{"id":10951,"date":"2023-01-19T09:58:51","date_gmt":"2023-01-19T17:58:51","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10951"},"modified":"2025-04-16T11:48:53","modified_gmt":"2025-04-16T18:48:53","slug":"what-is-supply-chain-management-importance-and-benefits","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2023\/01\/what-is-supply-chain-management-importance-and-benefits","title":{"rendered":"What is Supply Chain Management? Importance &#038; Benefits"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;10961&#8243; img_size=&#8221;full&#8221;][vc_column_text]<span style=\"font-weight: 400;\">Supply chain management (SCM) is essential to any business strategy. Negative effects wreak havoc, impacting customer satisfaction and ROI. Facets of this broad field include demand planning, inventory management, logistics, acquisitions and partner management. Supply chain management is never boring, and there\u2019s always more to learn. Let\u2019s dive in.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is a Supply Chain?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Simply put, a supply chain controls the flow of raw materials and goods. This process covers anything in direct relation, from individual employees to organizations, information and resources. Used to cut costs and maximize efficiency, supply chain trends cater to every business. E-commerce brands must oversee design, manufacturing, sourcing, warehouse inventory, shipping and delivery. Logistics is a larger focus for transportation companies. No matter the industry, customer satisfaction remains of utmost importance. Supply chain management is typically broken into three large buckets of intricate processes and roles:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Concept: the full cycle, from sourcing and procurement to fulfillment.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Industry: carrier regulations, trade compliance and transportation.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Function: operation management, logistics and inventory.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Cohesion is required across supply chain management to create maximum value. Working proficiently relies on moving parts, but the bottom line is simple: meeting customer demand.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is Supply Chain Management?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Supply chain management ensures that products get to the right place at the right time. This integration of supply and demand requires a special mix of business operations, procurement, accounting, and production. The five basic components of supply chain management are:\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Planning<\/b><span style=\"font-weight: 400;\"> &#8211; Organization matters. Supply chain management software helps to forecast demand and plan ahead through data and analytics.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Sourcing<\/b><span style=\"font-weight: 400;\"> &#8211; Collaboration starts by selecting suppliers to produce items or services. This stage also includes writing contracts and managing external vendor relationships. A supply chain management system streamlines the process oversight for ordering, receiving, inventory management, and payment authorization.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Making<\/b><span style=\"font-weight: 400;\"> &#8211; Technology is critical to production. This component includes conception, design, materials, manufacturing, quality testing, and packaging.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Delivering<\/b><span style=\"font-weight: 400;\"> &#8211; This stage is focused on logistics to ensure that goods reach customers. Different deliverables apply to every industry.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Returning <\/b><span style=\"font-weight: 400;\">&#8211; Effective supply chain management requires a network to support the return of any defective or unwanted items.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Why is Supply Chain Management Important?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Supply chain management can revolutionize business performance. Happy customers = higher margins and revenue growth. The benefits of supply chain management don\u2019t stop at cash. System optimization is valuable when reducing cost, waste, and time. Let\u2019s dive into three main reasons why supply chain management is so important.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Boost Customer Service<\/b><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> &#8211; A seamless supply chain management system protects the full customer experience. Don\u2019t let anyone fall through the cracks. Create memorable moments, from purchase to delivery. Buyers like to secure easily, and social media offers another great way to connect and even anticipate problems.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reduce Operating Costs<\/b><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> &#8211; Every stage of supply chain management can benefit from cost reduction without risk to the customer. Technology reduces time spent, along with providing helpful data for future improvements and improved decision making. Decrease purchasing and production costs through automation; sales planning; and even different transportation methods. Hiring skilled people can further decrease total supply chain costs.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improve Financial Position<\/b><span style=\"font-weight: 400;\"> &#8211; Geopolitical, environmental and other unplanned events are constantly invalidating your long term plans resulting in a divide between financial and operational supply chain objectives. <\/span><span style=\"font-weight: 400;\">You need to protect your bottom line by aligning financial plans and supply chain operations to reduce supply chain and financial risks<\/span><span style=\"font-weight: 400;\">. Fixed assets only lose value. Address these flaws in a full review of your supply chain management system from top to bottom. Inventory control is key to reducing the need for fixed assets. <\/span><a target=\"_blank\" href=\"https:\/\/www.gartner.com\/smarterwithgartner\/optimize-supply-chain-cash-flow-and-costs-using-three-performance-lenses\" rel=\"noopener\"><span style=\"font-weight: 400;\">Gartner suggests<\/span><\/a><span style=\"font-weight: 400;\"> three ways to level performance for cash flow optimization and boosting ROA:<br \/>\n<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Follow a comprehensive approach. Rather than focusing on fixed costs, aim to capture valuable margins and control working capital.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Drive better overall performance through clear communication, strategic alignment, and realistic performance goals.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Invest in digitalization to grow and transform, eliminating issues from human-related costs and errors.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Benefits of Supply Chain Management<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Supply chain management fosters functionality across the business, with benefits that trail back to three major areas:<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Lowered Costs<\/b><span style=\"font-weight: 400;\"> &#8211; There are many ways to reduce costs across SCM without losing sight of the customer. Efficient utilization of space is important. Develop a smoother approach to inventory organization through digitization. Supply chain management software keeps information in one place. Consider all the hours saved from manual data entry and other AI tasks.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Increased Revenue<\/b><span style=\"font-weight: 400;\"> &#8211; Make the supply chain management system into your competitive advantage. Once manufacturing is streamlined, labor and materials can be allocated to new initiatives, like product expansion or adding additional services.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><b>Asset Utilization<\/b><span style=\"font-weight: 400;\"> &#8211; Effective supply chain management allows organizations to make better use of assets. Rather than replacing equipment, businesses can assess and evaluate by demand. This process allows organizations to guarantee availability, reduce quality issues, deliver products more rapidly, and handle returns with ease.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Industries Utilizing Supply Chain Management<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Supply chain management is applicable to most industries, but here are a few examples of growing fields:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Industrial Manufacturers<\/b><span style=\"font-weight: 400;\"> &#8211; Today\u2019s consumers demand products that fall in the categories of configure-to-order, make-to-order, and assemble-to-order. A modern, agile industrial manufacturer must be responsive and able to deliver with quality and timeliness. Fluctuating demand leads to significant challenges around internal supply chain management, specifically cost control, inventory optimization and supplier management. <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/industrial\" rel=\"noopener\"><span style=\"font-weight: 400;\">QAD&#8217;s Industrial ERP<\/span><\/a><span style=\"font-weight: 400;\"> meets these challenges to exceed expectations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Pharmaceuticals and Medical Devices<\/b><span style=\"font-weight: 400;\"> &#8211; A tightening regulatory environment, increasing cost pressures, and supply chain management complexities raise new challenges in a typically innovative field. Other factors include emerging global markets, quality initiatives, and merger and acquisition activity. <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/life-sciences\" rel=\"noopener\"><span style=\"font-weight: 400;\">ERP solutions from QAD<\/span><\/a><span style=\"font-weight: 400;\"> deliver the flexibility required for manufacturers in this industry, providing industry-specific functionalities to meet the continually evolving supply chain needs of medical device, pharmaceutical, and biotech manufacturers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Food and Beverage<\/b><span style=\"font-weight: 400;\"> &#8211; Despite the unpredictable market, Food and Beverage <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/food-beverage\" rel=\"noopener\"><span style=\"font-weight: 400;\">ERP technologies<\/span><\/a><span style=\"font-weight: 400;\"> allow manufacturers to satisfy customers better and increase profitability. With different product lines, more inventory, and evolving compliance regulations, a supply chain management system must be flexible enough to streamline all inventory. Supply chain management logistics also provide field-to-fork traceability, documentation, and quality monitoring.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Consumer Products<\/b><span style=\"font-weight: 400;\"> &#8211; Consumer Products manufacturers face dramatic disruptions that continue to transform the industry, impacting daily operations and plans for the future. Manufacturers can stay ahead of the ever-changing market by being adaptive and agile. Supply chain management feels the impact of every buying pattern shift, especially as manufacturers face tightening margins. <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/consumer-products\" rel=\"noopener\"><span style=\"font-weight: 400;\">Consumer Products<\/span><\/a><span style=\"font-weight: 400;\"> ERP systems allow manufacturers to streamline processes, save on costs, and improve flexibility in the face of fluctuating customer demands.<br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Electronics and High-Tech<\/b><span style=\"font-weight: 400;\"> &#8211; Innovation and the ability to quickly manage change are two keys to success in this industry. There is constant pressure on margins, fluidity to global supply chains, challenges with cross-border shipments, material availability strains, and imperatives around controlling cost. <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/high-tech\" rel=\"noopener\"><span style=\"font-weight: 400;\">ERP software and solutions from QAD<\/span><\/a><span style=\"font-weight: 400;\"> allow high-tech and electronics manufacturers to meet these challenges while complying with industry standards and regulations.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Life Sciences &amp; Medical Device ERP<\/b><span style=\"font-weight: 400;\"> &#8211; Complexities of manufacturing and distributing medical devices and other life science products are influenced by emerging global markets, quality initiatives, and increasing merger and acquisition activity. Compliance is crucial, and <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/industries\/life-sciences\" rel=\"noopener\"><span style=\"font-weight: 400;\">Life Sciences and Medical Device ERP solutions<\/span><\/a><span style=\"font-weight: 400;\"> deliver the flexibility required for manufacturers in this industry. There are <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/2019\/01\/mitigating-life-sciences-trade-compliance-risks\" rel=\"noopener\"><span style=\"font-weight: 400;\">exacting regulations<\/span><\/a><span style=\"font-weight: 400;\"> for when you must ship hazardous materials, scheduled medicines, or biological matter. Non-compliance can result in delayed shipments, canceled orders, hefty fines, and damaged reputations.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">The Role of Supply Chain Management Software<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Supply chain management is far less effective without technology. When evaluating ERP vendors, a few <\/span><a target=\"_blank\" href=\"https:\/\/www.techtarget.com\/searcherp\/definition\/supply-chain-management-SCM\" rel=\"noopener\"><span style=\"font-weight: 400;\">important areas<\/span><\/a><span style=\"font-weight: 400;\"> to consider include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Supply chain management software for daily operations<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ability to anticipate risk and proactively manage cases<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Inventory management to track and optimize numbers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Warehouse systems to optimize storage management<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Businesses often fail to accurately account for costs beyond the purchase price of goods, including transportation, lead times, duties, taxes, fees, and other factors. It can also be difficult <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/data-sheets\/qad-srm\" rel=\"noopener\"><span style=\"font-weight: 400;\">to manage<\/span><\/a><span style=\"font-weight: 400;\"> supplier relationships. Without access to timely inventory, demand, and order information, suppliers cannot appropriately respond. <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/data-sheets\/qad-sourcing\" rel=\"noopener\"><span style=\"font-weight: 400;\">Sourcing<\/span><\/a><span style=\"font-weight: 400;\"> manages the electronic request for quote (RFQ) process with suppliers, from recording requirements to the RFI, contracts, and orders. More specifically, it identifies and qualifies suppliers, negotiates best-value agreements, streamlines processes, and manages sourcing knowledge.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Interested in learning more about supply chain management? Check out these additional resources:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/category\/supply-chain-trends\" rel=\"noopener\"><span style=\"font-weight: 400;\">Supply Chain Trends<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/integrated-supplier-management\" rel=\"noopener\"><span style=\"font-weight: 400;\">Integrated Supplier Management<\/span><\/a><\/li>\n<\/ul>\n<p>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;10961&#8243; img_size=&#8221;full&#8221;][vc_column_text]Supply chain management (SCM) is essential to any business strategy. Negative effects wreak havoc, impacting customer satisfaction and ROI. Facets of this broad field include demand planning, inventory management, logistics, acquisitions and partner management. Supply chain management is never boring, and there\u2019s always more to learn. Let\u2019s dive in.\u00a0 What is a Supply [&hellip;]<\/p>\n","protected":false},"author":56,"featured_media":10961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,2045],"tags":[2588,2226,118,2586,2584,2587,2585,2589,2583],"class_list":["post-10951","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-supply-chain-trends","tag-inventory-management-costs","tag-scm","tag-supply-chain-management","tag-supply-chain-management-logistics","tag-supply-chain-management-software","tag-supply-chain-management-stages","tag-supply-chain-management-system","tag-supply-chain-trends","tag-what-is-supply-chain-management"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is Supply Chain Management? Importance &amp; Benefits | QAD Blog<\/title>\n<meta name=\"description\" content=\"Supply chain management handles the entire production flow of a good or service. SCM concerns all activities that take a raw material to a final product and delivery to the customer or consumer.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.qad.com\/blog\/2023\/01\/what-is-supply-chain-management-importance-and-benefits\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is Supply Chain Management? Importance &amp; Benefits | QAD Blog\" \/>\n<meta property=\"og:description\" content=\"Supply chain management handles the entire production flow of a good or service. SCM concerns all activities that take a raw material to a final product and delivery to the customer or consumer.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.qad.com\/blog\/2023\/01\/what-is-supply-chain-management-importance-and-benefits\" \/>\n<meta property=\"og:site_name\" content=\"QAD Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/QADerp\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-19T17:58:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-04-16T18:48:53+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.qad.com\/blog\/wp-content\/uploads\/2023\/01\/1_19_2023_A.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"900\" \/>\n\t<meta property=\"og:image:height\" content=\"450\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Caleb Finch\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@QAD_Community\" \/>\n<meta name=\"twitter:site\" content=\"@QAD_Community\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Caleb Finch\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.qad.com\\\/blog\\\/2023\\\/01\\\/what-is-supply-chain-management-importance-and-benefits#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.qad.com\\\/blog\\\/2023\\\/01\\\/what-is-supply-chain-management-importance-and-benefits\"},\"author\":{\"name\":\"Caleb Finch\",\"@id\":\"https:\\\/\\\/www.qad.com\\\/blog\\\/#\\\/schema\\\/person\\\/90dbfdc4e3cf702dd6a85847078cdc2d\"},\"headline\":\"What is Supply Chain Management? 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