Supply Chain Management Vs. Customer Relationship Management

Supply chain management, or SCM, and customer relationship management, or CRM, are similar in that they are both technology-driven business processes that emerged at the start of the 21st century. Despite these parallels, they are very different in terms of their uses and effects in your business.

Supply chain management is a collaborative process where product resellers work closely with supply chain partners to deliver the best value to end customers or consumers. Software-based solutions are used that allow resellers and vendors to sync inventory levels and ordering systems for more efficient distribution and order fulfillment. Supply chain partners work together on transportation and logistics to try to optimize the movement of goods from the manufacturing level to wholesale or retail.

The main premise of supply chain management is that distribution channel members view themselves as partners trying to deliver value to consumers. This is different from the traditional vendor-buyer relationships. Rapid response to inventory needs and special orders, reduced inventory levels and management costs and fewer stock-outs are among the tangible benefits of SCM. For the companies involved, it allows them to manage costs and improve profit margins. A side benefit of supply chain efficiency is more environmentally friendly transportation practices.

Customer relationship management is a marketing system where companies use databases to collect data on customers to build stronger marketing programs. In a company-wide CRM program, the roles of each functional area are more customer-centric than they were prior to CRM implementation. Marketing, sales and service emphasize targeting the right customers with the best value to build long-term relationships. IT enables these functions by helping select and manage use of the high-tech infrastructure. Human resources, finance and operations all take on tasks related to customer objectives.

An overriding objective of CRM is to constantly improve the total customer experience through ongoing research and better systems. Building and maintaining long-term relationships with your core customers helps you optimize profitability. Using data gathered from customers allows you to target specific customers with focused marketing to attract interest and reduce wasted messages that would otherwise go to disinterested customers.