What is Supply Chain Management and Why is it important?

What is Supply Chain Management(SCM)?

A supply chain management system is a set of software solutions that manages and monitors the flow of goods, data, and finances as a product or service moves from the point of origin to its final destination. Supply chain activities include sourcing , product life cycle management (PLM) , supply chain planning (SCP) , logistics and order management. A complete, end-to-end supply chain management system includes material handling and software packages for all parties working together to create the product, fulfill orders, and track information, including suppliers, manufacturers, wholesalers, transportation providers, logistics providers and retailers.

Supply chain management (SCM) consists of tracking materials, information and finances throughout the process from supplier to manufacturer, wholesaler, retailer, and consumer. Supply chain management involves the coordination and integration of these flows, both within the same company and between different companies. The primary objective of any effective supply chain management system is said to be inventory reduction (assuming products are available when needed).

SCM refers to the range of IT tools that are designed to control business processes , perform operations, and manage supplier relationships. While the functionality of these systems varies greatly, there are common features including fulfillment of purchase orders, transportation, inventory and warehouse management, and the supplier of supply.

Importance of Supply Chain Management on business

The Importance of supply chain management on business is notorious , it can even be classified as exponential. Two of the main aspects where this impact can be clearly seen include:

Increase in customer service: Supply chain management has a direct impact on Customer Service, making sure to deliver the right quantity and product at the right time. Furthermore, these products have to be available in the location that customers have specified, therefore customers must also receive quality in terms of after-sales support.

Cash flow is increased: Supply chain management also increases cash flow since if product delivery can be accelerated, benefits are also received quickly. Companies highly value supply chain management as the use of large fixed assets such as plants, warehouses, as well as transport vehicles is reduced throughout the operation.

It is also important to mention that the management of the supply chain helps to simplify virtually everything from day-to-day products to the flows of unexpected natural disasters. By using the right tools and management techniques , companies gain the ability to correctly diagnose problems, while avoiding interruptions and in turn determining the best way to move products more efficiently around the world. in the event of a crisis. All this in the end is also related to the logistics of the company and therefore you should never lose sight of it.

We must always bear in mind that chain management is made up of carrying out an exhaustive and detailed control over all the parts that make it up, from manufacturing in our company such as road transport, management in ports , etc. Many supply chain programs include forecasting, which helps companies manage fluctuations in supply and demand by using complex algorithms and analytics to assess the consumption of buyer stories. This software can be an invaluable tool in maximizing production efficiency and planning for the future.