LESSON 5: ASSESSMENT

1. What is meant by supply chain management?

The managing of the flow of goods and services is referred to as supply chain
management, and it encompasses all procedures that turn raw materials into finished
goods. It entails a company's supply-side activities being actively optimized in order to
increase customer value and obtain a competitive edge in the marketplace. SCM refers to
suppliers' effort to develop and operate supply chains that are as efficient and cost-
effective as possible. Supply chains encompass everything from manufacturing to
product development, as well as the information systems required to coordinate these
activities.
SCM aims to link or control the production, shipment, and distribution of a
product from a central location. Companies can reduce extra expenses and deliver items
to customers faster by optimizing the supply chain. Internal inventories, internal
manufacturing, distribution, sales, and business vendor stocks must be under tighter
supervision. Improvements in productivity and efficiency have a direct and long-term
influence on a company's bottom line. Supply chain management keeps businesses out of
the news and out of expensive recalls and lawsuits.

2. Why is profit margin is important?

Profit margin is one of the most often used profitability ratios to determine how
profitable a firm or business activity is. It denotes the percentage of sales that have turned
in profits. The profit margin is calculated as the difference between a company's profit
(sales minus all expenses) and its revenue. The profit margin ratio compares profit to
sales and indicates how well a company's finances are managed in general. It's always
given in percentages. Profit margin is very important because a free-market economy
based on capitalism relies heavily on it. In order to attract investors, the profit margin
must be sufficient when compared to similar enterprises. In a market economy, profit
margins contribute to influence supply. Companies will not offer a product or service that
 does not generate revenue. These profit margins may also aid firms in developing product
or service pricing strategies. Companies set their pricing based on the expenses of
producing their goods as well as the amount of profit they want to make.

3. Is higher profit margin better? Why?

Profit Margin is a measure of your company's profitability, stability, and

investment value. It may also be used to see how you stack up against the competition
and determine whether your company strategy is viable. The higher the Profit Margin
is, the better. Higher profit margin makes more money for the company because it can
indicate how well the company converts its sales into profits. The PM ratio also shows
how much money might be losing on business-related charges and expenses. It can assist
analysts in determining if a company should focus on cutting costs.

4. How does forecasting helps a business?

Forecasting is a strategy that uses previous data as inputs to produce well-

informed predictions about the direction of future trends. Forecasting is used by
businesses to determine how to allocate their budgets or plan for anticipated expenditure
in the future. A forecast may have a big impact on whether a firm succeeds or fails. An
accurate forecast keeps prices low by optimizing a firm operation - cash flow, production,
workforce, and financial management - at the most basic level. It aids in reducing market
uncertainty and anticipating change, as well as improving internal communication and
communication between a company and its consumers. It also aids organizations in
gaining a better understanding of the industry. Furthermore, investors who are
considering investing in a firm would be enticed by a promising forecast.

5. What is the importance of forecasting?

 Businesses benefit from forecasting because it allows them to make educated
business decisions and establish data-driven strategies. Financial and operational
decisions are based on current market conditions as well as forecasts for the future. Past
data is compiled and examined to uncover patterns, which are then utilized to forecast
future trends and changes. Forecasting enables your business to be proactive rather than
reactive. Forecasting helps the company set reasonable and measurable goals and plans.
Having forecasted insights into current business functionality along with later predicted
trends and combining this information into meaningful insights makes for a better
allocated and estimated budget. Having insight into not only current data but projections
of what could happen in the future helps businesses to make adjustments to business
strategy and alter current operations in order to change their outcome.