What is Supply Chain Management? How does it work?

Supply chain management is the process of managing and coordinating activities related to the production, transportation, storage, and distribution of goods. This is an important job due to the ability to optimize the process of providing goods and services to customers, thereby bringing the highest profit value to the business.

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What is Supply Chain Management?

Supply Chain Management, also abbreviated as SCM, is a job related to the production, transportation, storage, and distribution of goods from the source of supply to customers. The objects within the scope of management will include suppliers, manufacturers, distributors, retailers, and customers.

Supply Chain Management is an extremely important job for businesses because it optimizes the process of supplying goods and services to customers. At the same time, it creates the highest profit level for businesses and stakeholders.

That is why this is an extremely difficult job, requiring the combination and harmony of many different components to achieve the desired goal.

How does Supply Chain Management work?

Supply Chain Management operates by centrally controlling or linking the production, transportation, and distribution of products. This process is relatively complicated because it involves many fields as well as the current market situation.

Hence, to make it easier for you to understand will be the simple steps by which an SCM works:

• System planning: The stage of planning, checking, and predicting market supply and demand factors from which to build distribution and production strategies. This is also the stage where inventory management is needed to balance and limit risks in the production and business process.
• Supply management: After successful initial planning, we will then proceed to select input sources for production to both ensure product quality and optimize investment costs. invest to get the highest profit.
• Production: This is the most important stage of SCM because it directly creates products that reach customers and thereby earn profits. This is also the stage that is significantly influenced by previous supply management.
• Distribution: The final stage in SCM is when manufactured products are delivered to customers. During this stage, it is necessary to ensure there is an order plan, delivery, and return process as well as a solution. resolve other arising issues.

Why is Supply Chain Management important?

As mentioned before, Supply Chain Management is a job that creates great value for businesses, production units, and customers. Accordingly, this work helps achieve great goals such as:

• Helps businesses grasp market trends and thereby establish better business strategies.
• Helps manufacturing units control the production process, significantly limiting product recalls.
• Helps optimize every stage in the supply process from production until the product reaches the customer.
• Help customers receive better quality products or services in the most optimal time.
• Helps detect problems and errors that may occur in the supply process to provide the most appropriate solution.

If you also want to learn more about other financial information, please take a look at: What is a Central Bank, Who is JPMorgan Chase,…

Can AI be applied to Supply Chain Management?

If you are wondering whether a job as difficult and requiring high precision as Supply Chain Management can be applied to AI? The answer we give you is definitely yes and AI is gradually becoming an indispensable part of this field.

With AI tools, businesses can simplify the process of identifying market trends, planning optimal production processes,… and more. Some typical applications include Logility, IOTA, SAP SCM,…

However, AI still has certain disadvantages when compared to humans, which are the basis for further exploitation and development in the future.

Conclusion

Here is all the most comprehensive and easy-to-understand content that we can share with you on the topic of Supply Chain Management. Thank you for taking the time to follow up and and see you again in future content from AZcoin.