What is Supply Chain Management?
Supply chain management or SCM is the management, control, and modification of the flow of goods and services as they go through the supply chain, from the raw materials into the final products. Supply chains cover everything and everyone from the production process to product development and to the information systems required to direct these activities.
In another sense, supply chain management is the active streamlining of the supply-side’s activities so as to maximize customer value, customer satisfaction and gain a competitive advantage in the marketplace.
The development of supply chain management system is based on the notion that most, if not every, products that appear on the marketplace are the results of various efforts from organizations, and individuals that compose the entire supply chain.
SCM is also a representative of an effort by suppliers to develop and implement supply chains that would optimize the efficiency and economical as much as possible.
In SCM, the supply chain manager strives to control and coordinate the fine-tuning of five aspects of the whole supply process:
- The plan or strategy
- The source (of raw materials or services)
- Manufacturing (focused on productivity and efficiency)
- Delivery and logistics
- The return system (for defective or unwanted products).
In theory, it’s fairly straightforward like that, but in practice, it’s noticeably more complex.
How Does An SCM Software Work?
Generally, SCM software attempts to integrate the control system or connect the production, shipment, and distribution procedure of a product or service. By utilizing the SCM software, organizations are able to cut down excess costs and products can be delivered to the customers quicker.
That objective is attained by keeping a tighter leash on internal inventories number and production process information, distribution and delivery, sales, finance and the inventories of cooperative vendors.
These key elements rule global supply chain management. Let’s have a brush over on some of these core components that make up the SCM software.
The movement or flow of the product plays a crucial role in developing an SCM system. Movement of the product needs to be managed well to achieve the optimization goal of every business, which includes minimizing cost, time, and resources, at the same time maximize efficiency, profit, and customers’ satisfaction. Timely arrival of a product from one node to another, strictly quality checking at each point and quick delivery are one of the most important components to result in a satisfied customer. SCM must help to decide on the most optimal solution for the process of product movement.
Information Sharing and Communication:
Inadequate communication can lead to misunderstanding and disaster in every aspect of a business. Therefore, SCM software should also be designed in such a way that it allows an appropriate flow of information that can be effectively communicated from one link to another while the supply chain is running.
Timely Order to Delivery:
From the very beginning of the supply chain management process, which usually is the placement of orders, to the receiving of the final product, the success of a business is solely depending on how satisfied the customers are when they receive their goods and services. That is how fast their needs are fulfilled and the quality of the service. Right from the ordering activity to manufacturing, transportation, receiving, quality checks, warehousing and until delivery to the end consumer, SCM software must be able to planned and carried out the process appropriately.
After delivery assessment:
Performance management is another vital function of any supply chain management system to perform if gaining long term success and continuous business growth is what an organization is searching for. Supply chain management model should have a system to appropriately conduct performance assessment, quality checks from time to time so that the service after delivery is well taken care of.
Finally, supply chain management cannot be completed if lack of the managing of the organization’s finance. Accounts payable, inventory management, billing accuracies, possibilities of sharing costs across different nodes are the few key finance responsibilities.
Common Features of A Supply Chain Management Software
If you are in the market for a SCM software for your company, there are a few things you might want to be acknowledged about. This software will have different features, functionality, as well as pricing, scale, and use intent across vendors. However, most SCM software will revolve around the following areas of functions.
As it is called, these types of SCM software is used to track, modifying goods and materials, which include stock picking and shelving, as well as shipping and receiving, within a warehouse or distribution center. Items will either be received, quality checked, stored, or shifted out to a customer or to another link in the supply chain. SCM software in warehousing is nowadays well-known for its integration with innovations such as the Internet of Things or Robotics machinery which further boost the efficiency of them.
Highly required by customer demands, seasonal oscillations, promotional strategies, and regular replenishment schedules, SCM software for inventories control are vital for a successful business. They are needed to keep adequate, and an appropriate amount of items stocked at the right places (warehouse, distribution center, store) in a supply chain to cut down overhead cost and enable uninterrupted delivery of satisfaction. These activities are simplified by the use of barcodes, serial numbers, or even RFID (radio frequency identification) tags.
Automate and manage customers’ orders from suppliers, including placement, payment, and receipt. SCM software by the use of procurement is usually integrated with financial management systems and log expenses to create a clear audit trail and a baseline for easy financial tracking, and future cycles.
Demand forecasting is one of the most fascinating applications of supply chain management software. The solutions of SCM is to based on sales history, operational information, and customer variables to help anticipate fluctuations in supply and demand of not only their customers but also their vendors and their own companies.
The functionality is sometimes referred to as supplier relationship management (SRM) which assist companies monitor, maintain and curate their relationships with suppliers. The help can be either performance and obligation tracking, risk measurement and management, or supplier segmentation, and other capabilities
Order fulfillment and returns:
The order fulfillment process includes all the steps companies must undertake from the moment they receive an order of a consumer until the items land in customers’ hands. Order fulfillment tools of SCM software help supply chain centers streamline the fulfillment process from inquiry to quote, invoice, shipment, and delivery.
Like other innovation technologies, SCM softwares create a huge advatage for companies using them. However, if you jump right to the act of purchasing one without knowing which functions and features are needed to your company, then you are in the wrong.
Therefore, you can either buy an on-the-shelf software, which should be compatible with you, or choose a customized solution to perfectly fit all your requirements.
At EnvZone, we are happy to tailor our product to meet every needs of our customer and help them optimize their business. Contact us and find out more about your potential!