Last updated on December 7th, 2022
When I first started getting into business and marketing, I kept mixing up my acronyms. Trying to remember all those different letters and what they meant was tricky at first, but I found some handy guides that taught me the differences with ease.
So, if you keep mixing up SCM and CRM, then here is a great guide I pulled together to help you understand the differences between these two areas of business and marketing. I hope you find it useful!
What Is SCM And CRM?
First, I talk about both SCM and CRM independently before comparing the two together to see how they differ.
This way, you will have an in-depth understanding of both – and I think this will make it a lot easier to understand how they are different from one another.
What Is SCM?
SCM stands for supply chain management. It’s used to refer to the flow of both goods and services, and is supposed to help streamline the process of a supply chain.
Supply chains refer to the different activities and resources involved in making a product and getting it to the customer. Supply chain management aims to keep these supply chains moving as efficiently as possible.
This is to help reduce cost and ensure that customers are getting the high quality products they want quickly.
As a result, SCM is considered vital to every kind of company and business, no matter the industry. A 2019 report found that 57% of businesses believe that SCM gave them a competitive edge to further develop their business.
This is reflected in the fact that 79% of companies with high-performing supply chains have higher revenue growth than those who don’t.
There are five sections of SCM: planning, sourcing, manufacturing, delivering, and returning.
Planning in SCM involves predicting what a company’s future needs will be in regard to materials, equipment, and staff numbers.
61.3% of businesses consider forecasting to be an important part of SCM as SCM managers need to plan ahead to meet customer demand. 29% of companies use softwares and SCM tools to process this information and give predictions.
This next part is sourcing. SCM managers will then go to suppliers for raw materials and request the right quantities needed to make enough products to meet their customer demand.
Sourcing also involves ensuring the raw materials are in good quality, that the prices the company is purchasing for are in line with market expectations, that the suppliers can deliver these materials (along with emergency materials should the demand be much higher than expected) and that the supplier is a trustworthy source of materials.
Then, the next step is manufacturing the product. This process is broken down into multiple steps including assembly, inspection, testing, and packaging.
SCM oversees all of these steps while trying to cut back on costs as much as possible to improve the economy of the product while keeping things as efficient as possible.
Once the products are made, it’s time for distribution. This involves hiring trucks and drivers, organizing fuel, and sourcing packing materials.
In 2019, 70% of supply chain managers predicted that SCM would be a key driver for improved customer service in the next year as it has a huge impact on delivery times.
Finally, there’s returning. SCM also covers areas such as customer returns and support (also known as reverse logistics).
Communication between the customer and company are key to identifying issues like defects or non-comforning products, and without identifying these issues, they won’t be able to be addressed and resolved.
As 61% of consumers will switch companies due to poor customer service, this part of SCM is also incredibly important.
Of course, these areas of SCM differ depending on the type of product or service you produce. Different companies follow different types of supply chain models.
Some models fluctuate seasonally, others prioritize speed, and others focus on creating the same product over and over again for reliability.
SCM is clearly a vital role within a company. Studies show that reducing supply chain costs can sometimes double net profits.
Not only is SCM important for getting your product out there quickly and for a lower cost, but they also help ensure product quality and prevent lawsuits, shortages, and oversupply.
What Is CRM?
Now, let’s take a look at CRM.
CRM stands for customer relationship management.
It refers to the process of managing company interactions with both potential and existing customers, and 91% of companies (with above 11 employees) use a specific type of CRM software to achieve this.
So, whenever you see the term CRM, it is almost always referring to CRM softwares and tools.
CRM technology is a product that is used by companies to store information regarding the company’s interactions with its customers.
This includes records of a customer’s contact details, and can be used to inform customers of new updates or to contact them regarding feedback or reviews.
Its aim is to help improve the efficiency of your business by keeping organized records of your customers and their interactions with your company.
You can record these details without a CRM software but this would involve numerous documents and spreadsheets which can take forever to shift through and update (I know this from experience).
CRM softwares (see also, ‘What is Dispatch Software?‘) updates automatically and I have found it much easier to use, thus improving my efficiency.
Companies use CRM systems to help analyze the data for information regarding their customers. This information is later used to make better marketing choices for audiences and to provide a more personalized experience.
This is important as personalization can help improve email marketing (according to more than 20% of marketers) and it’s the top tactic used in email marketing.
As 80% of consumers are more likely to make a purchase after a personalized experience, this can be vital for boosting sales.
The information gathered by CRM softwares can also be used in training programs so companies can help their staff build more effective relationships with their customers.
They will understand their customers’ needs better and this in turn builds stronger company-customer relationships. This helps improve your business’s reputation and image by improving customer service and beyond.
Ultimately, customer relationship management is focused on organizing relationships between customers and the company.
It accumulates their data, processes implementation, then spits back statistics to help companies make customer specific decisions regarding marketing, service, and more.
This not only improves your customer’s experience but also your business’s chances of success with attracting new customers and retaining existing ones.
Studies have shown that increasing customer retention rates by 5% can lead to profits increasing by 25% to 95% so this again proves how CRM can help a company grow.
All this means that CRM is vital for helping companies grow by providing them with the data and analysis they need to be able to serve more customers efficiently and effectively.
Companies are less likely to make customer service mistakes, improve their reputation and company image, and overall provide a better service to customers both old and new.
As a result, the CRM software market has become the fastest growing in the world and is projected to reach $80 billion by 2025.
SCM VS CRM: What’s The Difference?
So, now you know what both SCM and CRM are in detail, and you’ve probably already begun drawing some comparisons of your own. If not, don’t worry – here are all the key differences between SCM and CRM I have highlighted for you.
What They Manage
First up, both SCM and CRM manage very different areas of a business.
Although both are centered around the management of a key part of a business and are integral for a company’s success, the softwares SCM and CRM use focus on different areas.
SCM stands for supply chain management and is concerned with the management of products and services.
This means that SCM softwares collects supply chain data and this is used for forecast sales so managers know how much raw materials they need to source, how many workers they need to employ, and so on.
The logistics involved also includes inventory checks, delivery tracking, sales locations, and more.
CRM, on the other hand, is centered around customer relationships. The software used in CRM collects customer data and information and this is used to optimize customer interactions so companies can communicate effectively with new and existing customers.
So, overall, SCM manages products and services, while CRM manages customer data and information. This means that SCM is a lot more backhanded than CRM, which is more front ended as it works with customers.
Their Relationship With Sales
Both CRM and SCM have a relationship with sales but in very different areas.
CRM is focused on increasing sales by improving marketing, brand reputation, and customer service. It uses customer information to provide statistics and customer profiles so managers can make better decisions when it comes to their marketing strategies.
This then boosts the success of their marketing and increases the likelihood of a customer making a purchase.
SCM, on the other hand, is all about executing those sales. Once CRM has done its job and a customer has made a purchase, the sales transfers over to SCM. SCM controls the production, delivery, and any returns related to the sale.
However, you can argue that SCM also helps drive sales by ensuring that the production and delivery of a product remains efficient, and so keeping customers happy when they receive a high quality product very quickly.
62% of US consumers believe that fast delivery is the most important part of a positive customer experience, so I believe both CRM and SCM have a relationship to sales but in different ways.
To sum it up, CRM is all about boosting sales while SCM focuses on executing them.
Another key difference between CRM and SCM is that they are made with two totally different key purposes!
CRM is all about trying to boost the revenue of a company by attracting more customers while retaining old ones.
It does this by focusing on customer relationships, managing their data and information to help companies have a better understanding of their audience.
This can help them make more informed decisions when it comes to marketing, serving as an important part of customer research and customer service.
Meanwhile, SCM has two main goals: boosting efficiency and lowering costs.
SCM has a lot of logistics behind it, and is all about managing processes by cutting out the fat and streamlining the production and delivery of products.
SCM simpflies areas of the supply chain so companies can afford to hire less labor, or source their raw materials from more affordable places while still maintaining a high level of quality in their products.
So, CRM and SCM have very different roles in a company with different aims and objectives.
SCM VS CRM: The Similarities
Before I wrap up, I just want to touch on the similarities between SCM and CRM.
Both obviously are very important to boosting a company’s success and without either, a business will not be able to be efficient. Both are management systems that use softwares and tools to great effect, and manage very important data and information to provide vital analytics.
So, both areas are definitely ones to pay close attention to when you are running your own business – no matter how big or small (see also ‘Best Procurement Software For Small Businesses‘).
And that is everything you need to know about SCM and CRM. Now that you understand how both work in detail, it’s very difficult to continue mixing the two up.
Once I understood how each one worked and what their purpose was, it was very easy to keep them separate in my mind.
Just remember what each one stands for (supply chain management, and customer relationship management) and their names become pretty self explanatory.
This way, you will always remember their differences – but also keep in mind their similarities, especially when it comes to how important both management systems are to the success of a company!