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What is Supply Chain Management?

An effective supply chain management strategy requires efficient communication, collaboration, and coordination between all parties involved. This domain involves all the activities utilized in sourcing, manufacturing, and distributing various goods to customers. With the increased dependency on e-commerce, the importance of Supply Chain management has increased significantly.


Check out our Youtube video for a comprehensive overview to start a career in supply chain management.

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Supply Chain Management Overview

Supply Chain Management (SCM) in brief, refers to the entire production line of a product or service. SCM includes the complete product life cycle process viz. from raw material sourcing to production and maintenance to distribution.

Below mentioned points describe SCM at its best.

Enroll in our Supply Chain Management Course, to master the art of effectively managing a supply chain.

Working of Supply Chain Management

Working of Supply Chain Management

The foundation of SCM is the notion that almost all products that are sold are the result of the efforts of several companies that are connected by a supply chain. A supply chain includes the complete product development cycle from head to toe.

It comprises of five major stages including planning, material sourcing, product manufacturing, product delivery, and return of defective products. Below mentioned are the various working stages of a well-managed supply chain.


SCM often starts with planning to align supply with customer and manufacturing demands to get the best results. Businesses must foresee their future demands and take the necessary measures. This has to do with the raw materials required at each step of manufacturing, and the capability and constraints of the equipment.

Material Sourcing:

This SCM process heavily relies on the suppliers of the material used for manufacturing. Majorly SCM sourcing involves the process of sourcing raw materials, affordable prices associated with it, and flexible delivery of materials in an unforeseen event.

Product Manufacturing:

Manufacturing is further classified into various sub-processes. This includes assembling, testing, inspection, and packaging. Manufacturing is the stage where maximum wastage of resources can happen. Organizations should maintain the manufacturing process to reduce wastage. This process is solely responsible for the conversion of raw material into a useful product.

Product Delivery:

A company with effective SCM has strong logistical capabilities and delivery channels that guarantee the timely, secure, and affordable delivery of products.

Return of Defective Products:

The support for the product and customer returns marks the end of the supply chain management procedure. The firm must make sure it can collect returned goods and properly assign reimbursements for returns received. This return procedure is sometimes referred to as reverse logistics.

Key Components of Supply Chain Management

Key Components of Supply Chain Management

Supply chain management comprises multiple key components that form the bits and tits of SCM. Each component plays an essential role in the overall processing of an SCM. Business organizations are greatly dependent on these factors.

Here are a few of the most dependent key components of SCM that govern the formation of a supply chain.


It involves forecasting demand, developing production plans, and   scheduling resources to meet customer needs.


Sourcing of the materials encompasses identifying and selecting suppliers, negotiating contracts, and managing relationships with vendors.


In manufacturing, goods are produced according to the production plan, managing inventory levels, and ensuring quality control.


A game changer, this can do unimaginable events. Managing the transportation and distribution of goods, including inventory management, warehouse operations, and order fulfillment.

Customer Service:

This involves managing customer orders, providing support, and handling returns and exchanges.

Challenges in Supply Chain Management

Challenges in Supply Chain Management

Managing a supply chain can be a complex and challenging task. Businesses face several obstacles in the process.

Let’s have a look few common bottlenecks that organizations face.


The growth of global markets has made supply chains more complex, with increased regulations, customs, and trade barriers to navigate. Supply chains are greatly affected by globalization.


Market volatility can lead to fluctuations in demand, supply, and pricing, making it difficult to plan and forecast accurately.


The use of technology can help businesses streamline processes, but it can also lead to increased complexity and the need for specialized skills and expertise.


The increasing focus on sustainability and ethical practices has added a new layer of complexity to supply chain management.

Benefits of Supply Chain Management

Benefits of Supply Chain Management

Effective supply chain management can do wonders for businesses. Check out the below pointers to have a glimpse of how supply chain management can help organizations.

Increased Efficiency:

Optimizing the flow of goods and services can reduce lead times, eliminate waste, and increase productivity, leading to higher profitability and customer satisfaction.

Improved Collaboration:

Effective supply chain management requires close collaboration and communication among internal and external stakeholders, leading to better relationships and greater transparency.

Risk Mitigation:

By proactively managing risks such as supply chain disruptions, companies can reduce their exposure to financial losses, reputational damage, and regulatory penalties.

Competitive Advantage:

A well-managed supply chain can provide a competitive advantage by enabling companies to deliver products faster, at a lower cost, and with higher quality than their competitors.


Supply chain management plays a major role in the success of businesses. The whole process of SCM involves coordinating and managing all activities involved in the production and delivery of products and services to customers. The primary objective of Supply Chain Management is to optimize the flow of goods and services while minimizing costs, and maximizing profits.

Effective supply chain management can bring several benefits, including increased efficiency, improved collaboration, risk mitigation, and competitive advantage. Businesses can position themselves for success in today’s global marketplace if they are having an effective SCM.

Join Intellipaat’s Community to catch up with fellow learners and resolve your doubts.

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