Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.The 4 basic components of supply chain management are:

• strategy-the strategy for managing all the resources required to meet customer demand for all products and services.
• partners-the partners chosen to deliver finished products,raw materials, and services including pricing, delivery, and payment processes along with partner relationship monitoring metrics.
• operation-the schedule for production activities including testing,packaging, and preparation for delivery.Measurements for this component include productivity and quality.
• logistics-the product delivery processes and elements including orders,warehouse,carrier,defective product returns, and invoicing.(see figure below)

 
Effective and efficient SCM systems can enable an organization to:

• decrease the power of its buyer.
• increase its own supplier power.
• increase switching costs to reduce the threat of substitute products or services.
• create entry barriers thereby reducing the threat of new entrants.
• increase efficiencies while seeking a competitive advantages through cost leadership.(see figure below)