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Software, Logistics & Supply Chain March 2, 2023
Supply Chain Management (SCM) is a field of business that refers to the movement and conversion of raw materials from the suppliers to the finished product for customers. SCM is based on centralized control of production, storage, and distribution (the entire supply chain). It represents a core function for many businesses today.
With advances in technology and software, supply chain management has evolved into a complex set of activities that requires careful planning and resource management. It often involves collaboration between members of multiple departments within an organization as well as partners and stakeholders outside the organization.
The net effect of optimal supply chain management practices is a high-performing business with satisfied customers. In the long term, SCM can make a business both profitable and sustainable. The ability to identify problems and opportunities pertaining to supply and demand conditions in the marketplace also serves as a driver of industry innovation.
As we mentioned earlier, supply chain management is a complex interdepartmental effort that requires multiple units to work cohesively as a team. It involves specialized planning that coordinates with both internal and external stakeholders to ensure that supply chain processes are managed effectively. Companies are also investing significant funds to automate these processes through MRP and ERP software.
However, before any organization chooses to implement SCM software, it is crucial to understand the theoretical foundations of supply chain planning. By knowing the requirements of the organization, supply chain managers can adapt the business model that works best for the company, making planning and implementation simple and straightforward.
A typical supply chain revolves around the five key aspects of supply chain management; each being managed by a separate department within or outside the organization. These are:
Each of these areas involves a specific supply chain cycle. The most commonly recognized cycles include the customer order cycle, replenishment, cycle, manufacturing cycle, and procurement cycle. These cycles overlap with different departments and they typically run simultaneously.
Each cycle can be split into planning modules that have a specific role and objective. These include demand planning, supply planning, sales and operations planning, and product management. The importance of each planning segment depends on the nature of the business and its supply chain requirements. For example, a business involved in leather hide processing will have to focus heavily on the demand and supply of leather and tanning chemicals. A shoe factory, on the other hand, will have to plan its manufacturing carefully. A company that distributes different shoe brands won’t have to worry about manufacturing runs but will have to focus on meeting its retail customer orders.
By understanding the planning processes in a modular way, a company can use SCM practices to make their business flexible and optimize supply chain operations to meet evolving customer demands. Flexibility is especially important if the business is operating in multiple markets.
There are six main supply chain models. They can be adapted to fit the needs of a business.
Every organization needs to recognize the market outlook and the supply chain management model that best fits its business requirements. This combination of the business environment and supply chain model affects the planning modules that the business may need to realize its full potential.
A continuous flow model works in a stable market where demand and supply are not a major problem. In such a case, material resource planning and inventory management are key areas where a business is able to reduce operational costs. Similarly, companies that have one product may focus on fast distribution to gain a competitive advantage.
For a retail business that must keep shelves filled with its high-demand products, there will be a need to assess the capacity of the retailers as well as your own warehouses. This is where capacity planning is essential.
A company trying to maximize efficiency may want to focus on accurate demand forecasting to keep inventory lean. This is where demand planning and inventory will be most useful. Still, some organizations may look to consolidate their supply chain operations by vertically or horizontally integrating other businesses. Introducing a new business unit dealing in a specific part of the supply chain introduces additional SCM planning requirements to consider.
However, many businesses are turning to a combination of flexible and custom models. Flexibility in a supply chain is a desired feature, and certain legal requirements for taxation and documentation mean that standard modules provided by software vendors are not an option anymore. Most companies are, therefore, turning to specialized software and consultants to implement these models.
Supply chain management is made easier with the help of software such as Enterprise Resource Planning (ERP) software. Some software is specific to a single function, like Transportation Management Software (TMS), Material Requirements Planning (MRP), and Warehouse Management Systems (WMS).
ERPs are typically modular in design, and costly to implement. However, the best thing about ERP solutions is that they help to automate the entire supply chain network from end to end. The functionality of ERPs varies across different vendors, but in general terms, some packages offer solutions for the following business processes:
Each of these functions is packaged as a software module that can be enabled or disabled for the buyer depending on their specific requirements.
SCM software has many benefits for the organization:
Almost all SCM software operates on a SaaS model, meaning you will be paying a subscription fee to access their services.
Here are some popular options for supply chain management software.
Oracle – One of the leading supply chain software platforms in the world
SAP – A robust platform with some of the best options for process automation and costing
Shippabo – One of the best overall shipping and freight forwarding software
Netsuite – Oracles; dedicated SCM software
Sortly – One of the simplest inventory management systems on the market
Maropost – A flexible Solution for managing multiple warehouses
Manhattan – An out-of-the-box TMS solution
Cloud Logistics – A cloud-based solution for local road transport
Genius ERP – A standout platform for manufacturing planning and scheduling
Epicor Kinetic – A manufacturing-oriented SCM solution for shipping and warehouse management
Successful implementation of SCM software that allows you to perform advanced planning tasks like demand and supply planning, capacity planning, and production scheduling, will help you immediately realize organizational gains.
However, while it is clear that SCM software and advanced planning techniques go hand-in-hand, it’s worth emphasizing here that the path to a successful implementation depends on specific circumstances surrounding your business. With that in mind, there are many ways to solve a given SCM problem or take advantage of a new market opportunity.
At RTS Labs we make software that gives you an unfair advantage. Our elite cross-functional teams bring you the agility of a startup and the scalability of an industry leader.
Contact us to talk about how we can help.