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Supply Chain Management (SCM) Software, Process, and Roles
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Toluwani Folayan
November 14, 2023
Supply chain management (SCM) plays a crucial role in supporting various aspects of a company's operations, including product development, sourcing, production, and logistics, while also streamlining tasks. It enhances the smooth movement of both physical goods and essential information. Without SCM, businesses would struggle to efficiently coordinate their processes, manage inventory, meet customer demands, and ensure cost-effective operations, leading to potential disruptions in the supply chain.
That's why it's essential to oversee supply chain management closely, and it all begins with grasping the processes, understanding how SCM operates, and recognizing its roles. This article will discuss these highlighted topics and provide insights into 10 essential types of SCM software.
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Outline
What is Supply Chain Management (SCM)?
The Supply Chain Management Process
How does Supply Chain Management Software Work?
Supply Chain Management Roles
10 SCM Software Types
What is Supply Chain Management (SCM)?
Supply chain management (SCM) involves the strategic planning, efficient implementation, and precise control of supply chain operations to meet customer demands. It encompasses the entire journey of raw materials, work-in-process inventory, and finished goods, from their origin to the point of consumption. First introduced by British logistician Keith Oliver in a 1982 Financial Times interview, SCM has since seen various interpretations. In essence, SCM can be defined as the comprehensive oversight of the flow of goods and services, spanning from raw materials to the final products.
It is the systematic coordination of all processes, activities, and resources involved in planning, sourcing, making, delivering, and returning goods and services to satisfy customer requirements efficiently, from the point of origin to the point of consumption.
What is a SCM system?
Supply chain management (SCM) software is a computer-based program or system created to help firms manage and optimize their supply chain activities. It offers a collection of integrated tools and functions that aid in streamlining and coordinating the processes involved in the flow of commodities, information, and money across the supply chain network.
Supply chain management software's main goal is to assist organizations in efficiently planning, executing, monitoring, and controlling the many phases and elements of the supply chain. It encompasses a variety of functions, such as:
- Planning
- Inventory management
- Sourcing
- Procurement
- Production coordination
- Logistics and transportation
- Warehouse management
- Order management
- Data analytics and reporting
The Supply Chain Management Process
How does Supply Chain Management Software Work?
Supply Chain Management (SCM) software is like a conductor orchestrating the flow of goods and information in a business's supply chain. It starts by collecting data from various sources, such as sales orders, inventory levels, and supplier information. It centralizes it into a unified platform, ensuring that everyone involved in the supply chain has access to the same, up-to-date information. With this data at hand, SCM software uses advanced algorithms and historical data to predict future product demand. This demand forecasting guides businesses in planning production, procurement, and inventory management, ensuring they have the right amount of materials and products on hand, avoiding both overstock and stockouts. The software also streamlines inventory management by automating restocking processes, ensuring that orders are triggered when inventory falls below a specified threshold, thus maintaining an optimal stock balance.
Effective Supplier Relationship Management (SRM) is pivotal in this process, as it ensures a smooth flow of materials. Therefore, SCM software facilitates this by monitoring supplier performance, managing contracts, and enabling efficient communication. Think of it as nurturing reliable relationships with suppliers who consistently deliver what is needed when it's needed. These strong supplier relationships are essential for the smooth operation of the supply chain.
The software then optimizes production schedules based on machine capacities, labor availability, and customer demand, ensuring production efficiency and reducing wastage. This efficient production planning ensures that products are manufactured in the right quantities and at the right time, aligning with demand and minimizing unnecessary costs.
In the realm of logistics and transportation management, SCM software acts much like a GPS for products in the supply chain. It helps choose the best routes and carriers for cost-effective and timely deliveries. This ensures that products reach their intended destinations efficiently and without unnecessary delays.
Lastly, the software streamlines order processing, allocation, and shipment tracking, ensuring efficient order fulfillment and customer satisfaction. In summary, SCM software also simplifies and enhances supply chain operations by centralizing data, forecasting demand, managing inventory, optimizing supplier relationships, efficiently planning production, selecting the best logistics routes, and ensuring precise order processing. This integrated approach makes the entire process more efficient, cost-effective and customer-focused.
The 5 Phases of Supply Chain Management
1. Planning:
The SCM process begins with planning. This is where a company carefully maps out what it needs for production and delivery. It involves predicting future demands, considering the materials required, understanding equipment capabilities, and assessing staffing needs. Think of it as creating a comprehensive blueprint to ensure all necessary elements are in place at the right time. Large businesses often use specialized software called Enterprise Resource Planning (ERP) to help in this planning.
2. Sourcing:
Sourcing is all about securing the necessary materials for production. It requires developing strong relationships with suppliers to ensure a reliable supply. This entails verifying that materials meet specific production requirements, negotiating fair prices, and ensuring suppliers can respond promptly to unexpected needs. Sourcing is like building a trustworthy network of suppliers who consistently provide the right materials when needed.
3. Manufacturing:
The manufacturing phase is where the planned products are actually produced. It involves various steps, such as assembly, testing, inspection, and packaging. During this phase, close attention is paid to the production process to prevent deviations from the initial plans. If, for instance, more raw materials are used than initially planned due to inadequate employee training, the company must address this issue to ensure efficient production.
4. Delivery:
Delivery is the step where the finished products are transported to customers. Effective SCM ensures that the products are delivered efficiently, cost-effectively, and in a timely manner. It's like ensuring that there are multiple routes available for delivery, so even if one becomes temporarily inaccessible due to unforeseen events, the process can continue smoothly.
5. Returns:
The final stage of SCM involves managing product returns and supporting customers. This phase is often referred to as reverse logistics. It's essential for a company to have the capability to receive returned products and process refunds accurately. Returns can occur for various reasons, including product defects or customer dissatisfaction. The goal here is to address the root causes of customer returns to prevent recurring issues and continuously improve the process.
Supply Chain Management Roles
1. Supply Chain Manager:
The Supply Chain Manager is pivotal in orchestrating all supply chain activities. They oversee the entire supply chain, from planning and procurement to production, logistics, and customer service. Their primary objective is to ensure the seamless flow of products, meeting customer demand while optimizing costs. This role involves strategic decision-making, setting objectives, and coordinating various teams within the supply chain.
2. Demand Planner:
Demand Planners are experts in forecasting future customer demand. They analyze historical sales, data, and market trends and collaborate closely with sales and marketing teams to create accurate demand forecasts. Their work ensures that companies have the right amount of inventory on hand to meet customer needs without overstocking or experiencing stockouts.
3. Inventory Manager:
Inventory Managers are responsible for maintaining the right balance of stock levels. They make critical decisions regarding reorder points, safety stock, and inventory turnover. Their goal is to optimize inventory management, ensuring products are available when needed while keeping carrying costs in check.
4. Purchasing Manager:
Purchasing Managers are responsible for procuring raw materials, components, and finished products from suppliers. They negotiate contracts, assess supplier performance, and ensure that procurement is timely, cost-effective, and aligned with the company's requirements.
5. Supplier Relationship Manager:
Supplier Relationship Managers are focused on building and maintaining strong relationships with suppliers. They monitor supplier performance, address any issues that arise, and ensure a consistent supply of materials. Hence, effective communication and collaboration with suppliers are fundamental in this role.
6. Production Planner:
Production Planners optimize the manufacturing process. They create production schedules, considering machine capacity, labor availability, and customer demand. Their primary objective is to ensure efficient production, minimize waste, and adhere to delivery schedules.
7. Logistics Manager:
Logistics Managers oversee transportation, warehousing, and distribution processes within the supply chain. They manage the movement of products to ensure efficient and cost-effective delivery.
8. Distribution Manager:
Distribution Managers are responsible for the final stages of product delivery. They oversee distribution channels, manage inventory at distribution centers, and ensure products reach customers safely and on time.
9. Order Fulfillment Specialist:
Order Fulfillment Specialists focus on the accurate and timely processing of customer orders. Their role is to ensure that orders are picked, packed, and shipped correctly, contributing to customer satisfaction.
10. Quality Control Manager:
Quality Control Managers maintain product quality by developing quality control processes, conducting inspections, and implementing measures to address defects or deviations from quality standards.
10 SCM Software Types
Here are 10 essential SCM software types you need to know if you want to enhance the smooth movement of both physical goods and essential information using SCM software:
1. Order Processing software
Order processing software is the engine that drives customer transactions within the supply chain. It automates the entire order lifecycle, from initial order entry to final fulfillment, ensuring accuracy and efficiency in order processing.
2. Scheduling Software:
Scheduling software plans and organizes production and delivery schedules. It optimizes resource allocation, including machinery and labor, to meet customer demand and production targets efficiently.
3. Inventory Management Software:
Inventory management software tracks and controls inventory levels in real-time. It manages stock levels, automates restocking processes, and prevents overstocking or stockout situations.
4. Truck Dispatching Software:
Truck dispatching software assists in managing the transportation of goods. It assigns vehicles to shipments, optimizes routes, and ensures timely deliveries.
5. Shipment Monitoring Software:
Shipment monitoring software provides real-time tracking and monitoring of goods in transit. It offers visibility into the location and condition of products to ensure on-time and secure delivery.
6. Business Intelligence Software:
Business intelligence software collects and analyzes supply chain data, providing insights into performance metrics and areas for improvement. It supports informed decision-making by transforming data into actionable insights.
7. Demand Forecasting Software:
Demand forecasting software uses historical data and predictive algorithms to forecast future customer demand. It helps in creating accurate demand forecasts for production and inventory planning.
8. Client Support Software:
Client support software manages customer interactions and inquiries about orders, deliveries, and product information. It ensures timely and effective communication with customers, enhancing their experience.
9. Business Intelligence (Repeated):
Business intelligence software continuously collects, analyzes, and visualizes supply chain data to offer insights and inform data-driven decisions across various processes.
10. Customer and Supplier Management Software:
Customer and supplier management software centralizes information about customers and suppliers. It streamlines communication, ensuring both parties access relevant information, fostering strong relationships and collaboration within the supply chain.
Conclusion
A supply chain begins with a company ordering the raw materials or parts it needs from its suppliers and ends when the finished product or service reaches the customer. In supply chain management, each step in this process offers a chance to improve efficiency and create more value. This is why a well-executed SCM program can boost a company's income, lower its expenses, and strengthen its overall financial health.
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