Supply Chain Management
Supply chain management is the handling of the entire production flow of goods or services—starting from the raw components to delivering the final product to consumers. A company creates a network of suppliers that move the product from raw materials suppliers to organizations that deal directly with users.
Supply chain management important.
Effective supply chain management systems minimize cost, waste and time in the production cycle. The industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers. Retailers can then restock shelves almost as quickly as they sell products. One way to further improve on this process is to analyze the data from supply chain partners to see where to improve further.
By analyzing partner data, CIO identifies three scenarios where effective supply chain management increases value to the supply chain cycle:1
Identifying potential problems
When a customer orders more products than the manufacturer can deliver, the buyer can complain of poor service. Through data analysis, manufacturers might be able to anticipate the shortage before the buyer is disappointed.
Optimizing price dynamically
Seasonal products have a limited shelf life. At the end of the season, retailers typically scrap these products or sell them at deep discounts. Airlines, hotels and others with perishable “products” typically adjust prices dynamically to meet demand. By using analytic software, similar forecasting techniques can improve margins, even for hard goods.
Improving the allocation of “available to promise” inventory
Analytical software tools help to dynamically allocate resources and schedule work based on the sales forecast, actual orders and promised delivery of raw materials. Manufacturers can confirm a product delivery date when buyers place orders—significantly reducing incorrectly-filled orders.