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.
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.
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.
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.
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.
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.