Tips for Success with Supply Chain Management
Manufacturers, vendors, distributors, and other active participants in the supply chain dedicate a significant amount of their technology budgets to the acquisition and administration of supply chain management software. In fact, leading industry analyst firm AMR Research claims that revenues from purchases of new supply chain management software, as well as software upgrades, enhancements, and replacements, have grown an average of 4 percent annually over the past several years.
Additionally, AMR expects that spending on supply chain management software will continue to rise well into the foreseeable future. Therefore, it is critical that businesses understand how to maximize value and get the most out of their supply chain investments. Here are some tips that can help guarantee supply chain management success:
Get Everyone Involved
There are many critical stakeholders, both within and outside an organization, who contribute to the effectiveness of supply chain management operations–not only internal employees on production teams, in purchasing departments, or in stockrooms and warehouses, but also external business partners such as vendors and distributors.
Since supply chain management software will impact each and every one of these constituents, they must be fully involved in the initiative, and their feedback and input must be gathered as early in the process as possible. This will help facilitate widespread user adoption and ensure that the supply chain management software will satisfy everyone’s needs.
Look for Robust Demand Planning and Forecasting Capabilities
Many experts believe that the ability to accurately predict sales demand and adjust output and supply levels accordingly is the key to supply chain management success. Without supply chain management software – and the powerful forecasting functionality it provides – companies run the risk of:
- Product shortages, which can lead to low levels of customer satisfaction and high levels of churn.
- Component shortages, which can cause delays in production activities.
- Too many components, which can lead to overstocked warehouses and increased inventory management costs.
- Excess finished product, which can take up valuable warehouse space and force companies to cut prices to deplete remaining stock.
Integration is Key
In most companies, supply chain management operations span multiple departments and business units. In order to coordinate the seamless execution of activities across these groups, supply chain software must tightly integrate with the applications they utilize.
Test your Processes
The purchase of a new supply chain software, or a significant upgrade to an existing one, presents a great opportunity to evaluate current processes and revamp them as needed to make them more productive and cost-efficient. Analyst firm Gartner suggests starting with a pilot project that involves just one or two suppliers and distributors and using limited information sharing to test different procedure scenarios, until the one that proves to be most effective is discovered.
One of the primary benefits of supply chain management software is its ability to enable rapid, unhindered information sharing. Companies who don’t fully leverage these capabilities – using them to communicate with and make data available to external supply chain partners in real-time – will realize only limited benefits from their supply chain management software.