The short answer is that SCM is the management of the business supply chain, where the supply chain includes any function that’s required to produce and deliver the final product to the customer. More specifically supply chain functions include: managing supply and demand, selecting sources for raw materials or parts, producing / assembling / packaging, warehousing, maintaining and tracking inventory, managing order entry, and providing distribution across all channels including delivery to the customer. SCM is the act of integrating any or all activities associated with supply chain flows that occur inside or outside the company. Two important objectives of supply chain management are (1) getting the right supply chain strategy to meet or exceed customer expectations, and (2) providing communication between suppliers and trading partners to enable collaboration.

Figure 1 provides a simple example of a supply chain model. As shown in the Figure, the first event is when the retail store receives an order from the customer. At the same time the retail store gets the order, the supplier also receives information about the order. The supplier checks invent

• Optimal distribution of existing inventory across the supply chain.

• Provide a low cost communication channel. An example would be a web browser over the Internet that creates a trading community through a business portal.

It is clear that SCM solutions require tailored and specific applications for each company. To present an example of the diverse applications available for SCM, the list that follows provides supply chain functions that have software application packages developed for their automation. Items are taken from http://supplychain.ittoolbox.com.

Dell remains the undisputed leader in inventory management. Dell electronically communicates customer demand to all its suppliers. Dell does not start to build a PC until after the customer has placed an order. “Where most hardware manufacturers have a month to a year of inventory lying on the shop floor, Dell has no more that five to six hours of inventory at one time” says Andy De, Dell’s director of product engineering. Dell’s SCM system was co-designed by i2. As a result of Dell’s efforts in developing supply chain management systems, their operating margin is 7% compared to an industry average of 2.3 to 4%.

Trading Partner Integration – B2B exchanges, vendor managed inventory, payment / transaction services, and logistics management (big category).

The big question is should a company build or buy the software tools to enhance the SCM systems? And how does a business implement the software tools?

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