What is supply chain management?

Supply chain management refers to the management of the entire manufacturing process of a product or service -- beginning at the beginning with raw materials and until the delivery of the finished product to the customer. A business creates a network made up of its suppliers ("links" within the chain) that help move the product from sources of raw materials to companies that directly deal with the end-users.

What is the significance of supply chain management? Crucial?

Supply chain optimization techniques reduce the amount of time, cost, and waste during the production process. The industry standard is an automated supply chain that can retail sales can automatically send replenishment orders to the manufacturer. Retail shelves are then replenished almost as fast as products are sold. Another way to enhance the efficiency of the process is to study the information from suppliers and chain of supply partners to identify what improvements could be implemented.

Analyzing partner data by analyzing partner data, the CIO.com article 1 provides three scenarios in which the effective management of supply chains adds efficiency to the supply chain process:

• Recognizing potential issues. If a client purchases more products than the manufacturer are able to deliver then the buyer may complain that they received poor services. With the help of data analysis, companies might be able to predict the problem before the customer is dissatisfied.

• Dynamically optimizing prices. Seasonal products have short shelf lives. When they are finished with this season items are often discarded or sold at a significant discount. Hotels, airlines, and other businesses that sell non-perishable “products" typically adjust prices in a dynamic manner to meet the demand. Utilizing analytic software, similar forecasting methods can boost margins even for the hard goods.

• Improving the allocation of “available to promise” inventors. Analytical software tools assist in dynamically allocating the resources and plan activities based on sales forecast, the actual orders, and the promised supply of the raw material. Manufacturers can guarantee a product's delivery date once the order is placed greatly reducing orders that are not filled correctly.