Companies that excel in supply chain operations perform better in almost every fi nancial measure of success, according to a report from Boston-based AMR Research Inc. When supply chain excellence improves operations, companies experience a 5 percent higher profi t margin, 15 percent less inventory, 17 percent stronger “perfect order” ratings, and 35 percent shorter cycle times than their competitors. “The basis of competition for winning companies in today’s economy is supply chain superiority,” said Kevin O’Marah, vice president of research at AMR Research. “These companies understand that value chain performance translates to productivity and market-share leadership. They also understand that supply chain leadership means more than just low costs and effi ciency: It requires a superior ability to shape and respond to shifts in demand with innovative products and services.”

Collecting, analyzing, and distributing transactional information to all relevant parties, supply chain management (SCM) systems help all the different entities in the supply chain work together more effectively. SCM systems provide dynamic holistic views of organizations. Users can “drill down” into detailed analyses of supply chain activities to fi nd valuable information on the organizational operations. This chapter explores the details of supply chain management.