Supply chain management is an approach used by firms to ensure that their business can be highly effective, and profitable and that operations run smoothly. This involves managing the movement of raw materials inwards and finished goods outwards. Logistics is a key component of this. It also involves managing the flow of products between companies, which can involve the movement of products between a manufacturer, a wholesaler, and a retailer. Supply chain management is therefore the integration of these flows between companies. Several innovative techniques can be used to optimize supply chain operations, particularly given recent advances in information technology. The function of logistics is known as activities that are related to the flow of products between companies, such as the transportation and warehousing of goods. Activities that take place within companies, such as inventory management and materials handling, are not considered to be logistical activities but part of the supply chain. The level of interest in supply chain management has risen quite dramatically over the last few years. This is partly due to advances in information technology, which have enabled closer integration of the supply chain. As well as increasing competition between companies, on both a national and an international level, has led to an increasing emphasis on the need for companies to concentrate on their core competencies, and to look to outside suppliers to provide other goods and services. This has led to the increased use of external suppliers.