What is a Supply Chain Management System?

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  • Written By: M. McGee
  • Edited By: Lauren Fritsky
  • Last Modified Date: 24 February 2020
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A supply chain management system is a collection of manufacturers, businesses and warehouses that provide necessary raw and finished materials to companies when they need them. One company refines a raw material, then sends it to a company that makes a component, who then sends it to a company that makes a finished product. The end product ends up in a retail store. The proper use of supply chains streamline the refinement and manufacture of goods while keeping costs down. Supply Chain Management System (SCMS) is also the name of a non-profit organization that sends medicine and supplies to poor nations.

Understanding a supply chain management system requires a basic understanding of modern manufacturing. Most companies do one thing and pass their product on to the next company. For instance, a company may manufacture bolts used for washing machines, but they don’t make the machines. Their bolts are sent to another company that makes the entire machine or another component of the machine.

In order for this process to work efficiently, companies use a supply chain management system. These systems place a company in the middle of an interconnected web of companies. On one side are all the companies that supply the materials for a product. On the other side are all the companies that require the product. Each part needs to work smoothly, or all connected companies falter by having a surplus product or a product deficit.


Continuing with the bolt example, the company may receive various supplies from several companies, then turn those supplies into bolts. The bolts are shipped to a handful of manufacturers of both finished products and product components. In addition, they may package bolts for distribution in retail stores or warehouse surplus bolts for later shipment.

Moving goods and materials from place to place can be a complex process. In order for the entire operation to run smoothly, two things need to happen. First, people have to be in the right places at the right time. Second, raw materials and component goods need to exist in large enough supply for the people in the next stage of production.

A full supply chain management system is made up of a large amount of people and locations. Raw material is gathered from the earth or manufactured, then processed into a usable form. The raw materials are shipped to a multitude of different manufacturers that make components for retail products. This step is repeated over and over until the collection of components reaches a final product location where it is made into retail goods. After final production, they are shipped to retail stores and sold to consumers.

Outside of the business definition, supply chain management system has one other important meaning. SCMS is an arm of the Partnership for Supply Chain Management (PFSCM). The PFSCM is a non-profit organization that centers on moving goods and supplies into poor or developing nations. SCMS specializes in moving retroviral vaccines and other medicines to countries all over the world.



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