Supply Chain Management
Also: SCM, Supply-Chain-Management, Lieferkettenmanagement, Supply Chain Steuerung, Supply-Chain-Steuerung
AI-generated
Supply Chain Management (SCM) refers to the holistic planning, control, and monitoring of all material, information, and financial flows along the entire value chain – from raw material procurement to delivery to the end customer.
Key facts
- Supply Chain Management coordinates all material, information, and financial flows along the entire value chain – cross-company, from procurement through to delivery.
- SCM connects planning (Supply Chain Planning) and operational execution (Supply Chain Execution) as interconnected control loops.
- Typical SCM metrics include OTIF, inventory coverage, and cost-to-serve – they make bottlenecks and inefficiencies in the supply chain visible.
- The integration of ERP, WMS, TMS, and planning systems is one of the greatest technical challenges in SCM.
- Resilience against supply disruptions and demand fluctuations is an increasingly important design objective in Supply Chain Management.
What is Supply Chain Management?
Supply Chain Management (SCM) encompasses the cross-company coordination of all processes required to move products or services from supplier to end customer. This includes procurement, production, warehousing, transportation, inventory management, and order fulfillment – as well as the information and financial flows that accompany these physical processes. SCM is not a single system, but a management approach that brings together strategy, processes, and IT systems.
The key difference from traditional logistics lies in scope: while logistics has traditionally focused on operational execution within a single company, SCM views the entire supply chain as a network – including external suppliers, service providers, and sales channels. Planning and execution are not treated as separate activities, but understood as interconnected control loops.
How does SCM work in practice?
In practice, SCM is divided into two closely interlinked areas: Supply Chain Planning (SCP) and Supply Chain Execution (SCE). Planning encompasses demand forecasting, requirements and capacity planning, and the design of the supplier network. Execution includes procurement logistics, warehouse processes, transportation management, and order management.
Typical KPIs used by SCM professionals to measure performance include OTIF (On Time In Full), inventory coverage, supplier performance, and cost-to-serve. These KPIs reveal where bottlenecks, buffers, or inefficiencies arise within the chain. Procurement and logistics share responsibility here: procurement shapes the supplier network and manages costs and risks; logistics is responsible for operational execution and service levels.
On the IT side, SCM relies on the interplay of multiple systems: ERP systems form the transactional core, specialized APS or SCM platforms handle planning, WMS systems manage the warehouse, and TMS systems control transportation. How these systems are integrated – via a best-of-suite strategy or modularly according to the best-of-breed principle – is one of the central architectural decisions in SCM.
What matters when selecting and designing an SCM approach?
When implementing or further developing an SCM approach, three questions are particularly relevant:
- Planning depth and data foundation: How reliable are demand forecasts, and what data underpins planning decisions? Poor master data quality is one of the most common causes of SCM problems.
- Risk management: How resilient is the supply chain against disruptions – such as supplier failures, transportation bottlenecks, or demand fluctuations? Single-source dependencies are considered particularly critical.
- Integration across system boundaries: SCM only works when data flows between systems and partners. EDI connections, APIs, and shared data standards are prerequisites for genuine transparency.
SCM is not a one-time project, but a continuous optimization process. The functional scope of supporting systems varies considerably depending on the vendor – a clear definition of requirements before system selection is therefore essential.
Related terms
- 3PL
3PL (Third Party Logistics) refers to the outsourcing of operational logistics processes – such as warehousing, order picking, or transportation – to an external service provider. The company retains strategic responsibility, while the 3PL vendor handles operational execution.
- 4PL - Fourth Party Logistics
4PL (Fourth Party Logistics) refers to a logistics model in which an external partner coordinates the entire supply chain and manages multiple 3PL providers and carriers without performing any physical transport or warehousing services itself.
- Absatzplanung
Sales planning refers to the systematic forecasting of future sales volumes for defined products, regions, or channels. It forms the foundation for all downstream planning processes in production, procurement, and logistics.
- Absatzprognose
The sales forecast estimates future demand for products or items over a defined period. It forms the basis for inventory, capacity, and procurement planning in logistics and purchasing.
- Auftragsmanagement
Order management refers to the systematic control and monitoring of orders throughout their entire lifecycle – from capture through prioritization and status tracking to completion. It forms the operational link between sales, logistics, purchasing, and IT.
- Bedarfsplanung
Demand planning refers to the systematic process by which a company determines what quantities of materials, goods, or resources are needed and when. It forms the foundation for inventory management, procurement, and warehouse planning.
- Beschaffung
Procurement refers to the systematic process by which a company sources materials, goods, and services from external suppliers. It encompasses all steps from requirements identification through vendor selection to order placement and goods receipt monitoring.
- Beschaffungsplanung
Procurement planning refers to the process by which a company systematically determines which materials or goods need to be sourced, in what quantities, at what time, and from which suppliers.
- Bestandsmanagement
Inventory management refers to the systematic planning, control, and monitoring of stock levels across the entire supply chain. The goal is to ensure delivery capability while keeping capital commitment and warehousing costs within economically viable limits.
- Cost-to-Serve
Cost-to-Serve refers to the total costs incurred to fully serve a specific customer, customer segment, or order. The metric consolidates all relevant cost components along the order fulfillment process and enables cause-based cost allocation.
- Disposition
Disposition refers to the operational planning and control of resources, quantities, and orders in logistics – for example in transport or materials disposition. It encompasses capacity assignment, scheduling, prioritization, and response to disruptions.
- Distributionslogistik
Distribution logistics encompasses all processes that move goods from the manufacturer or warehouse to the end customer – from network planning through storage and transportation to order fulfillment.