Even companies that are preparing to implement supply chain management (SCM) software solutions for the first time may be a little curious about exactly how these types of software tools help business operations. However, CIOs and the others in leadership often understand the rush toward SCM and other types of enterprise planning tools. Global supply chain management is often a key part of innovating for the modern business world.
Supply chain management software systems do a lot for businesses in all sorts of industries. SCM tools can automate much of the physical supply chain process, and providing analytics and business intelligence for growth. Supply chain management systems help human leadership teams to fine-tune business operations and make them as efficient and effective as possible, for a competitive advantage in a particular industry.
One of the biggest pieces of supply chain management software is the evaluation of supplier relationships.
Looking at the features and functionality of supply chain management systems, shoppers will see that many of these systems include models for comparing costs and support, and other factors that govern a business partnership.
By being able to have a transparent view of what vendors charge, how they support products, and how they deliver, companies are really able to analyze the supply relationships that they have. This helps them to make decisions accordingly.
Here are some of the nuts and bolts of how this works. It’s important to note that a whole new set of software solutions has spring up called “Supplier Relationship Management” software, but that in many cases, conventional SCM starts to build the same kinds of functionality that help companies to get a competitive advantage and manage and improve vendor relationships.
A Distributed Footprint
Most businesses of a larger size have enormous volumes of materials and supplies flowing around multi-location business footprints, coming and going in dizzying and elaborate ways.
When supply chain complexity is too much for managers and others to assess through a simple spreadsheet or document, supply chain management software helps to order and organize these processes. This way, decision-makers can see at a glance how much of something they’re getting, where it’s coming from, and how they are using it. In a sense, SCM software breaks down massive amounts of supply shipments into something that company leaders can peruse in detail, to figure out whether to make changes in supply and delivery schedules and deal with global supply chain management well.
Lean Inventory and On-Demand Supply Chains
It’s often been said that SCM doesn’t focus on internal inventory — but comprehensive supply chain management software will often include tools for managing inventory, at least as it comes into business warehouses. Many SCM tools have the kind of functionality that allow managers to pursue a lean inventory or on-demand model.
The idea is that rather than having to stock large volumes of incoming supplies in a warehouse, managers can craft extremely precise supply schedules, so that they never have to worry about the cost and workload of having too much inventory on hand.
More precise on-demand systems have helped many companies to close warehouses, save real estate space, and cut costs by enormous margins. That’s one of the biggest benefits that supply chain management tools offer to businesses — they actually allow more capable operations on a smaller footprint.
Optimizing Business Process Speed
Experts also often call global supply chain management software and comprehensive enterprise resource planning software “business process software” because of how these tools help to direct individual business processes.
Supply chain management software can decrease time delays in operations. For instance, if there are bottlenecks in a supply chain – for instance, if workspace managers end up waiting on raw materials in a particular business process — evaluation through SCM applications can take these time delays away. By being able to anticipate bottlenecks and eliminate them, companies save time in the critical processes of getting products and services to market. Here are some other ways that speed in supply chain handling helps a firm.
Liability and Risk
Here’s another way that supply chain management software works in conjunction with other enterprise planning tools.
Businesses have to assess risk and liability in the right ways. They have to look at the potential for known and unknown problems, and how various issues could affect business outcomes.
How do supply chains and risk go together? The Financial Times talks about how complexity introduces risk, and what kinds of issues may be important to managers.
Some of these issues involve product quality — others are focused on workplace safety or some part of a specific physical business process. In many of these cases, looking at the data and analysis that’s presented by supply chain management software can give managers clues about where risks might lie. This will help with risk mitigation and covering the company’s liability, whether that’s through insurance policies, crafting new work processes, delivering health and safety resources to workers, or any other protective strategy.