A supply chain is a concept going beyond a distribution channel. The latter one is limited to the delivery of a finished product from its manufacturer to the final customer, while a supply chain is using it as one of its many other segments starting from raw material sourcing. It encompasses not only resources and transportation, but also any other activities, entities and even technology used for a product development into a single network. To make it work efficiently, proper management is required.
Supply Chain Management Goals
Supply chain management, also referred to as SCM is tracking the flow of the three components of a supply chain which are materials, finances and information while they are moving among resource suppliers, product manufacturers, wholesalers as well as retailers before they can reach customers.
SCM is making a business more competitive in various ways. It reduces manufacturing costs by guaranteeing on-time material delivery for production and preventing resource shortages, using the reorder frequency data for supply shortage prediction and efficient future planning.
Another essential goal of SCM is minimizing the costs of warehousing by decreasing the time of finished goods delivery to the retailers.
Furthermore, SCM is focused on providing customers with the best experience by executing orders with precision regarding time, destination and quantity.
How Is Supply Chain Management Functioning?
SCM starts with demand forecasting, which determines all of the necessary business operations. Manufacturing goods according to the current demand is a must for any company to generate profits. At the same time, forecasting for resource supply is a crucial step to make it happen and avoid any losses related to production disruption because of material shortages as well as unnecessary costs of transportation and warehousing of an excessive amount of resources.
With thorough planning, SCM moves to acquiring row materials required for product manufacturing, taking care of their on-schedule delivery through intense collaboration among all of the parties involved in the process.
In addition to resource management, logistics and transportation, SCM also maintains smooth information flow among all of the parts of a supply chain.
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Modern Technologies for Supply Chain Management
SCM is one of the most complex parts of a business, dealing with a large number of processes and entities. Since a supply chain acts like a network of blood vessels connecting all of the segments within and outside an organization, its management is a highly responsible task.
More and more enterprises of different sizes are adapting modern ERP systems with advanced functionality for SRM. Such systems are enforcing a flawless data exchange and transparency for business activities. The most up-to-date ones, such as Microsoft Dynamics 365 are also equipped into Artificial Intelligence for efficient forecasting and IoT Intelligence for better asset management and production.