The concept of SCM (Supply Chain Management) can be understood on the basis of two ideas. First, when a product gets to the end user, this is a proof that there are processes that have taken place from the manufacturer, distributor and the retailer; the whole supply chain is successful. The other idea is that some businesses are not able to take care of the supply chain. Such businesses are not concerned with what happens to other partners in the supply chain. They are just concerned with their activities. For instance, if it is a manufacturing company, it will just manufacture without much concern about how the end user will access the supplied goods.Therefore, such a system can bring disjoints in the system, thereby creating some inefficiencies.
As such, Supply Chain Management is the active organization of the activities within the supply chain to maximize the value of the customer and organizations to start and run supply chains in effective & efficient ways. Activities in the Supply chain product development, production, sourcing and logistics, as well as the communication systems that are indispensable in the coordination of these activities.
In SCM, organizations that constitute the supply chain are joined through both physical and information flows. Physical flows include things such as conversion, movement, and storage of goods and other materials. They are the tangible pieces in the supply chain. However, the flow of information is just as important. This is because you may have things to distribute but without having the people to distribute, you will not succeed. Thus, the SCM is very important and indispensable in the business world.
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