Supply Chain Management Definition

by Shane Thornton; Updated September 26, 2017

Supply chain management is the management of the network of businesses involved in the supply of goods or services. The supply chain begins with the supply of raw materials and ends with the consumption of the good or service and includes all organizations, employees, resources, technology, and information involved in the process.

Benefits

Supply chain management is a popular and effective management philosophy that is crucial to the success of any company; correct managerial practices can increase efficiency and reduce costs of the business process.

Significance

Supply chain management is the constant planning, research, supervision, and efforts for improvement in the procurement of raw materials, transportation and storage of resources, production cycle, work in progress inventory, and the delivery of finished goods to the consumer.

Requirements

Before integrating a supply chain, a company must undergo the following activities: perform a SWOT analysis to understand the internal strengths and weaknesses as well as the opportunities and threats in the marketplace, compare current suppliers with all possible suppliers in search for lowest cost and highest quality, identify opportunities for partnerships that benefit both organizations' core competencies, and focus on long-term goals over short-term goals.

Considerations

An important aspect of supply chain management is the relationship with other organizations involved; businesses must align goals, objectives, and ethical standards with all members of the supply chain.

Warning

Businesses are responsible for all other organizations’ ethical standards and business practices within their supply chain. For example, Nike was the recipient of consumer backlash when they found themselves on the cover of the New York Times for their use of child labor in a Vietnam shoe factory.

References

About the Author

Shane Thornton has published business-related on eHow.com. In addition to business, his other areas of interest include sports, traveling and entertainment. He earned a Bachelor of Science in Business management from Arizona State University’s W.P. Carey School of Business.