While many companies use them together, there are distinct differences between Customer Relationship Management (CRM) and Supply Chain Management (SCM). CRM is primarily used by sales and marketing departments, while SCM is mainly used by procurement, production and distribution departments. What makes them similar is that they both allow companies to track information relating to their businesses and use this information to make more informed decisions.
In a nutshell, the difference between CRM and SCM is that Customer Relationship Management (CRM) tracks clients and prospects, while Supply Chain Management (SCM) tracks products and information relating to internal company processes.
Customer Relationship Management (CRM)
CRM software is designed to move the sales process along and to keep customers happy. All departments can use the same database to record their interactions with customers, eliminating duplicate efforts. It can also record interactions by email, telephone and even social media. Advanced CRM software can also predict what clients are likely to buy based on past behavior.
The marketing department can use CRM to track marketing campaigns and to measure the return on investment by seeing how many people become customers from each campaign. Sales departments can use CRM to track their interactions with customers and prospects by seeing when they were contacted, what they've purchased or what they're inclined to purchase in the future. Customer service departments can use CRM to record their interactions with clients, such as problems they've had with products or services.
Supply Chain Management (SCM)
SCM software tracks and executes company processes, including design, procurement, manufacturing, production, distribution, sales and order fulfillment. The result is that it can reduce company costs and risks in things like having too much or too little inventory. Advanced SCM software can also predict problems within the supply chain before they happen.
SCM software can be used across most departments, from accounting and customer service to manufacturing and shipping. Suppose, for example, sales tend to ramp up near the end of the year. SCM software can prompt you to order new inventory so it arrives before you run low on stock or even order it for you automatically. It will then tell you where the orders are in shipment, when they arrive in the warehouse, where they are in production, when they're shipped and when they're expected to arrive at the customer's location.
CRM vs. SCM Examples
A company that has many customers or a long sales cycle with many prospects will likely want to use CRM software. A company with a strong focus on fast delivery times or that sources components from multiple suppliers would want to use SCM software. Often, companies need both, but not always. Candidates for customer relationship management examples include e-commerce businesses, retailers, business-to-business (B2B) and manufacturers.
A services company with a lot of clients would likely need a good CRM system, but without supplies or products to track, it wouldn't need SCM software. On the other hand, a small manufacturer that makes parts for one or two car manufacturers may have little need for CRM software, but if it sources steel, plastic and other components from several different suppliers and needs to track its shipments in real-time, SCM software would be invaluable.
Despite the differences between SCM and CRM systems, any company that needs to track products and wants to increase sales will likely be able to use both. For these companies, it's usually essential to integrate both systems. Trends in sales can be tracked and used to ensure inventory levels are sufficient, for example, while customers can be assured of getting their products quickly.