DEFINITION of 'Supply Management'

A broad term describing the various acts of identifying, acquiring and managing the products and/or resources needed to run a business or other organization. These include physical goods as well as information, services and any other resources needed. Supply management divisions within large corporations can be very large, with budgets in the billions and employing hundreds of workers. The main goals within supply management are to control costs, efficiently allocate resources and gather information to be used in strategic business decisions.

BREAKING DOWN 'Supply Management'

While it is easy to understand how supply management directly affects the results of a large purchaser or a manufacturer, supply management is just as important to service-based firms. The internet, along with broad improvements to logistical networks worldwide, have helped turn supply management into a key strategic objective at most large companies, capable of saving millions and increasing efficiency company-wide.

A company's ability to execute on supply management goals can directly benefit the stock price by increasing metrics such as gross and net margins, cash flow, and cost of goods sold (COGS).

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