Supply Chain Management Software

What is Supply Chain Management Software (SCM Software)

One of the most complex processes that involves collaborating and communicating between many parties including distributors, manufacturers, suppliers, and trading partners is called supply chain management.

Supply chain management software is often used to assist in the optimization and automation of activities which are required to control, plan, and execute the flow of products including acquiring raw materials, product distribution, production processes, and finally, delivery to the customer.

One of the main goals of supply chain management software is to efficiently and cost-effectively organize the flow of products. On the other hand, the level of supply chain management that’s required differs between companies. There are many variables which can influence the SCM software needs of a company including the length of the supply chain, type of industry, the complexity of the product, the size of operations, and the number of suppliers that are involved.

All of these factors result in uneven product space for an SCM software. For that reason, there are a number of different products available such as point solutions, industry-specific software, ERP suites, and large SCM software suites.

ERP Software vs. Supply Chain Software

Enterprise Resource Planning Software (aka ERP software) internally manages administrative functions by tying the operations of the back office and front office together and supporting the physical production of all finished goods as well as product planning. By contrast, supply chain management software manages incoming raw material data from external suppliers.

Most supply chain capabilities are included as components of ERP suites. Many of the features ERP provides are typically more generic than industry-specific software or supply chain point solutions. The point solutions of an SCM software focuses more on individual modules like inventory management or operations planning.

Buyer’s Guide for Supply Chain Management Software

Is the success of your company motivated by product sales? If so, you’re in a game that’s either lost or won depending on your ability to defeat expense and inefficiency in the supply chain. How are you doing so far? Are you doing well? Can you be able to tell the score? If all of these questions are a resounding “no,” you should consider purchasing some software tools to help you. Having the right SCM software is important for capturing and lowering costs related to bringing all of your products to the market.

How to Manage the Complexity of the Supply Chain

Supply chain management software holistically approaches maximizing cost reduction opportunities that involve getting products provisioned from the vendor to the customer. If you are managing a company that is selling products, you want to be able to reduce supply costs. This is something that guides all of your most complicated decisions such as who to buy from, when to buy, how to take delivery, where to send it, how to get it there, and wondering whether the customer has received your item. Once you start to multiply all of these questions times the volume of your transactions at each of your locations every day, it becomes a lot to track.

This only covers the strategic side of things. There’s more. When you’re considering the angle of your strategic business analysis, you now have a new set of questions pertaining to product lifecycle management, business partnership planning, and network optimization.

Getting all of your products processed from the supplier and sent on to the customer is an extremely complex process. This is where a strong industry of software developers comes in. They can provide different approaches and solutions to optimize a company’s supply chain.

Understanding SCM Functionality – A System’s Approach

System is a word that’s often applied to supply chain software and is never an appropriate term to use. Supply chain management software is broader than just an application or a module. Actually, you could say that most supply chain systems are a collection of applications and modules which include data that needs to be pulled together to provide a clearer picture of the supply chain.

So many sub-modules make up an entire supply chain management program including routing, delivery optimization planning, product lifecycle management, inventory control, warehouse management, receiving, forecasting sales, demand planning, vendor management, purchase order management, and approvals and requisition management.

Matching the Best Program to Suit Your Needs

Matching a program with the best software to suit a company’s needs is one of the biggest challenges in finding the right supply chain management. If you have a fleet of delivery vehicles, your needs are going to be vastly different from the company that’s outsourcing delivery. If you operate a large number of distribution centers, your needs are going to be different from a company that needs to lease warehouse space. This should make some sense. You don’t have to worry, though. Industries are coming up with new combinations of functionality to offer as well as new roles to serve every day.

There are many other variables to take into consideration beyond the issues related to the scope of needs and specialization when looking at the variety of SCM options to choose from. You might have noticed something earlier when you were reading the list of sub-modules. A majority of the modules that are listed represent functionality provided by an ERP or other existing information system which is not uncommon. Originating functionality may exist in another program according to the diversity of supply chain management. The main role of supply chain management software is to provide intelligence that will correlate information that originates in disparate programs.

Software Integration and Supply Chain Management

If you’ve ever managed the integration of multiple information systems, you know in its own right that it’s practically a science. Consideration is given to integrating supply chain management programs with particular ERP programs. That’s how most supply chain management software is designed. But by no means is the integration hands-off or automatic. It’s a complex process to link the systems of complexity required for an effective SCM. A careful approach executed by experienced technical resources and significant customization is often required. Unfortunately, these integrations happen very rarely. This kind of skill is something most companies are not likely to find with staff members in an experienced technical team. Hands-on assistance from a technology partner that specializes in integrations and implementations is required for executing supply chain management.

It is a daunting challenge to find the right SCM program. Software matching services such as the one that’s mentioned in this article can speed up your review process by matching you to appropriate options. Nonetheless, there’s still a lot to think about when purchasing supply chain management software. And there are several reasons you might not want to invest time and money looking for a new supply chain management program. In order to achieve the R, the I is always required when using the right program to deliver the strongest ROI. You likely have other initiatives, investments, or other projects that are vying for investment funds. Be sure you consider the multitude of benefits available to improve your supply chain management capabilities when making your decision.

Some of the benefits of key supply chain management software include eliminating delays leading to decreased customer satisfaction, identifying vendors who provide the most attractive rates, saving warehousing costs and maintaining just-in-time inventory, avoiding shortages and back-orders that could lead to lost business, optimizing warehousing so it requires fewer facilities or less space, providing real-time updates to customers on order provisioning status, utilizing historical data to feed future forecasting or projections, decreasing turnaround time, and reducing hold-ups on the production line.

Market Trends You Need to Understand

One of the first market trends you need to understand is increased demand for labor management. Companies are not only using SCM software to track their inventory. They are also using it to optimize labor in order to manage each employee more efficiently. These systems do a great job of creating a list of tasks a worker can complete in one trip.

The next market trend you need to understand is improving business intelligence. More companies these days want to know how their business spends money. Strategic sourcing capabilities, demand planning, and sophistication of planning will increase to meet the demand.

The third market trend you need to understand is eco-friendly logistics. Consumers are more environmentally conscious than ever before and are starting to think more about logistics when they purchase their products. The food industry is where this trend is most noticeable. Both restaurants and grocery stores are marketing and branding products under a “locally sourced” banner. Supplier transportation is one of the easiest places for a manufacturer to cut down on carbon output into the atmosphere. Buyers should try to locate suppliers based on green factors such as proximity.

The fourth market trend you need to understand is Software as a Service (SaaS). This is strictly cloud-based software that’s hosted by a vendor and is accessible through a web browser instead of being installed on a local computer. Most industries have adopted this type of service. While SCM technology has been slowly adopting this trend with Fishbowl, WISE, Geneva Systems, or Microsoft to develop systems that are web-based, more supply chain management software providers will eventually offer web-based applications. These applications will include the benefits of online purchasing integration and collaborative networks. Two of the biggest SaaS contenders include SAP and S2K.

The final market trend you need to understand is online purchases. Online retail sales have exploded over the last ten years along with the need for effective transportation, inventory, and warehousing control. More often than not, suppliers will take a product in manufacturing to a warehouse to store and ship directly to the consumer. This ensures an effective inventory path which is extremely important throughout the entire process.

SCM Software Benefits

There are also many benefits of supply management software to consider.

Increased efficiency is one such benefit. While SCM software helps to improve the efficiency of your business from inventory check-in, storage distribution, and transportation, making these processes more automated or electronic will decrease the time spent on these tasks, allowing you to send more products out quicker. Another thing to consider is reduced costs. Increased efficiency will reduce labor costs. Likewise, there are many intelligence features included that will identify cost waste and how to eliminate it.

The final benefit to consider is business intelligence and trend analysis. In addition to helping control costs, the intelligence features improve revenues by guiding the user towards meeting the demands of the market and identifying products that are performing strongly.

All of these supply chain solutions are pricey, but with proper implementation, can lead to a sizable return on your investment in about a year.