What Is Supply Chain Management?

Supply chain management is the overall process of sourcing, producing, and delivering goods. It's a foundational business function, playing a critical role in controlling costs, supporting high-quality service, and ensuring operational agility for businesses of all types and sizes. The scope of supply chain management spans the entire product journey, from raw material to delivery of a final product. 

An effective supply chain process requires interconnected functions that help logistics organizations and businesses guide materials and goods from initial planning and ordering phases to delivery—and sometimes back through a reversal process. Every component plays an essential role in optimizing operations and supporting positive business outcomes. 

Planning

Planning is the foundation of supply chain strategy, as it involves forecasting demand and aligning inventory and resources to meet business and customer needs. Strong planning helps minimize costs while supporting a roadmap for optimized procurement, production, and fulfillment.

For example, a global retailer may use demand forecasting software to understand potential seasonal surges. It can align distribution resources, including staff and inventory, to meet expected holiday rushes. 

Sourcing

Sourcing activities focus on identifying, evaluating, and managing suppliers, which include vendors and partners providing raw materials, products, and services. Tasks related to sourcing include negotiating contracts and ensuring continuity and quality of supply.

An example of sourcing is a manufacturer partnering with multiple suppliers to diversify raw material sources, reducing vulnerability in its supply chain and risks of disruptions. 

Manufacturing

Manufacturing is the process of transforming raw materials and goods into finished products. The efficiency of manufacturing contributes to the cost, output, and lead times within the supply chain. As part of the manufacturing component, businesses must create production schedules, effectively manage equipment, and ensure compliance with regulatory standards.

An example of manufacturing in supply chain management would be an automotive company implementing lean techniques to reduce waste and accelerate delivery times without negatively impacting product quality.

Delivery and Logistics

The delivery and logistics component of supply chain management ensures goods are transported from source locations and delivered to the right place at the right time. Delivery must support manufacturing and customer receipt of ordered products. Delivery and logistics include shipping, fleet management, and customer support.

For example, a clothing brand may use transportation management systems to optimize delivery routes to retail locations. Better route performance reduces fuel costs and helps support on-time deliveries across large regions.

Returns Management

The supply chain doesn't only move in a single direction. Returns management supports the flow of product back into or up the supply chain. While this process is important for customer returns and handling damaged goods, it's also required for sustainability initiatives, such as recycling and refurbishment. 

For example, a technology manufacturer might have processes for buying back used equipment, refurbishing it, and reselling it. Or, a home goods retailer may need a way to accept returns for online orders when customers aren't satisfied with products. 

Supply chain strategies define how businesses approach all the components discussed above, and the right strategies can help align operations with demand and support resilience in challenging markets. Let's look at four common SCM strategies with examples of each.

Lean Supply Chain Management

Lean approaches focus on removing waste from processes. Waste includes:

• Unnecessary movement of inventory or goods between processes
• Excess inventory
• Unnecessary motion of people or machines
• Idle time when people or machines aren't producing
• Producing more than needed
• Putting in more work or effort than necessary for the required outcome
• Defects that cause rework or scrap

For example, a company may adopt a lean approach to inventory, ordering only what's needed immediately to minimize the cost of warehousing. However, this approach requires strong demand forecasting to avoid stockouts and processing delays.

Agile Supply Chain Management

Agile approaches support businesses in adapting quickly to changing market conditions, including supply and demand. Key pillars of this approach include flexibility, speed, and responsiveness, which make access to accurate real-time data a must. Logistics teams must also engage in effective cross-functional collaboration to support agile SCM.

For example, if a fashion retailer notices changing trends in the middle or late in the season, it might change suppliers to meet evolving customer expectations. 

Just-In-Time (JIT)

Just-in-time approaches involve producing or receiving inventory or goods only as required. JIT, which is often a component of lean and agile approaches, helps cut down on inventory holding costs. However, it requires precise planning, dependable supplier relationships, and a mature supply chain.

An example of just-in-time is seen in print-on-demand (POD) book processes. Independent authors and small press publishers use these processes to substantially reduce publishing costs and make their books available to a wider audience, as copies are printed as ordered.

Total Quality Management (TQM)

Total Quality Management focuses on supporting quality in every part of a supply chain through continuous improvement and data-driven decision-making. TQM seeks to create in-process quality assurance and accountability at all levels of the supply chain.

For example, a pharmaceutical company might leverage TQM to ensure strict controls at every stage of the drug manufacturing and delivery process. 

Modern supply chains run on advanced technology, which helps keep pace with global demand, pivot in response to disruptions, and meet customer expectations. The right technology supports visibility into the entire supply chain and precision across every stage.

Digital transformation has enabled real-time insights and seamless data sharing across supply chains. AI and machine learning help organizations forecast demand based on millions of data points and automate decision-making at a scale that supports global logistics. 

The Internet of Things (IoT) offers a way to track assets via scanning, GPS tracking, and other technologies. It also paves the way for more detailed environmental monitoring. All this results in greater control over shipments and inventory throughout the supply chain. 

Blockchain offers added transparency and security. It creates immutable records that document transactions throughout the supply chain, supporting more confident customs processes and peace of mind for buyers and sellers alike.  

Software plays a critical role in modern supply chain execution. From demand planning to final-mile delivery, businesses need the right digital tools to respond quickly, optimize performance, and scale effectively. 

Integration Capabilities

Many supply chain software solutions are cloud-native, which supports seamless integration. Planning and executing may be able to be done on the same platform, or solutions can be integrated to support a unified approach for holistic logistics. Integration reduces silos between departments and provides a more coordinated supply chain.

Keep in mind, your software shouldn’t just be able to integrate with your systems. If you’re using multiple software solutions, they need unification — the ability to communicate, share data, and work seamlessly with each other.

Even the most optimized supply chains can face challenges that increase costs or negatively impact customer experience. Challenges that affect production or delivery include natural disasters, geopolitical situations, and supplier failures. 

It's impossible to always know when disruptions might occur, so proactive risk management strategies are critical. Planning, supplier diversification, and real-time monitoring can help reduce risk vulnerability or ensure rapid resolution when issues arise. Scenario modeling helps businesses understand the impact of various potential events so they can create flexible sourcing strategies to improve logistics resilience.

Global operations must also adhere to evolving regulations related to safety, trade, and the environment. Because noncompliance can result in delays and additional costs, often in the form of fines or harm to business reputation, it's crucial to consider these factors when managing supply chains.

The importance of supply chain management extends beyond efficiency. Minimizing environmental impact through lower emissions, reduced waste, and responsible sourcing is an essential component of most modern SCM processes. Sustainable practices help companies meet regulations across the globe and may be necessary to meet ever-changing customer preferences.

Ethical supply chains are also important—they emphasize fair labor, long-term economic stability, and transparency. Integrating these values into supply chain management helps strengthen an organization and build trust with customers and global supply partners. 

AI-driven automation, predictive analytics, and demand for better end-to-end visibility will continue to shape supply chain management in the near future. These technologies will only get more adept at supporting real-time access to logistics information.

Globalization continues to expand supplier networks, which is a good thing for SCM. However, it also introduces risks and complexities that smaller or more regional businesses might not have dealt with before. Building a resilient network via flexible sourcing, real-time data, and integrated planning becomes more essential every day for companies that want to compete in modern markets.

Effective supply chain management drives efficiency and agility to support long-term success. With increasing globalization and more complex networks for businesses of all types, advanced tools are required to stay competitive.

Manhattan’s best-in-class supply chain management solutions include supply chain execution, planning, and order management software. These solutions all integrate seamlessly to facilitate more efficient communication and effective planning.

Scalable Supply Chain Execution

Manhattan’s supply chain execution solutions help organizations consolidate their labor, distribution, transportation, and yard management efforts in a scalable, cloud-native solution with a versatile feature set including:

Extensible Warehouse Management Solutions

Manhattan SCALE offers the choice of an on-premises or cloud-hosted warehouse management solution that’s highly extensible, adaptable and easy-to-use. Meanwhile, Manhattan Active Warehouse Management offers a future-proof cloud-native solution that integrates with your entire network to facilitate real-time decision making.

Gamified, Engaging Labour Management

Optimize your labor utilization and keep your staff engaged with Manhattan Active Labor Management. Access real-time staff performance data, offer valued incentives, and utilize machine learning to optimize your operations.

Optimize Every Stage of Transportation

Manage even complex transportation routes with Manhattan Active Transportation Management and enjoy improved visibility and service levels as well as a more sustainable, environmentally friendly business. Seamless integration with Manhattan Active Yard Management and the WMS solutions ensures every single stage of the logistics process can be optimized for increased agility and efficiency.

Trucking companies can take advantage of Manhattan Carrier, a carrier optimization solution that helps manage driver loads, routes, tolls, and taxes to improve efficiency and minimize costs.

Supply Chain Planning

Enjoy unified forecasting, replenishment, and allocation systems in a powerful cloud-native platform. Manhattan Active Supply Chain Planning offers a microservice API for easy integration with other tools and delivers AI-powered demand forecasting, real-time inventory management, and dynamic replenishment systems.

This next-generation system helps businesses keep up with fluctuating market conditions, improving the customer experience while maximizing stock turnover.

Efficient Order Management

Retailers can take advantage of Manhattan Active Order Management to improve their scalability, reduce fulfilment costs, and maximize their profitability. With features such as dynamic inventory visibility, intelligent fulfillment orchestration and personalized post-purchase options, this cloud-native, omnichannel tool helps retailers future-proof their operations.