In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers. A more narrow definition of supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally".Cornell Engineering, Supply Chain, School of Operations Research and Information Engineering, accessed 27 March 2021 This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end-to-end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.Harland, C.M. (1996) Supply Chain Management, Purchasing and Supply Management, Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics. In: Slack, N (ed.) Blackwell Encyclopedic Dictionary of Operations Management. UK: Blackwell.
SCM is the broad range of activities required to plan, control and execute a product's flow from materials to production to distribution in the most economical way possible. SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and capital in functions that broadly include demand planning, sourcing, production, inventory management and logistics—or storage and transportation.
Supply chain management strives for an integrated, multidisciplinary, multi-method approach. Research in supply chain management focuses on topics such as resilience, sustainability, and risk management, among others. Some suggest that the "people dimension" of SCM, ethical issues, internal integration, transparency/visibility, and human capital or talent management are topics that have been underrepresented on the research agenda.
Supply chain management, techniques with the aim of coordinating all parts of SC, from supplying raw materials to delivering and/or resumption of products, tries to minimize total costs with respect to existing conflicts among the chain partners. An example of these conflicts is the interrelation between the sale department desiring to have higher inventory levels to fulfill demands and the warehouse for which lower inventories are desired to reduce holding costs.
Origin of the term and definitions In 1982, Keith Oliver, a consultant at Booz Allen Hamilton, introduced the term "supply chain management" to the public domain in an interview for the Financial Times.
In the mid-1990s, the term "supply chain management" gained popularity when a flurry of articles and books came out on the subject. Supply chains were originally defined as encompassing all activities associated with the flow and transformation of goods from raw materials through to the end user or final consumer, as well as the associated information flows. Mentzer et al. consider it worthy of note that the final consumer was included within these early definitions. Supply chain management was then further defined as the integration of supply chain activities through improved supply chain relationships to achieve a competitive advantage.
In the late 1990s, "supply chain management" (SCM) rose to prominence, and operations managers began to use it in their titles with increasing regularity.Andrew Feller, Dan Shunk, and Tom Callarman (2006), Value Chains Versus Supply Chains, BPTrends, published in March 2006, accessed on 20 September 2026Blanchard, D., (2010), Supply Chain Management Best Practices, 2nd. Edition, John Wiley & Sons, A supply chain, as opposed to supply chain management, is a set of firms who move materials "forward", or a set of organizations, directly linked by one or more upstream and downstream flows of products, services, finances, or information from a source to a customer. Supply chain management is the management of such a chain.
Other commonly accepted definitions of supply chain management include: The management of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, company, resellers, and final consumers.Nabil Abu el Ata, Rudolf Schmandt (2016), The Tyranny of Uncertainty, Springer, The systematic, strategic coordination of traditional business functions and tactics across all business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole. A customer-focused definition is given by Hines (2004:p76): "Supply chain strategies require a total systems view of the links in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence, costs must be lowered throughout the chain by driving out unnecessary expenses, movements, and handling. The main focus is turned to efficiency and added value, or the end user's perception of value. Efficiency must be increased, and bottlenecks removed. The measurement of performance focuses on total system efficiency and the equitable monetary reward distribution to those within the supply chain. The supply chain system must be responsive to customer requirements." The integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders.Lambert, 2008 Cooper, M.C., Lambert, D.M., & Pagh, J. (1997) Supply Chain Management: More Than a New Name for Logistics. The International Journal of Logistics Management Vol 8, Iss 1, pp 1–14 According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliers, intermediaries, third-party service providers, or customers. Supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.
Mentzer et al. make a further distinction between "supply chain management" and a "supply chain orientation". The latter term involves a recognition that a business strategy cannot be fulfilled without managing the activities of suppliers and customers upstream and downstream, whereas the former term is used for "the actual implementation of this orientation".
Supply chain visibility, in its origins, was concerned with knowledge of the location, production stage and expected delivery date of incoming products and materials, so that production could be planned,Blanchard, D., Predictive Analytics Let Manufacturers See More Clearly into their Supply Chains, IndustryWeek, published 27 March 2015, accessed 29 November 2022 but the development of the term has enabled it to be used to plan orders using knowledge of potential supplies, and to track post-production processes as far as delivery to customers.Biel, J., What Is Supply Chain Visibility (SCV)? Definition & Examples, Oracle Netsuite, published 16 December 2021, accessed 29 November 2022 The concept of a "supply chain control tower" reflects the "end-to-end visibility" provided by an air traffic control tower.Cooke, J. A., The power of a control tower: see illustrations, CSCMP's Supply Chain Quarterly, Quarter 4, 2013, archived on 11 June 2017, accessed on 22 July 2025 Writing for Gartner, Ashutosh Gupta sees a "supply chain control tower" as a concept which combines the capacities of "people, process, data, organization and technology" to improve supply chain visibility, noting that the technology behind a system which draws together information from a number of sources should not be separated from the people and processes it supports in order to improve visibility.Gupta, A., What Is a Supply Chain Control Tower — And What’s Needed to Deploy One?, Gartner, published on 25 March 2022, archived on 20 December 2025, accessed on 17 February 2026
The UK Government also uses the term "supply chain visibility" in conjunction with its mandate to ensure that potential suppliers have visibility into future supply opportunities. The government's action note on supply chain visibility covers obligations and appropriate contractual wording requiring prime suppliers to advertise sub-contracting opportunities and to report on their spend with small and medium-sized enterprises and voluntary/community organisations within their supply chains.Crown Commercial Service, Procurement Policy Note 01/18: Supply Chain Visibility, published on 10 April 2018, accessed on 12 April 2025
Supply chain management software includes tools or modules used to execute supply chain transactions, manage supplier relationships, and control associated business processes. The overall goal of the software is to improve supply chain performance by monitoring a company's supply chain network from end-to-end (suppliers, transporters, returns, warehouses, retailers, manufacturers, and customers).
In some cases, a supply chain includes the collection of goods after consumer use for recycling or the reverse logistics processes for returning faulty or unwanted products back to producers up the value chain.
Functions Supply chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer. As organizations strive to focus on core competencies and become more flexible, they reduce ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations. Less control and more supply chain partners lead to the creation of the concept of supply chain management. Supply chain management is concerned with improving trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.
Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.Baziotopoulos, 2004 In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. According to Drucker, "the greatest change in corporate culture—and the way business is being conducted—may be the accelerated growth of relationships based not on ownership, but on partnership." This approach allows companies to leverage the strengths and capabilities of various partners to achieve greater efficiency and innovation, ultimately enhancing overall business performance.