Top product quality, creative marketing, responsive customer support are nothing if the supply chain fails. 94% of the Fortune 1000 companies experienced supply chain challenges due to the COVID-19 pandemic, and in today’s global business disruption, sufficient supply chain management is the key to business survival. SCM applications help streamline the product’s trip to the customer and foresee and manage future failures.
What are Supply Chain Management Systems?
Supply chain management software systems help streamline and automate supply chains, i.e., all processes from raw materials procurement and product manufacturing to its delivery to the end customer. Moreover, it helps to plan and coordinate all these processes.
Originally SCM appeared as a strategy for boosting operations performance alongside cutting production and distribution costs. Today SCM software applications have the same purpose with one important add-on: they have become customer-centered. Besides saving money and producing more and better within the same timeframe, it cares about fulfilling customer expectations in the best possible way.
Commercial SCM solutions are available either as a part of ERP software or as stand-alone systems that communicate with the enterprise’s ERP system. There are also separate software tools providing a certain amount of SCM features. Custom supply chain management software development is a prevalent practice among enterprises, as each business is highly unique in its SCM processes and management requirements.
Basic types of SCM software
In the broadest sense, there are two major types of supply chain management software:
- SCE (supply chain execution)
- SCP (supply chain planning)
Supply chain planning software applications are responsible for planning production, establishing supplies, scheduling manufacturing operations, forecasting the demand, and developing various performance metrics to ensure financial cost and time efficiency. Implementing machine learning, artificial intelligence, and other advanced supply chain planning applications technologies has breakthrough data analysis and forecasting capabilities.
Supply chain execution applications help ensure delivery on a plan by being responsible for the purchase, project, and production processes. Acting as a single system, this type of supply chain management software interacts with the SCP application to match available capabilities with the planned requirements and produce a proper production plan.
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Supply Chain Planning Software Features
SCP tools perform a forward-looking role in coordinating assets for optimizing the product delivery from supplier to customer. A ‘product’ can be goods, services, or data. It is responsible for planning, constraints analysis, modeling potential scenarios, and forecasting the outcomes. Here are the major modules of SCP applications.
Demand Forecasting
Powerful analytics mechanisms of SCP tools help to anticipate the customers’ demand based on past data processing. This algorithm allows preventing stock shortages in demand peaks and overproduction when the market unexpectedly falls.
Supply Chain Collaboration
SCP software utilizes tools for the effective collaboration of different parties along the supply chain. Collaboration portals minimize communication issues between suppliers, manufacturers, and distributors by finding new fields for growth and resolving various issues.
Supply-Demand Planning
This unit is responsible for fulfilling customer demand without under- and over-stocking situations.
Production-Distribution Planning
SCP software also helps coordinate raw materials, inventory, and other resources to meet the product delivery schedule. It helps to adapt the production operations to the dynamic behavior of the consumption.
Customer Segmentation & Pricing
Customer segmentation with a segmental price-setting helps to maximize presence on the market, i.e., increase profit.
Strategic Network Design
SCP software helps define the appropriate supply, warehousing, and distribution infrastructure, produce distribution strategies, inventory planning, outsourcing operations, and much more.
SCE software Features
The supply chain involves many operations on every stage, and proper coordination between these stages relies on accurate data synchronization and exchange along the whole chain. This is what supply chain execution management software does. It contains five main components (but is not limited by this list).
Order Processing
It is one of the key SCM tools responsible for automating and streamlining the processes related to orders, such as:
- Sales order processing
- Order fulfillment
- Billing
- Order fulfillment
- Order returns, etc.
It speeds up processing by automating the data exchange, POs, and invoices generated and sent out.
Warehouse Management
This type of software is responsible for managing the operation of warehouse and distribution. Depending on the specific needs of the enterprise, it may control the following functions:
- Order picking
- Packing
- Receiving
- Product tracking
- Route planning
- Location management
- Shipping
Sourcing and Procurement
These applications help automate and manage the corporate sourcing and purchasing of various goods required for production and handling the business. These can be goods and suppliers, and different informational content like product catalogs, supplier directories, and other important information sources. There are also event management apps that help to manage events occurring between the manufacturer and various supply chain partners. Such an app informs all organizations connected within one chain about activities across all its links.
Manufacturing Management
Manufacturing management involves the automation of the following control areas:
- Production scheduling
- Resource allocation and status monitoring
- Process management
- Maintenance management
- Labor management
- Document flow
Transportation Management
The transportation system automates all freight activities across the enterprise, starting with inventory and materials transportation, and finishing with an order shipment. It allows planning logistics, optimizing routes, consolidating shipments, etc.
The benefits of SCM software
To sum up the importance of supply chain management software, here are the major benefits it brings:
- Transparent visibility: 62% of companies experience problems with supply chain visibility. Only 15% are entirely transparent with visibility on the production stage. This leads to order processing delays and other failures. SCM software helps to eliminate such issues.
- Lean inventory: SCM system provides manufacturing as many goods as needed to cover the current demand, no over- or underproduction, continuous product line optimization.
- Report accuracy: automated data flow and data processing significantly accelerate report generation, minimizing the risk of data input mistakes.
- Faster operation: SCM software minimizes delays in production, logistic errors, and other uncertainties.
- Higher productivity: SCM software improves communication between all departments, vendors, shipping companies, and suppliers, increasing the productivity of employees.
- Liability and risk: SCM systems help to foresee potential risks, giving the ability to react timely and minimize the impact.
- Improved supplier relationships: SCM tools help analyze relationships with suppliers and detect any problems with deliveries, goods pricing, distribution, etc.
Intelligent SCM software undertakes many routine tasks to support and maintain the supply chain, giving employees the ability to add more value to the business. It helps to hit commercial targets with minimum risks and maximum customer satisfaction. Isn’t this what every company wants?
