Supply Chain Management (SCM) is an optimization of goods and process flow, that includes a transformation of raw materials into final products. It has a complex set of business processes such as inventory management, order management, procurement, and transportation management. The main goal of supply chain management is to increase efficiency and minimize costs. With the integration of SCM in Enterprise Resource Planning (ERP), a company can automate its operations in the supply chain, which improves efficiency, and customer satisfaction and reduces costs.

Supply Chain Management usually starts with planning, to match the supply (customers) and demand (manufacturers). It is crucial to have a demand and supply forecast, otherwise, it can end with high inventory costs or a low percentage of market share. With ERP integration a company can improve its data accuracy and get more precise forecasts.

The next step in the supply chain is sourcing. Sourcing is a complex process that links suppliers and manufacturing. It includes ensuring that raw materials meet the manufacturing standards and requirements, the price for the raw materials is not too, suppliers can deliver the materials quickly in case of emergency and supplier delivers the goods on time. ERP automates all these processes and enables quick information flow between suppliers and manufacturers. A manufacturer can make an order for raw materials very fast, and suppliers can start to fulfil the order immediately.

Manufacturing is the next step, where raw materials are transformed into finished goods. Inside Manufacturing, there are many subtasks such as testing, assembly, packaging, etc.

When final products are produced, they need to be delivered. Delivering is often seen as a brand image contributor. It is the first point where customer interaction appears. Therefore, the delivery should be safe and on time. ERP systems enable online tracking and accurate calculation of delivery time, which reduces the number of delays and increase customer satisfaction.

The last step is Returning, which can be described as a backward Delivering process. It is important to add, that customer returns are not just an interaction with the customer and company but also with the manufacturer. If the product is defective, it is a signal for the manufacturer to inspect why it was defective and how to prevent similar issues in the future.

As can be seen SCM is a complex part of the business. Because of the complexity, an ERP system is a must-have for any company. Behind the flow of goods (raw materials and finished goods) there is also a flow of data, information, and money. Therefore, it is important to implement an ERP system in all business processes that your company has. Also, ERP integration can help you with business intelligence and analytical tools that allow you to analyse all the data within SCM, based on which you can make better business decisions as a CEO or supply chain manager.