Decoding Supply Chain Management (SCM)

Supply chain management (SCM) is much more than a materials movement or transportation initiative. It is also a new way of thinking about business relationships. Some organizations, however, are trying to adopt supply chain management practices (such as just-in-time replenishment or strategic sourcing) without also implementing an organization-wide supply chain philosophy and culture. 
SCM actually has two distinct and equally important parts: the SCM philosophy and the SCM methodology. It is possible to have limited success by embracing only one of the parts.

SCM philosophy is anchored in the realization that everyone involved in the supply chain, both internal and external to the organization, is both a supplier and a customer. The interlinking of these dependent elements is the basis of the SCM philosophy. The philosophy forces companies to move away from an organizational structure designed around functional silos and towards one designed around the end-to-end flow of business processes.

SCM methodology is the “how to” of SCM. In other words, it implements the philosophy. Selecting the correct methodology for implementation is as important as the philosophical decision to implement SCM. A race driver cannot make a decision to drive in a particular race and then select a car that is not suited for it. SCM methodology includes the transactional and mental processes needed for identifying, evaluating, optimizing, managing, and monitoring the critical events in the entire supply chain. The transactional processes are the physical, mechanical events or “hands-on” actions that are required to complete a process. The mental processes are the thinking, planning, and decision making that supply chain management requires. SCM methodology encompasses everything from setting your strategic plan to fulfilling your operating and financial plans.