19 exposed supply chain vulnerabilities, triggering investment in local sourcing and digital resilience.
Why is Supply Chain Management Important?
SCM is critical because it directly impacts cost, speed, service, and competitiveness. A well-managed supply chain ensures that the right products reach the right place at the right time—with minimal waste and maximum efficiency. In today’s fast-moving markets, it’s not just a support function—it’s a business driver. With rising customer expectations, labor constraints, and an ever-volatile industry, supply chain management is essential for keeping the kinks out of the supply chain—and turning logistics into a strategic advantage.
What is Needed For Supply Chain Management?
Effective supply chain management requires the right blend of people, processes, and technology. That includes clear communication across departments, strong supplier and logistics partnerships, and digital tools like ERP (Enterprise Resource Planning), WMS (Warehouse Management Systems), TMS (Transportation Management Systems), and analytics platforms that provide real-time visibility and control.
What is Supply Chain Management Used For?
SCM is used to streamline every stage of the product journey—from planning and sourcing to production, storage, and final delivery. Businesses rely on it to reduce costs, mitigate risks, improve agility, and deliver better customer experiences. In short, it’s how organizations turn operational complexity into a competitive edge.
Key Components and Functions of Supply Chain Management
The five main functions of supply chain management include the tasks needed to complete the loop in the movement of goods through the supply chain. From sourcing raw materials to delivering finished products, these five functions—planning, sourcing, making, delivering, and returning—work together to ensure efficiency, cost control, and customer satisfaction. Each function plays a critical role in building a resilient and responsive supply chain.
SCM Function #1: Planning
This involves strategizing how to meet customer demand efficiently and cost-effectively. It includes demand forecasting, inventory planning, and aligning supply with demand to optimize resources.
SCM Function #2: Sourcing
This covers selecting suppliers and managing relationships to ensure the timely procurement of goods and services. It includes activities like vendor negotiation, purchasing, and supplier performance evaluation.
SCM Function #3: Manufacturing
The production phase includes transforming raw materials into finished products. It involves scheduling, quality control, facility management, and continuous improvement processes.
SCM Function #4: Delivery and Logistics
Often referred to as distribution, this function handles the storage and transportation of products to customers. It includes warehousing, order fulfillment, shipping, and last-mile delivery.
SCM Function #5: Returns (Reverse Logistics)
This function manages the return of products from customers for reasons such as defects, recycling, or disposal. It’s essential for customer satisfaction and sustainability efforts.
Supply Chain Management Software
SCM software helps businesses manage the flow of goods, information, and finances across the entire supply chain—from raw materials to the end customer. It provides tools to plan, execute, and monitor supply chain activities efficiently and cost-effectively.
Types of SCM Software
- Supply Chain Planning (SCP)
Forecasting demand, planning production, and aligning supply with customer needs. - Procurement (Sourcing)
Managing supplier relationships, purchase orders, and supplier performance. - Manufacturing Execution
Tracking and managing production processes in real time. - Warehouse Management System (WMS)
Controls inventory, picking, packing, and shipping in distribution centers. - Transportation Management System (TMS)
Plans, executes, and optimizes the movement of goods. - Order Management Systems (OMS)
Coordinates order processing from placement to delivery. - Inventory Management
Tracks stock levels, minimizes excess, and ensures availability. - Supply Chain Visibility and Analytics
Provides real-time data and insights to make better decisions.
Getting Started with Supply Chain Management (SCM)
Supply chain management has evolved significantly over the years. Ordering and receiving a package within a day used to be a luxury—now it’s becoming the standard. The key to meeting new consumer demands is investing in the right supply chain management technology. The decision to invest in technology isn’t always easy—but it is for our experts. Reach out today, and let us help you identify the right tools to streamline your operations, support growth, and impress your customers.
