What is SCM

SCM is acronym of Supply Chain Management. At fundamental level Supply Chain Management is management of flow of goods and services from procurement of raw materials, production at various stages and movement of intermediates to the delivery of products at final destination to satisfy customer demand. A great Supply Chain
Management has to be customer-centric ensuring that customer is always delighted while ensuring that company is focusing on high value addition customers giving the what they want, what time they want and where they want.

History of SCM

Supply Chain Management shares its history with its more famous cousin ERP. In fact what was supposed to emerge as ERP is now known as SCM. All the resource planning in ERP is now done in Supply Chain Management as can be seen in their history.

  • Mid-range computing of 1970s-MRP

    MRP stands for Material Resource Planning .where computer systems were use to plan requirement of raw material and comonents based on production which was planned outside conputer systems. Given large number of materials and components required for manufacture of products. Solution had to estimate requirement of material, look at availability of stock and place orders in time to support un-interrupted manufacturing.

  • Client Server Computing of 1980s-MRPII

    MRP-II was extension of MRP by using conputer systems for productio planning (and scheduling as some reports say). Initial planning was infinite capacity planning to meet customer orders. Later on finite capacity planning based on machine and labour resources.

  • Internet Technology and GUI- ERP 1990s leading to emerence of SCM

    It was introduction of Internet and modern Graphical User Interface with Windows which resulted into introduction of ambitious solutions like Enterprise Resource Planning. However soon ERP abandoned planning function which was taken over by SCM. MRP which was extended to material scheduling, MRP-II became Production Scheduling.l Scheduling was further extended with interface with Demand Planning.

  • Service Oriented Archtecture 2000s

    Soon service oriented architecture as ERP abandoning planning function to SCM which now covered planning and execution across the supply chain to satisfy customer across the supply chain.

  • Cloud Computing with intelligent and collaborative SCM

    Cloud Computing took supply chain to next level. AI can improve supply chain both on demand side and inventory management. Overall supply chain can still remain as mathematical program solved for entire supply chain for maximization of EBIT. SCM is really geared to help corporates for enterprise value maximization.

  • Covid-19 and Supply Chain Challenges

    Covid 19 brought SCM back into focus. Most manufacturing companies faced these challenges which caught headlines with headlines with semi-conductor shortages that hit virtually every industry. Importance of supply chain in ensuring customer gets what he wants, when he wants and where he wants in ensuring profitability of the companies was evident once again. Importance of SCM in uncertain times in maintaining business continuity and longetivity became evident. Now its time for SCMs to prove themselves again.

What is not SCM

Supply Chain Processes involves transactions at various stages like indents, enquiries,quotations,purchase orders, material receipts, issues, productions, dispatch to directly to customers or through company depots. But various ERP modules which capture these transactions and provide visibility through reports and queries are not supply chain management as much as financial accounting is not financial management but critical for financial management.

So what is Modern SCM of 2020s

SCM as the name suggest is about Management of Supply Chain. It provides ability for planning, execution and control of supply chain transactions. It also provides visibility across the supply chain to its participants to that they can plan and respond better to emerging situations for business continuity and longetivity. SCM is technology solution to make supply chain and effectively enterprise smarter and more profitable.

  • Modern SCM is based on Cloud Computing

    SCM has to manage transactions across diverse functions like demand planning, procurement planning, production planning, distribution planning and dispatches to final customers across large geographical area many times spanning countries.So SCM has to leverage cloud technology

  • Modern SCM is Comprehenesive with moduar structure

    Modern SCM has to be comprehensive to cover every functional area which is critical in ensuring its ultimate objective of servicing customer efficiently and profitably. These are cover demand planning (for improving accuracy of forecast), supply chain planning using mathematical techniiques, production scheduling, distribution scheduling, material scheduling for improving efficiency.

  • Modern SCM provides visibility across the enterprise

    SCM has to make information which was hitherho available in silos where production focussed on improving its efficiency without considering its impact of servicing customer or on profitability, material scheduling was not fully integrated with production scheduling and so on. Organisation has to move from selling what is produced to ensure that customer gets what he wants, where he wants and when he wants, creating customer centric organisation.

  • Modern SCM provides incorporates mathematical,statistical and AI/ML tools

    Modern SCM has to use laterst advances in mathemical, statistical technologies, Artificial Intelligence and Machine Learning to improve efficienies, identifying opportunity for profitable growth, identifying what customer wants many time even before customer knows what he wants.

  • Modern SCM works for building intelligent organization which takes right decisions

    Modern supply chain management helps in building intelligent organzation which identify customer needs, produces and distributes efficiently quality products and procures materials efficienty in holistic manner so that whole organisation works holistically for continuity and longetivity.

  • Modern SCM supports enterprise value maximization

    SCM is involved in planning, execution and control of supply chain for value maximisation going beyond managing efficient supply chains. It has to identify the products and customers it should focus on, weeding out unprofitable products and customers and then service them in best possible manner.

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