A supply chain is a system of facilities that procure raw materials, transform them into intermediate goods and then final products, and finally deliver the products to customers through a distribution system that includes a (probably multi-echelon) inventory system. Thus, it spans procurement, manufacturing, and distribution, with effective inventory management as one key element. To fill orders efficiently, it is necessary to understand the linkages and interrelationships of all the key elements of the supply chain.In commerce, supply chain management (SCM), the management of the flow of goods and services,involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
Supply-chain management has been defined as the "design, planning, execution, control, and monitoring of supply-chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."SCM practice draws heavily from the areas of industrial engineering, systems engineering, operations management, logistics, procurement, information technology, and marketingand strives for an integrated approach.[citation needed] Marketing channels play an important role in supply-chain management.Current research in supply-chain management is concerned with topics related to sustainability and risk management, among others. Some suggest that the “people dimension” of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are topics that have, so far, been underrepresented on the research agenda.
Supply-chain management, techniques with the aim of coordinating all parts of SC from supplying raw materials to delivering and/or resumption of products, tries to minimize total costs with respect to existing conflicts among the chain partners. An example of these conflicts is the interrelation between the sale department desiring to have higher inventory levels to fulfill demands and the warehouse for which lower inventories are desired to reduce holding costs.