SCM Systems — Supply Chain Management
SCM (Supply Chain Management) systems optimize the flow of goods from manufacturers to customers — managing procurement, logistics, and inventory to reduce costs and improve delivery performance. In B2B, supply chain efficiency is a core competitive differentiator.
What an SCM Does
- Manages procurement from suppliers (POs, supplier relationships, lead times)
- Optimizes inventory levels across the network (demand forecasting, replenishment)
- Coordinates logistics: carrier selection, routing, freight cost management
- Tracks order status through the supply chain
- Provides supplier performance data (fill rate, lead time, quality)
- Supports contract management with suppliers
SCM vs. ERP for Supply Chain
“SCM often can be a separate system. Sometimes companies use their ERP for supply chain management. SCM systems often are heavier used in the manufacturing world more than the distribution world. In the distribution world, they use typically just the ERP and maybe a little bit of order management.”
— C1, Module 2 Lesson 3
Manufacturers more commonly use dedicated SCM systems because they manage complex multi-tier supplier networks and production planning. Distributors often rely on their ERP for supply chain functions, supplemented by order management tools.
SCM and eCommerce Integration
When eCommerce is live, SCM data becomes more important for:
- Inventory visibility — showing customers real-time availability
- Backorder management — communicating expected ship dates when out of stock
- Supplier performance — ensuring supplier reliability as eCommerce orders increase
- Demand forecasting — eCommerce adds a new demand signal that SCM systems must incorporate
Key Metrics (VP Supply Chain’s KPIs)
- Fill rate — percentage of line items shipped complete
- On-time delivery — % of orders delivered on promised date
- Inventory turns — how many times inventory sells through per year
- Freight cost per order — total logistics cost divided by order count
- Forecast accuracy — % variance between forecast and actual demand