Supply Chain Management

Definition of Supply Chain Management as it relates to Business, Business Planning, Budgeting

Supply Chain Management (SCM) is an integrative approach to managing all activities involved in the flow and transformation of goods from raw materials stage, through to the end user, in the most cost effective manner possible. It encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. Effective SCM practices improve a business's competitive advantage by reducing inventories, increasing the transaction speed with channel partners, and decreasing the bullwhip effect (amplification of demand variability) throughout the supply chain. It is closely linked to business planning and budgeting as effective forecasting and resource allocation are crucial for successful SCM.

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