According to the Council of Supply Chain Management Professionals, it incorporates “the planning and management of all activities involved in sourcing and procurement, conversion and logistics.” Three key features of a SCM system are:
Demand Management
Demand management helps companies and partners to focus on meeting the needs of customers, rather than the production process. By updating customer needs with partners and increasing their collaboration, companies can increase business opportunities for all members.
Communication
Effective communication enables all members in the chain to share the same demand and operational information, which keeps them informed of developments that affect their contribution. It also facilitates members to respond rapidly to new business opportunities, helping to get new products to market quickly.
Integration
Integrating supply chain processes helps each member reduce its inventory costs. According to a case study on the Wal-Mart by the University of San Francisco. Suppliers share up-to-date information on demand to route their products to Wal-Mart’s warehouses for onward shipment to stores with minimum time in inventory. This reduces Wal-Mart’s costs significantly, enabling them to offer customers highly competitive pricing. To achieve this level of integration, companies develop single information networks that enable all members to access and share supply and demand data securely.
Reference: http://smallbusiness.chron.com/four-elements-supply-chain-management-52355.html