Supply Chain Management (SCM)

We know from our first computer course that "computer is a data processing device" which takes input and gives information. When computers were made affordable in 1960's business started using computers. Each department such as marketing, production, accounting developed separate application to process data generated in thier respective domains. Hence they developed systems such as material management system(MMS), Payroll system, accounting systems ( such as Tally etc). However this approach led to creation of "islands of information". One department can not access the information residing in other department for various reasons such as applications used by different departments were different and data formats were not compatible. Business realised the need for seamless integration of information residing in various department application. This led to the creation of Enterprise Resource Planning ( ERP). You may read more on ERP here

Supply chain management (SCM) is the extension of this principle in which departments outside of the an enterprise are also connected. For instance, SCM may be used to connect a car manufactures with tyre manufacture who in turn may be connected to rubber manufacture etc. The advantage of SCM is that every participant in the business process has access to most updated information so that delays can be avoided in supply of raw material needed for production process.

Japanese car companies harnessed the power of SCM so well that they come out with a revolution production system called JIT ( Just in Time) production. In this once the order is captured, each supplier is altered to supply item to produce the required car in time