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Supply chain management (SCM) is among the most complex and vast industries. Supply chain processes range from predictive analytics and demand sensing to route planning and truck dispatching. Having such a wide range of tasks, specialists have to rely on software solutions to automate and simplify the procedures. Meanwhile, numerous businesses are still recovering from the disruptions brought by the COVID-19 pandemic.
In the abundance of supply chain systems on the market, organizations may struggle to find the best one for their unique needs and customer base. Should you choose off-the-shelf supply chain management apps or hire software product development services? While most available solutions can be tailored to your requirements, a dedicated software team can build a perfectly suitable tool from scratch.
In this article, we will discuss the complexity of the supply chain ecosystem, list the most integral types of SCM software, and discuss how to choose the right one for you.
Before we dive into the elements of supply chain management, let’s identify what SCM is. Supply chain management (SCM) is the process of managing the flow of goods and services, from the procurement of raw materials all the way to delivering the final product to the customer. A discipline that encompasses a wide range of activities, supply chain management includes storage, inventory, production, logistics, and data analytics.
Supply chain management is a highly complex process involving multiple departments, employees, and steps to execute properly.
The process begins with supply chain planning, or assessing future demands and creating an actionable plan to cover customers’ needs. This step is contingent on performing comprehensive market research and analytics to build accurate forecasts.
Based on the prepared strategy, you can begin to select supplies and purchase the amount of materials sufficient to complete the planned production. Generally described as procurement, this stage is about building and maintaining long-lasting business relationships with vendors.
Once all the necessary materials are acquired, you can move to manufacturing, the process of transforming raw materials into a new product. You have to make sure you have the right equipment, infrastructure, and human talent to follow through with the entire process.
Production is followed by logistics, a process of distributing the created goods and services. From transportation management and cargo handling to delivering products, logistics is a major part of the supply chain ecosystem.
Inventory management is another integral part of production and includes controlling available stock throughout the entire supply chain.
Finally, data analytics allows organizations to identify weaknesses in the supply chain and improve performance using valuable insights.
Often confused with supply chain management, operations management (OM) is concerned with what happens inside the company. While SCM solutions deal with suppliers, distributors, warehouses, and customers, OM is more focused on maximizing profits. By implementing various business practices, OM specialists strive to increase the efficiency and subsequent profitability of the company.
However, both supply chain and operations managers have some overlapping duties such as budget planning and auditing, cost management, inventory management, and demand forecasting. Essentially, these specialists have similar responsibilities but in different environments. While SCM optimizes the flow of materials and products from one point to another, OM develops policies to streamline manufacturing and improve efficiency within the organization.
The COVID-19 pandemic has demonstrated how damaging disruptions can be to a business. So much so that some companies are still recovering from the losses. That’s why it’s imperative to shift your focus to making the supply chain more resilient to internal and external factors. A supply chain is resilient when it can quickly and painlessly adapt to the changing environment and mitigate the risks.
By discovering weak spots and solving them, companies can increase the resilience of their supply chains and the company as a whole. Advanced data analysis is also a contributor to your strength and flexibility. Utilize various supply chain management software solutions to uncover opportunities for growth and patch all the existing and anticipated vulnerabilities.
Supply chain management fulfills an array of functions, from planning to analytics. In this section, we will focus on the most crucial roles that SCM experts carry in the organization.
The supply chain planning stage revolves around gaining insights into the market and forecasting future customer demand. By collecting and analyzing large volumes of real-time data from various sources, companies can accurately predict how trends will evolve in the foreseeable future. Since trends change extremely quickly nowadays, demand sensing can mostly be considered for short-term predictions.
Further, demand planning is then segmented by AI-powered supply chain management software. Segmentation allows experts to fine-tune their forecasting abilities and optimize predictions for specific products, customers, and channels. Given these findings, you can even run simulations to see how various demand scenarios would unfold under different circumstances.
The next stage is the actual pre-production planning, encompassing the assessment of required resources. From raw materials, equipment, and storage to human talent and know-how, this involves a wide array of resources that you need to allocate and procure to meet customer needs.
Ultimately, the planning phase allows businesses to make predictions about market behavior, enhance their capacity utilization, optimize production, and ensure customer satisfaction early in the pipeline.
Procurement is a stage that helps organizations acquire the materials needed to produce goods. While a lot goes into this, the first step is so-called eSourcing, a collection of digital tools aimed at optimizing processes. Using a procurement management system, you can create an electronic questionnaire and a request for quotation to each vendor prospect. Using the data they upload, managers can make informed decisions.
Aside from automating data collection, eSourcing supply chain management software can also simplify the sorting part. They analyze the keywords from the received information, extract the essential data, verify the vendor’s regulatory compliance, compare prices, and summarize results. The shortlisted suppliers are then contacted with more details about the requirements and invited to tender forms.
Tender works as an auction where vendors publicly submit their proposals which usually makes the price lower to outbid the competition. Once suppliers are chosen, procurement apps gather and store information about them and notify you whenever an action is required. Moreover, suppliers’ performances are analyzed to identify their accuracy, price, and quality.
Manufacturing is the production of goods using equipment, tools, machinery, and labor. To automate manufacturing processes, you can rely on various supply chain management tools. Production planning solutions help organizations create orders and distribute them among workstations, resources, and employees to eliminate delays and inefficiencies.
Supply chain management applications can also streamline documentation and automatically create and update the bill of materials (BOM) to ensure accountability and transparency. Additionally, some advanced tools utilize computer vision to verify the quality of production. Such systems scan goods to identify defects and damages to eliminate subpar products before they land in the store.
Manufacturing solutions can also aid in equipment quality control and maintenance. They rely on supply chain industry trends like IoT to monitor the performance of every piece of machinery and send updates to the cloud. Furthermore, experts utilize collected data to make accurate predictions about systems’ health statuses. Predicting potential malfunctions and failures allows businesses to take proactive action, which reduces downtime and saves repair expenses.
Inventory management is another pivotal element of supply chain processes. From receiving, storing, and monitoring inventory to handling changes in demand, this area of expertise contains a slew of activities.
Inventory management software is designed to track stock and organize it by various attributes like suppliers, models, tags, barcodes, etc. Moreover, these tools can be programmed to alert you whenever a certain item goes below a predefined stock volume. In this case, the system will automatically generate a new order and purchase the missing goods or materials.
Using real-time data, business analysts can identify which products perform better than others and why. These findings allow corporations to remove inefficiencies and increase the profitability of their businesses. For example, first-in, first-out (FIFO) is a method that helps you prioritize the oldest inventory to avoid overstocking or spoilage.
Logistics is a key part of supply chain management and involves a large collection of utilities such as order management, warehouse management, transportation, etc. Order management software receives orders from multiple sources and transmits this data to warehouse employees and other departments. This type of supply chain management software stores all the data associated with the order, including customer data, optimal routes, stock availability, invoices, and more.
Logistics experts also closely communicate with the warehouse to maintain and control its operations efficiently. From receiving and moving items to managing staff and ensuring work safety, warehouse management systems offer various features to streamline processes.
In addition to warehouse and order management, logistics specialists also oversee transport and cargo operations. Transportation software for supply chain management handles deliveries and scheduling, last-mile logistics, route tracking, and cost management. Essentially, you can get the entire overview of each cargo and package from the moment it leaves the warehouse until its final destination at the customer’s house.
Customer relationship management (CRM) systems are built to aggregate, store, and analyze your customer base. By monitoring customer retention and churn, customer satisfaction, and sales growth, companies can pivot their strategies to better accommodate their user base—for instance, evaluate their feedback about different distributors, delivery times, and product quality to identify the areas for improvement.
Another important function is the measuring of how customer demands fluctuate depending on the season, trends, and other aspects. This data will unlock numerous insights into customer behavior and help you meet ever-changing demands.
Companies can also leverage data science, machine learning, IoT, and other cutting-edge technologies to derive insights into their supply chain operations. Supply chain analytics can and should be applied throughout the entire supply chain to increase productivity and efficiency across the organization.
SCM software benefits are quite vast and include vendor analysis, streamlined logistics, inventory optimization, and reduced risks. For example, a company can rely on SCM applications to gain intelligence about their suppliers and build a better relationship with them. Let’s delve into some of the most integral advantages of supply chain management applications.
SCM tools provide a much greater insight into the business, internal processes, and systems across the organization. The enhanced transparency opens up opportunities for data sharing and collaboration, strengthening relationships with suppliers and customers, and improving business performance. Having systems in place that collect data in real-time provides companies with a better understanding of the inner workings and aids them in increasing efficiency, productivity, and profitability.
Supply chain management solutions rely on data analytics to instill rigorous quality control measures and eliminate waste. Instead of waiting until the product reaches the consumer and dealing with damage reactively, you can now take a proactive approach. SCM systems provide companies with tools and data to ensure that every batch adheres to the highest standards of quality before it ever hits the shelf.
Reduced overhead, increased efficiency, and the power of data unleash cost savings that allow organizations to reallocate their funds toward core business goals. Furthermore, supply chain management systems eliminate expenses associated with waste, overstocking, and delays in the pipeline.
Much like most industries, supply chain management is prone to risks and threats, both from inside the organization and from the outside. Economical, political, social, and technological factors play a major role in how the sector performs. SCM software solutions aid in identifying potential risks and allow experts to come up with scenarios to mitigate or eliminate the threat.
The ability to foresee changes and quickly pivot to address them is an undeniable advantage to any business. Having better visibility across supply chain operations aids companies in anticipating potential disruptions and adapting to new circumstances. While the market will always change and trends will always fluctuate, businesses with greater agility have a competitive edge that allows them to stay afloat.
No supply chain management tool is built the same. Depending on your business model, operations, industry, and current needs, you may require different types of SCM software. In this section, we will explore the most common types of software for supply chain management. So, what is SCM software composed of?
Predicting future demand is incredibly useful, especially for production companies. Knowing what your customer will want to purchase in the next period will give you an immense competitive advantage. Forecasting SCM applications help you utilize predictive analytics to fine-tune human resource allocation, inventory control, procurement management, and more.
An integral part of supply chain operations, order processing software is in charge of activities associated with order management. Nowadays, customers expect rapid speeds when it comes to confirming and fulfilling their orders. To achieve that, companies implement various SCM software solutions to automate and streamline order tracking and fulfillment, billing, and invoice generation.
An inventory management tool is another SCM example designed to optimize warehouse capacity, automate restocking, and increase production efficiency. IoT-powered systems provide insights into how products are stored, moved, and managed to ensure the utmost quality. Smart tags also help warehouse workers bundle shipments that depart at the same time to speed up the processes.
Dispatching software tools are a type of SCM software that deals with routing, vehicle tracking, scheduling, and other activities associated with transportation. Using these types of supply chain management software, drivers can communicate with back officers, learn about possible updates, and update their colleagues about changes in their routes.
Similarly, companies can also track their shipments to ensure on-time arrival, top-notch product quality, and correct order fulfillment. The adoption of IoT sensors in SCM software allows businesses to oversee the entire journey of cargo and even monitor its conditions. Especially if the item is sensitive to certain temperatures or humidity, tracking the conditions throughout the entire route is vital to customer satisfaction.
Supply chain analytics tools are imperative to a successful modern business. Gaining intelligence through complex data analysis allows companies to peek behind the curtain and see how their performance is impacted by various factors. From marketing campaigns and sales to delivery estimates and optimal routes, such supply chain management applications will offer you a unique glimpse into your metrics and KPIs.
No matter how convenient your application or website is, clients may require some assistance in shopping, ordering, canceling, and other actions. Consider setting up an AI-powered chatbot to take over a large portion of common requests. More complex inquiries should still be handled by a human customer support manager to provide the best services.
Finally, collaboration applications connect employees throughout the organization with each other and with other stakeholders like vendors and distributors. From simple communication features to task and project management, collaboration systems are designed to optimize workflows. For example, tools like Jira allow you to exchange messages, create tasks, choose assignees, monitor progress, check timelines, and more.
There are a plethora of SCM software examples available on the market, from big players like SAP and Oracle to less-known ones like e2open. Your choice ultimately depends on what functions you require to better your business operations and reach your goals. While some supply chain management apps are more focused on transportation management, others excel at data science and predictive analytics.
Let’s take a look at a few market leaders and determine which pros and cons they carry and where their strengths lie.
Finally, let’s explore some tips that will help you identify the best supply chain app for your company, product, and industry.
Before signing up for a system, take a look at your finances to determine your budget for an SCM application. Don’t forget to include the costs of customization, upgrades, and system setup during your evaluation. The final bill may be significantly larger than the initial license or subscription purchase.
Additionally, don’t invest in a large system from the get-go. It’s recommended to start small and gradually add more modules when necessary.
When choosing the right supply chain management applications, concentrate on your current IT infrastructure. For example, if you’re already using an array of Oracle products, it may be beneficial to collaborate with their SCM as well. If the acquired tool is not compatible with the existing ecosystem, this may create a new set of issues.
Furthermore, pay attention to their domain focus. If the application wasn’t designed for your industry, it may lack a range of important features.
Finally, creating your own custom supply chain application can be a great investment. Although software development is not cheap, customizing and fine-tuning an off-the-shelf solution might be even costlier. Especially if you’re struggling to find a fitting tool, the reason may lie in your unique needs that cannot be easily covered.
Additionally, you can reduce the costs of custom product development by delegating the project to a third-party company. There are more and more successful examples of outsourcing which proves that collaborating with a trustworthy IT partner will not only save you expenses but also deliver a high-quality product.
If you’re interested in custom supply chain management application development, NIX is here to help. Our decades-long experience across industries and technologies allows us to create high-performance solutions. Having a wide array of supply chain success stories makes us feel confident that we can deliver the product you need to reach your goals. Reach out to the NIX team to discuss your ideas and start your supply chain or logistics software development.
Being a proactive leader, Mike's driving force is to assist businesses in leveraging technology to create robust and scalable software solutions that will endure in an ever-changing market.
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