Supply Chain and Logistics Software

Since there usually are many third-parties concerned with a company’s end-to-end supply chain process, SCM software is intended to improve communication, coordination, and collaboration with vendors, suppliers, intermediaries, transportation and shipping companies, and other related partners by enabling more efficient information sharing.

Key Benefits of SCM Software
With SCM software in place, a business is better able to:

• Effectively manage its network by overseeing activities across production plants, suppliers, and distribution and storage facilities.
• Centralize and streamline its distribution strategy in order to eliminate logistical errors and coordination failures that often lead to delays.
• Increase visibility and augment collaboration across its entire supply chain by distributing important information, such as forecasts, demand trend reports, transportation plans with suppliers and other partners, and inventory levels.
• Reduce storage costs and increase cash flow through better inventory level management.
• Improve logistics tracking in order to rectify breakdowns, problems in the supply chain, and inefficiencies before they get out of control.

A recent study from AMR Research showed that companies that have better demand forecasting accuracy (which is easily achieved through SCM software) improve their perfect order ratings, reduce as much as 15 percent of unnecessary inventory, and cut down cash-to-cash cycles by up to 35 percent.

SCM software offers an all-inclusive suite of features and modules to support your company’s end-to-end supply chain process, including:

• Inventory management to guarantee optimum component stock levels for production plants, finished goods to customers, and spare parts for your field service technicians, while still minimizing storage costs.
• Order management that handles automated order entry, pricing and product configuration, and dynamic supplier scheduling to speed up your order-to-delivery cycle.
• Procurement to streamline purchasing, sourcing, and payables across your whole supplier network.
• Logistics that enhance how you manage warehouses and coordinate transportation channels, making sure that on-time delivery performance is dramatically improved.
• Supply chain planning to improve operations by facilitating accurate demand forecasting, reducing manufacturing over-runs, and improving order promising.
• Return management to accelerate goods inspection and handling, automating the claims processing with insurance companies and suppliers.
• Incentive management to help companies easily manage vendor negotiations, incentive plans, discounts, and commissions.

Some SCM offerings also include contract management capabilities, product lifecycle management, and asset management.

Manufacturers, distributors, vendors, and other active supply chain participants dedicate a considerable amount of their technology budget to acquiring and administrating supply chain software. AMR Research found that purchase revenues of new supply chain software, in addition to software upgrades, replacements, and enhancements, has grown on an average of 4% every year for the past several years. Moreover, AMR expects that expenditures on supply chain software will keep on rising well into the future.

Therefore, it’s critical that businesses appreciate the best way to maximize value from their supply chain investments. Here are some best practices that can help you guarantee success with your supply chain management:

Get Everyone Involved
There are many vital stakeholders within an organization who have a say in the effectiveness of your supply chain operations. External business partners, like vendors and distributors, have just as much influence as employees on production teams, purchasing departments, stockrooms, and warehouses. Since supply chain software impacts all of these players within and without your organization, they must be completely involved in your initiative and their input and feedback has to be gathered early on in the process. This will help ease widespread user adoption, ensuring that your SCM software will meet everyone’s needs.

Robust Demand Planning and Forecasting Capabilities
Many believe that accurately predicting sales demand and adjusting output and supply levels are the means towards achieving supply chain success. Without SCM software and the forecasting functionality it delivers, companies may run up against:

• Product shortages, which equal low customer satisfaction levels and high churn levels.
• Component shortages, causing delays in production.
• Component overages, leading to overstocked warehouses and an increase in the cost of inventory management.
• Product overages, which take up warehouse space and force companies to drastically reduce prices in order to get rid of remaining stock.

The Key Is Integration
Supply chain operations in most companies span multiple business units and departments. So as to coordinate a seamless execution of processes across these disparate groups, supply chain software has to tightly integrate with applications already utilized in the company.

Testing Your Processes
Purchasing new SCM software, or making significant upgrades to an existing software installation, is the perfect opportunity to evaluate current processes and re-vamping them as needed so that they become more cost-efficient and productive. Gartner suggests opening with a pilot project that involves one or two distributors and suppliers, and using partial information sharing so as to test different scenarios to determine the right one.

Encouraging Collaboration
One of the main benefits of supply chain software is the ability to enable swift, unimpeded information sharing. Companies that don’t completely leverage this will only realize limited benefits from their SCM software.