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According to Gartner, supply chain management (SCM) is a “strategy to improve shareholder and customer value by optimizing the flow of products, services, and related information from source to customer/consumer." SCM includes the processes involved in fulfilling market demand for goods and services and spans from suppliers to customers.
As businesses spread their sourcing and customer base around the world, managing supply chains has become increasingly difficult. The complexity of these supply chains stem, in part, from a reliance on third-party services and the need for production partners to deliver products on time.
Managers also face changes in legislation, increased consumer demand for immediacy, commodity pricing fluctuations, and large volumes of data. SCM software helps companies manage all these complicated factors while improving visibility for their clients and operational efficiency.
Supply chain management can encompass processes from planning and inventory optimization to shipping and procurement. In broad terms, SCM software can fall into one of these three categories:
Supply chain planning: Planning applications usually encompass decisions related to the structure of the supply chain and how to optimize resource allocation.
Supply chain execution: Manages the processes that lead to the completion of plans, including taking and documenting orders, managing inventory, and delivering goods to customers.
Procurement: Manages terms of procurement at the transactional level and in some cases, the enterprise expense level.
Supplier management: Monitor supplier performance through tracked key performance indicators (KPIs) and audit trails and assess supplier risk and regulatory compliance.
Inventory management: Track, order, store, and consume inventory, including raw materials, components, and finished products. Using several communication channels, such as web portals and email, help to increase visibility amongst business partners. Buyers have the ability to automate inventory reports and suppliers can respond to shipment notifications and invoices.
Odoo's inventory overview dashboard
Warehouse management: Control warehouse operations throughout the storage lifecycle. This feature often includes shipment notifications, as well as tracking, picking, and putaway using auto identification and data capture (AIDC) and radio-frequency identification (RFID).
Demand planning: Use historical insights and simulations to forecast customer demand. This feature can improve accuracy of forecasts and provide data to your business in real time. It also allows users to explore hypothetical scenarios and filter by information needed.
Procurement: Carry out purchase orders and maintain the financial side of supplier/customer relationships, as well as handle reporting and any compliance issues. This feature often includes electronic distribution of purchasing terms and an automated expense log for quick reference.
Procurement budget tracking with Precoro
Transportation management: Guides and tracks the movement of materials to and from the warehouse. Deliveries are monitored via Satcom or other devices.
Order fulfillment: Input, organize, track, and fulfill purchase requests. Users may also track unpaid orders through revenue recognition processes. This feature helps supply chain managers decrease lead times and make the quote-to-cash process seamless.
Cin7's order fulfillment dashboard
These are the deployment options for deploying supply chain management software in your business:
Cloud-based: This type of software allows users to access their contracts remotely from various devices and locations as the data is stored in the cloud. This is a growing market within SCM, but is quickly becoming predominant.
On-premise: This software type is deployed on computers within the premise of the organization. Therefore, as data is collected and generated by this type of software, it can only be accessed using local computers.
GetApp's website emphasizes cloud-based deployment, because tools deployed via this method typically involve lower up-front costs, faster implementation, and automatic updates; they also better support remote use, scale more easily, and minimize the need for IT staff.
Digitization: Digital businesses tend to be more complex and change quickly, and this trend has made it difficult for traditional supply chain strategies to keep pace. This trend refers not just to an increase in online purchases, which has meant many products go to a warehouse and then to a consumer instead of being delivered to a store first. As communication between businesses, people, and physical assets is digitized, supply chain software will have to respond to the demands these changes generate.
Artificial intelligence (AI): Many organizations seek to improve efficiency and reduce costs with AI. According to Gartner's Supply Chain Technology User Wants and Needs Survey, 74% of organizations have demonstrated AI-use cases (full report available to clients). AI-enabled solutions can automate processes all along the supply chain, including production planning, demand forecasting, and enhanced decision-making which improves product quality and shortens production cycles.
Internet of Things (IoT): According to the Supply Chain Technology User Wants and Needs Survey, 63% of organizations are running IoT initiatives or use cases. Initial applications of IoT have been within customer service, asset maintenance, and remote monitoring. The most frequent adopters of this have been businesses in the retail space, consumer packaged goods (CPG), and automotive spaces. IoT is also now proving to have functional applications in inventory tracking, cargo security, and prescriptive and predictive maintenance.
Advanced analytics: 66% of organizations that participated in the Gartner survey stated that they are actively using or exploring advanced analytics capabilities. Given the increasing complexity of supply chains, businesses are looking to leverage data from the entire supply chain to derive actionable insights to improve end-to-end management.
Eco-friendly logistics: Consumers are increasingly expecting a low carbon footprint from their purchases, and the supply chain offers plenty of opportunity for improvement. Supply chain managers have found themselves making decisions with the environment in mind, such as cutting fuel usage by sourcing products based on proximity, decentralizing warehousing, and re-thinking packaging.
Back to the SCM software directory.
Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They are obtained from sources believed to be reliable at the time of publication.