Supply Chain Management Software Is All About Optimizing Product Flow and Minimizing Costs
By Urnesha Bhattacherjee, Technical Content Writer at SelectHub
Just as gears keep a well-oiled machine running smoothly, supply chain management software is the unsung hero of a seamless production flow. This technology, often tucked away behind the scenes, is the beating heart of commerce, driving efficiency, reducing costs and ultimately, propelling businesses toward success.
In tandem with market demands, SCM software has built-in real-time visibility modules to deliver actionable insights into the supply chain. The solution covers several aspects, including procurement, production planning, logistics, demand forecasting and supplier relationship management (SRM).
However, selecting the right supply chain software is challenging. We’re here to help narrow down crucial factors and pick the best solution.
What Is Supply Chain Management Software?
Supply chain management software is a comprehensive toolkit that manages every supply chain process from a unified dashboard, including raw material acquisition, product designing, supplier lifecycle management and final distribution.
Seamless integration with multiple stakeholders in one central location ensures inventory and final product distribution at the appropriate time and place.
Businesses can automate product development, sourcing and logistics. Depending on your business size and software variant, you can expect modules that handle warehouse management, order management, shipping and receiving, transportation, procurement and more.
Some solutions include advanced forecasting and analytics that help optimize your supply chains. You can also leverage demand planning software to keep your inventory organized and ready for market fluctuations.
Supply Chain Management Systems Report
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Primary Benefits
To better understand the manifold aspects that benefit from digitalization, we’ll consider the key advantages of implementing SCM systems and associated real-life examples of each.
Improve Business Performance
Supply chain management software automates order processing and fulfillment to improve operational efficiency. This automation reduces manual errors and speeds up order delivery.
Toyota Motor Corporation employs a consistent production process that optimizes resources, reduces waste, and streamlines operations, resulting in cost savings to reinvest in R&D and continuous improvement efforts, allowing the company to remain competitive in the automotive market.
Reduce Costs
Streamline your supply chain with a robust system that delivers more compelling information, resulting in better sourcing and procurement decisions. With greater supplier forecast visibility, your company can determine which products to offer and when.
Walmart has been able to maintain its "Everyday Low Prices" strategy by putting a strong emphasis on cost-effectiveness.
Boost Visibility
Businesses can ensure regulatory compliance and increase supply chain visibility by using supply chain management software to track and trace products.
Track available materials by market demand, allowing your company to plan production better and increase manufacturing yield rates. This flexibility translates into fewer out-of-stock scenarios for high-demand products.
FourKites and other supply chain digital platforms provide complete transparency and visibility into global shipment flows. This visibility improves customer service by delivering precise, proactive communication on shipment status and delays.
Supply Chain Management Systems Report
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Implementation Goals
As with any software implementation, there are several goals you want to hit to ensure your company benefits from all the supply chain software has to offer. Accomplish the following goals to ensure a successful implementation:
Goal 1
Enhanced Visibility
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Supply chain systems provide real-time visibility into the entire supply chain. Users can make more educated choices, keep track of inventory and optimize processes.
SCM software enables businesses to track and trace products throughout the supply chain, ensuring compliance with regulations and improving overall supply chain visibility.
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Goal 2
Cost Reduction
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Businesses must continuously optimize supply chains like any other complex system to minimize financial risk.
Errors, from order fulfillment software mistakes to delivery delays, can add to overhead expenses.
By assisting managers with inventory control, warehouse operations organization and automation wherever possible, SCM software helps with cost savings.
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Goal 3
Operational Efficiency
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They enable companies to gain greater control over the logistics while also assisting in managing vendor interactions.
Companies can detect non-compliant behavior and respond appropriately. SCM software also includes data analysis processes, allowing managers to tackle performance management effectively.
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Goal 4
Greater Collaboration
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These tools encourage collaboration amongst various supply chain participants. This collaboration streamlines operations by guaranteeing that all parties have access to the most recent data.
Increased collaboration, data sharing and teamwork can result in more efficiency.
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Goal 5
Demand Forecasting and Management
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SCM software helps companies predict demand precisely, control inventory levels more effectively, and minimize stockouts and excess inventory.
Users can schedule production and predict market trends. Businesses can minimize stock-related problems and meet customer demands by targeting this goal.
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Supply Chain Management Solutions Report
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Basic Features & Functionality
Supply chain management software should be able to manage supplier relationships, orders, warehouse activities, transportation and demand.
Let’s learn about these features in detail.
Supplier Relationship Management |
Based on real-time performance analytics, SRM can assist businesses in identifying and selecting the best suppliers for a competitive advantage. It supports onboarding new suppliers quickly and efficiently.
Track supplier performance, identify areas for improvement and manage contracts.
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Distributed Order Management |
DOM is prevalent in SCM systems at the platform level as it provides order execution and fulfillment workflows necessary for ordering raw materials for production.
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Warehouse Management System |
Support user-level query and database tools, allowing personnel to manage, define, and measure distribution and logistics strategies.
They also support pick, pack and ship operations, replenishment functions and technologies (barcoding and RFIDs).
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Transportation Management System |
TMS modules support transactions encompassing booking, execution and settlement of transportation costs.
More advanced modules also support collaboration at the transaction level using a common data dictionary and data model.
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Logistics Network |
Supply chain software companies offer tools that help your organization control the movement of goods and plan for all major processes.
Logistics helps keep things running smoothly and on schedule. Support for these processes comes from features or outside aid like third-party logistics providers.
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Returns Management |
Define rules and criteria for accepting reverse logistics, including product condition, return window and required documentation.
The system automates returns workflows, guiding users through each step of the returns process.
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Integrations |
Seamless integration provides real-time data synchronization between connected systems.
Exchange data between different systems, including customer relationship management, warehouse management, transportation management, eCommerce and others.
For example, integration with a shopping cart solution and a CRM platform lets you manage your supply and value chain from a single dashboard.
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Supply Chain Management Systems Report
Expert recommendations and analysis on the top SCM Software
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Advanced Features & Functionality
Many of today’s supply chain software companies offer tools beyond the basic features listed above. Learn more about SCM’s advanced features in the following table:
Advanced Shipment Notice |
ASN sends information like product descriptions, carrier information and item numbers as soon as the shipment goes out for delivery.
The ASN is a significant component of modern supply chain management software, providing businesses with real-time visibility into incoming shipments, allowing them to improve visibility and planning.
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Customizable Alerts |
Customize user-defined triggers or conditions. Alerts notify supply chain planners and authorized employees in real time about user-defined events such as inventory stockouts, order transportation delays and more.
Specify parameters like inventory levels, order status, production and shipment delays, quality issues, or other relevant data points.
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Business Analytics |
This SCM software inclusion enables better decision-making by providing personalized insights and actionable intelligence. The result is greater productivity and better overall results.
Business analytics also helps with performance monitoring by tracking key performance indicators (KPIs), allowing companies to identify underperformance areas and implement corrective measures.
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Multiple Warehouse Management |
Define and configure various warehouses within the system by setting up physical layouts, storage zones, racking systems and other parameters.
You can tailor the module to a company's requirements, allowing it to manage inventory across different locations effectively. This process is especially beneficial for kitting.
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Demand Planning |
These modules analyze historical demand data and generate precise, data-driven forecasts, allowing businesses to manage inventory levels better and reduce stockouts or excess inventory. They also identify cost-cutting measures and limit resource waste.
Segment customer demand based on product category, geographical region, customer type or sales channel.
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Supply Chain Management Software Report
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Current & Upcoming Trends
The supply chain industry constantly innovates to find the fastest, most accurate ways to handle daily processes. Despite recent struggles, it continues to adopt and expand into cutting-edge technological trends to survive:
Actionable AI
Today, artificial intelligence (AI) is experiencing unprecedented popularity. According to Fictiv’s 2023 State of Manufacturing Report, 85% of companies surveyed have adopted AI solutions, with 45% expecting impacts on supply chain management tasks.
AI and automation are invaluable tools for accelerating supply chains and increasing competitiveness. Regardless of how you use AI, streamlining your supply chain is critical, especially since your competitors are already doing so.
Risk Management
The complexity and volatility of global supply chains are aggravated by
- Labor shortages
- Ocean freight bottlenecks
- Rising inflation
- Global port congestion
- Warehouse shortages
- Sustainability concerns
- Potential pandemic resurgence
Therefore, resilience and risk management are major focuses going into 2024. Diversifying the supplier base and closely monitoring market trends are critical strategies for mitigating these risks and ensuring financial stability.
Generative AI and other digital tools can improve supply chain operations and reduce potential disruptions. However, these tools are extremely expensive, hindering adoption.
Digital Supply Chain Twins and SCaaS
A digital supply chain twin is the recreation of an entire supply chain in an accessible, digital environment. Multiple IoT-enabled devices track real-time data from every physical front of the supply chain and offer maximum end-to-end visibility.
However, creating one is no small feat and requires skilled manipulation and maintenance. Many small businesses naturally lack the talent and finances to develop and run one from scratch.
They’ll outsource most of these critical processes — this is where supply chain as a service (SCaaS) can shine. It can offer you better asset management, higher flexibility, lower costs, increased productivity and every other benefit associated with SaaS.
Supply Chain Management Systems Report
Expert recommendations and analysis on the top SCM Software
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Software Comparison and Pricing Considerations
Businesses must implement a software comparison strategy that aligns with their unique needs while considering robust security measures.
Understanding SCM system pricing nuances, including deployment strategies, required functionalities and additional costs, ensures informed decisions that align with financial goals and operational needs.
Here’s how to compare:
- Acknowledge diverse needs and initiate the selection process with focused modules targeting specific aspects of SCM software.
- Prioritize module implementation to address significant problems and bottlenecks.
- Connect standalone solutions into a unified system to ensure seamless data flow and prevent data silos.
- Consider custom development for a tailored solution aligned with unique business needs, weighing it against industry-specific tools.
- Emphasize data security, evaluating HTTP security, full traceability, and restriction options, ensuring compliance with security protocols like OAuth2 and LDAP.
- Opt for products from reputable SCM software providers to ensure robust security measures and protection against potential threats.
SCM Software Price Factors
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Deployment Strategy: Choose between cloud-based (subscription-based) and on-premise (upfront investment) solutions.
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Functionality Needed: Opt for modular options to reduce costs by selecting essential features.
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Customizations and Add-Ons: Be prepared for extra costs for tailored solutions and additional features.
Price Guide for SCM Software
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Questions To Ask Yourself
Knowing everything about a product is one thing, but you could be in trouble if you don't ask probing questions about your company before adopting new software.
Set a strong foundation by asking yourself:
- What are our inventory management needs?
- How do we handle logistics and transportation management?
- Do I have third-party logistics providers to consider?
- How many users will need access to the new solution?
- Do I need end-to-end supply chain features or just specific modules?
Questions To Ask Vendors
When narrowing down your search for the perfect software, always gather some questions for your prospective supply chain vendors.
This information can help iron out any confusion and ensure that your product of choice solves your main pain points.
About the Software
- How does the software handle integration with other systems?
- What is the implementation process and timeline?
- Does the software support end-to-end visibility?
- Is it compatible with my existing system?
- What data security features does it offer?
About the Vendor
- When did you release your last upgrade?
- What level of customer support and training do you provide?
- How does your technical support team handle help requests?
- Is the software customizable to specific business needs?
- What’s the total cost of ownership?
Supply Chain Management Systems Report
Expert recommendations and analysis on the top SCM Software
Get free access now
FAQs
What software is used in supply chain management?
Supply chain management software uses various tools to automate and improve product flow planning, control and execution.
They cater to materials procurement, manufacturing, distribution, final delivery, inventory management and demand forecasting.
What are the four major types of SCM software?
The four kinds of SCM software and some notable examples include:
Next Steps
Selecting the ideal supply chain management software is a critical task that needs serious consideration. Think about key factors like core functionalities, scalability, integration capabilities, implementation process and more before deciding.
Grab our free comparison report to explore solutions with features like demand sensing, supply chain analytics and integrations. Happy selecting!
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