Supply Chain Management, SCM
SCM (Supply Chain Management) is a management concept and organizational strategy, which consists of an integrated approach to managing the entire flow of information about raw materials, materials, products, and services that arise and are transformed during the implementation of the enterprise logistic and production processes. The goal of this strategy is to obtain a measurable cumulative economic effect (cost reduction, meeting the demand for final products, etc.).
A supply chain is a number of independent companies that are involved in the search for materials, manufacturing products, and their physical distribution to end customers.
Supply chain management is the systematic and strategic coordination of traditional business functions within a particular company and in the supply chain to improve the long-term performance of each individual company and in the supply chain as a whole.
The supply chain management system (the SCM system) is an application software designed to automate and control all stages of the enterprise’s supply and the entire movement of goods: procurement of raw materials and materials, production, and distribution of products.
SCM systems can be executed in various options:
- as independent replicable SCM systems;
- as solutions implemented as components of ERP systems;
- as unique systems created for specific enterprises.
The SCM system typically consists of two subsystems:
- SCP (Supply Chain Planning) is planning and creating calendar schedules, designing supply chains, modeling various situations, and analyzing the performance of operations;
- SCE (Supply Chain Execution) is tracking logistics operations and monitoring their implementation.
The choice of the optimal order lot size is one of the most important conditions for improving the efficiency of the enterprise since insufficient lot size leads to an increase in administrative costs with repeated orders, and excessive one leads to freezing of funds.
SCM solutions make it possible to develop optimal plans for the use of existing technological lines, detailing what, when, and in what sequence should be made, taking into account the limitations of production capacity, raw materials and materials, batch sizes, and the need to change equipment to produce a new product. This helps to achieve high satisfaction of demand at minimum cost.
The main tasks solved with the help of SCM systems:
- Increased level of service.
- Optimization of the production cycle.
- Reduced inventory.
- Increased enterprise productivity.
- Increased profitability.
- Control of the production process.
The Supply Chain Management (SCM) solution, part of the IT Enterprise system, provides strategic and operational supply chains planning, automatic selection of the best route, providing data on current location and logistic costs for any cargo online, and also performs many other functions.