Supply chain management (SCM) is the coordinated planning and management of the activities that move a product or service from sourcing and production through delivery. It aligns supply with demand across organizations and includes procurement, production, logistics, information-sharing, and collaboration with suppliers and other partners.
What supply chain management includes
The Council of Supply Chain Management Professionals (CSCMP) describes SCM as integrating supply and demand management within and across companies. In practice, it connects decisions about what customers need with decisions about what to source, make, store, and deliver.
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SCM commonly covers these activities:
- Plan demand and supply: Use forecasting and demand planning to inform what an organization needs to buy or produce.
- Source inputs: Procure materials, products, and services, and manage supplier relationships.
- Transform inputs: Convert sourced materials or components into finished products or services.
- Manage inventory and storage: Coordinate stock, warehousing, and the timing of supply.
- Fulfill orders: Organize transportation and delivery to meet customer requirements.
- Handle returns and reverse flows: Manage goods moving back through the chain, such as returns or other recovery flows.
These activities rely on both physical and information flows. Physical flows involve transforming, moving, and storing goods and materials; information flows help organizations coordinate long-term plans and day-to-day operations.
Supply chain management vs. logistics
Logistics is part of supply chain management, not a synonym for it. Logistics focuses on planning and controlling the forward and reverse movement and storage of goods, services, and related information between origin and consumption. SCM has a wider coordinating role: it connects logistics with sourcing, production, demand planning, and partner decisions.
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| Area | Main focus |
|---|---|
| Logistics | Movement and storage, including forward delivery and reverse flows. |
| Supply chain management | Coordination of supply and demand, sourcing, conversion or production, logistics, and processes across partner organizations. |
The responsibilities can overlap in everyday operations, but logistics remains one component within the broader SCM discipline.
How supply chain processes are organized
ASCM’s SCOR framework groups supply-chain processes into six areas. It is a useful vocabulary for understanding the work, not a requirement that every organization structure its operations in exactly the same way.
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- Plan: Balance anticipated demand, supply, resources, and performance.
- Order: Manage the processes involved in receiving and handling orders.
- Source: Obtain the materials, products, or services needed.
- Transform: Produce or otherwise convert inputs into outputs.
- Fulfill: Prepare and deliver orders to customers.
- Return: Manage products and materials moving back through the supply chain.
At the strategy level, SCOR also addresses performance management, data and technology, network design, risk, compliance, and circular supply-chain management.
Why SCM crosses company boundaries
A product’s path from inputs to customer may involve suppliers, manufacturers, intermediaries, third-party service providers, and customers. SCM coordinates their contributions rather than treating each company’s work as isolated. Within a company, it can also connect operations with marketing, sales, product design, finance, and IT, so that plans and information support the same flow of goods or services.
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As CSCMP puts it, “In essence, supply chain management integrates supply and demand management within and across companies.”
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