Introduction: 3
Conclusion 8
References: 8
Introduction:
Supply chain management is a concept that combines the art and science of enhancing the way companies find the raw materials required for creating a product or service. Along with that, SCM uses these features to deliver a high quality product to the clients. SCM is composed of the following five basic elements:
1.1. Plan— As a strategic part of supply chain, businesses must have a strategy in place to manage every available resource that is used to satisfy client needs. A major part of its planning involves the development of a series of metrics for monitoring the supply chain to ensure that is effective, low-priced, and can deliver quality products to end users.
1. 2. Source— Companies ought to select suppliers for delivering goods and services for creating their product. Hence, supply chain officials and managers need to devise a defined series of invoicing or pricing, payment and delivery of processes with suppliers and develop metrics to control and for enhancing the relationships. After this, SCM managers must combine processes “for handling their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments” (Association of Modern Professionals, 2013).
1. 3. Make— It involves the manufacturing task, wherein the scheduling of the activities needed to produce, test, and pack and delivery preparation is done by the SCM managers. It allows businesses to measure levels of quality, production result as well as workforce productivity.
1.4. Deliver— Also termed as logistics by several SCM insiders. In this part, companies coordinate and organize the acknowledgment of orders from received by customers, create a warehouse network, select carriers to deliver products to customers, and develop a payment system
1.5. Return— For several firms, this could be a challenging step in SM. Here, SCM managers are responsible for producing a flexible and efficient network so as to receive faulty and extra products from their users and intermediate customers facing issues with delivered products.
Furthermore, Supply chain management software or SCMS is seen as the most fractured group of software apps. Moreover, each of the five primary supply chain steps mentioned above comprises of lots of specific tasks, many of which consist of their own specific software. Majority of these different chunks of software have been assembled together by SCM managers under a single roof; however, no company is equipped with a complete and overall package which is best suited for its operations. For instance, majority of firms need to track supply, demand, production status, logistics (i.e. where things are in the supply chain), and distribution of products. They are also expected to share information with supply chain partners at a rapid rate. Although ---products from big ERP sellers such as SAP's Advanced Planner and Optimizer (APO) could execute most of these functions, and since each market’s supply chain has a unique set of problems, so most companies opt for targeted best of breed products, although some integration is an inevitable consequence.
Undoubtedly, the old adage regarding systems only being as good as the information they store is applicable doubly to SCM. Further, if the data inserted into a demand predicting application is inaccurate, then an inaccurate forecast will be generated. Likewise, if workers bypass the supply chain systems and seek to handle activities manually (with spreadsheets or fax machines), then even the costliest of systems will give an incomplete data on what is happening in a company's supply chain (Association of Modern Professionals, 2013).
Further in this direction, the supply chain is made up of a set of processes carried out between a company’s customers and trading partners, like manufacturers and suppliers. Broadly explained, these business processes particularly involve planning and execution operations that are devised to streamline the flow of data, products, goods, and services on the supply chain continuum.
Planning operations commonly include processes like sharing of product designs amongst manufacturers and designers; predicting product demand; decision making about what to buy and where to buy it; scheduling manufacturing functions; planning the amount of inventory to store; and planning transportation alternatives (Association of Modern Professionals, 2013).
Execution functions make sure that every planning process is fulfilled. They can involve creating purchase orders; recording and handling customer orders; monitoring the movement of goods within a warehouse; and goods delivery to end user/ customers.
Processes and Technologies for SCM keep evolving at a rapid rate, from conventional static, optimization, intra-enterprise planning, and execution functions to a greater and more effective inter-enterprise, collaborative approach. Important factors of comparison amongst SCM solutions include:
- collaborative abilities that are a function of application and process integration;
- business intelligence software availability
- breadth of product portfolio;
- vendor’s vertical market emphasis
It also includes:
- Inventory ManagementSupply chain management allows companies to significantly improve how they track and handle their supplies of goods, raw materials and components required for production, along with finished products to meet open sales orders, and spare components needed for field service and support. This allows for elimination of excess and wastage, frees valuable property for other crucial purposes, and reduces associated storage costs.
- Order ManagementWit order management, SCMS can dramatically increase the execution rate of the complete order-to-delivery cycle by aiding businesses to more productively create and monitor sales orders. SCM also supports the dynamic scheduling of supplier deliveries to more efficiently satisfy client demands, and more rapid generation of pricing and product configurations.
- ProcurementAll operations and tasks related to sourcing, purchasing, and payment can be fully automated and streamlined through an organization’s complete supplier network with SCMS. Therefore, this enables companies to build stronger relationships with vendors, better evaluate and handle their performance, and enhance negotiations to leverage bulk discounts and other cost-cutting approaches.
- Logisticswith global expansions of businesses, associated supply chains increase in complexity, thereby making the coordination between the legion warehouses and transportation channels a very quite a challenging endeavour. With supply chain software in place, this challenge can be combated. Further, with SCM, companies grow on time delivery performance and promote customer satisfaction by focussing more on the way finished goods are stored and distributed, irrespective of the quantity of facilities or partners involved.
- Forecasting and PlanningSCM enables businesses to more accurately predict customer demand and accordingly plan their procurement and manufacturing processes. This will lead to the prevention of unnecessary purchases of raw-materials, elimination of manufacturing over-runs, and prevent ion of excessive finished goods storage, or dropping prices to discard products off of warehouses. .
- Return ManagementWith Supply chain software, the inspection and handling of defective or broken goods can be simplified and accelerated - on both the buying and selling side of the business. SCM also helps in automating the processing of claims with distributers and suppliers, along with insurance companies. Majority of supply chain facilities include add-on options or modules developed for enhancing associated activities. Support is offered, via these features, for various types of crucial processes like product lifecycle management, contract management, capital asset management, etc.
Before the advent of the Internet, the visions of supply chain software experts were limited to enhancing their capability of predicting demand from customers and make their own supply chains execute more smoothly. However, with the many benefits of the ubiquitous nature of the Internet, have changed things altogether. Today, businesses are able to connect their own supply chains with that of their suppliers and customers together within a single broad network which optimizes costs and opportunities for all partners involved. Hence, this gave rise to the B2B revolution; the concept whereby everyone a company does business with could connect together into one big happy, cooperative family (Wood, 2008).
On the contrary, however, majority of companies share at least some information with their supply chain members. The main aim of such projects is greater supply chain visibility. Simply put, the supply chain in most industries resembles a big card game where no players wants to their cards to the other because they don't trust anyone else with the data, but if they showed their hands they all could benefit. Suppliers need not forecast how many raw materials to purchase, and manufacturers need not order more than the amount needed from suppliers to ensure they have surplus on hand if demand for their products unexpectedly rises. Further, retailers would have fuller shelves if they shared the information they possessed on sales of a manufacturer's product in all their stores with the manufacturer. Hence, the Internet makes it possible to show a business’s hand to others; however, decades of distrust and coordination problems within industries make it unmanageable.
Recently, companies of all sizes ranging from giant international corporations to small-scale specialty manufacturers have adopted SCM to improve their relationships with their suppliers, distributors and customers to reduce costs, increase quality and speed, and decrease risk. As a result of this, the demand for both effective as well as efficient SCM software has caused an intense competition in the SCM software industry. Typically, SCM ranges from a fully vertically integrated company and one where each channel member functions separately and independently. Thus, it is highly crucial for the various players in the chain to coordinate properly for its effective management. A comparison study was conducted Cooper and Ellram (1993) where SCM was compared to a well-balanced and well-rehearsed relay team. The team is more competitive and performs better when every player knows how to be positioned for the hand-off (Yang and Whitfield). Here, the relationships play a vital role; players directly passing the baton have the strongest relationship, but the entire team must make a coordinated effort to win the race. In other words, a company must move beyond the orthodox supply chain. Sharing and passing information between partners in a sequential, linear manner is no more as viewed as effective, since it is too slow, expensive, and inaccurate, and it makes the business susceptible to competitors that do possess responsive supply chains. Rather, a company ought to develop adaptive supply chain networks wherein manufacturers, distributors, suppliers, and customers pass on information dynamically through the network.
Information Technology (IT) systems have a primary role to play in the supply chain’s success, as they allows company management to take bold decisions on a broad scope. With IT systems, it is possible for businesses to monitor raw materials, orders, schedules, finished products inventory, and other important information across the complete organization. Interestingly, SCM systems bring together many of the preceding applications and are used to span the stages in the supply chain and to allow for a more global scope because they can span many supply chain stages with their different modules (Yang and Whitfield).
SCM tools can analytically produce planning solutions and make strategic level decisions. With supply chains growing to become increasingly global and complex and with customers and competitions becoming more demanding, businesses will require the supply chain capabilities which only advanced IT systems can offer. Although having a limited pool of resources, several software providers are orienting their SCM software products to match the current trend and overcome specific challenging surrounding inventory visibility, supplier management, or product development collaboration (Balko, 2002).
Software providers are attempting to supplement large-scale projects implemented by vendors of ERP (enterprise resources planning) in the past few decades by providing slenderer, more modular tool packages. However, customers are not just more focused as far as the problems they are addressing is concerned, but also insist on affordable applications which enable them to monitor the progress at various levels of implementation. As discussed previously, one ideal and efficient approach of improving supply chain effectiveness is via collaboration – including as many suppliers as early as possible in the planning and development phase. In this domain, the automotive sector has made groundbreaking progress.
With SCMS, suppliers are not just associated with the development of the product, but are also made to participate at every stage of the scheduling and production stages. Suppliers to automotive firms can improvise in their role in the process and can make plans accordingly by having an in-depth knowledge and understanding of the production schedule. As the demand for SCMS highlighted features like easy installation, easy management, and rendering a rapid return on investment (ROI), experts predict that the competitive standards for a successful SCM tool will be more on the following: (1) ROI: – how fast a software solution can shape the bottom line and generate cost savings. (2) Total cost of ownership – this includes the total cost of the solution, the training, the implementation, and extra consulting fees. (3) Viability – capability of the software vendor to have the financial means of surviving the recession and remain in business for coming years, And (4) tested and proven solution for a given supply chain issue– customer references who could speak to the efficaciousness of the software solution. In the software industry, it is understood that present time’s SCM needs to offer certain functionality for both vertical industries as well as emerging business processes. In this direction, the vertical industries within the SCM software market include:
High tech/electronics: In the electronics industry, the key factor for success is agility, particularly in time-to-market with new products. Vendors of SCM tools have started addressing those key industry challenges. In high-tech industries, SAP and i2 Technologies are predominant in, mainly for computers and associated products. Occupying a commanding place in the large enterprises market, and the mid-market, are the software giants: Oracle, Baan, J.D. Edwards.
Food & Beverage/Consumer Packaged Goods (CPG): CPG manufacturers deliver products made up of few materials produced by automated or highly repetitive procedures. Accuracy in forecasting, timely response to customer demand, and organized monitoring of supply chain costs are the key factor to success in CPG. ERP and SCM vendors are termed as the top two players in CPG for large-scale enterprises. SAP endorses global financial and process manufacturing, and expands support for SCM which has made the leader in CPG manufacturing.
Process industries: The process industries, which include petroleum, chemicals, steel, pharmaceuticals, and paper, are characterized by huge, multinational corporations that operate highly automated process plants in developing countries and global distribution operations in large industrial plants. Therefore, the key to success for process industries SCM vendors is support for multiple currencies, multiple languages, and localized tax and financial accounting. For large-scale enterprises, SAP holds the top position with its dedication to global financial management.
Automotive: After several years of cost reductions via through robust manufacturing methods like JIT movement, automotive suppliers have eliminated a lot of over-head costs and complexity out of their operations. They have three business strategies in common: supply chain efficiency, product lifecycle management, and customer intimacy. Such strategies would result in significant change in every tier of the supplier network.
Order-driven manufacturing: In this, manufacturers produce products accordingly to customer’s order specifications. Manufacturers employ technology and applications of ERP vendors for providing customers with practical and real-time available-to-promise (ATP) of a configured order. With ATP as the benchmark, the objective is to minimize lead times for meeting customer’s deadlines and schedules.
Volume-driven manufacturing: because of the competitiveness of majority of volume-driven markets, the application vendors must provide applications that increment capacity utilization, decrease inventory, cut time-to-market, and support for enhanced customer intimacy. Oracle, with the combination of its CRM and Flow Manufacturing module, has the top position in the volume-driven markets. Due to the increasing awareness and importance about supply chain problems and the potential of Advanced Planning & Scheduling (APS) systems, i2 Technologies has become a very vital partner in reduce cost from the supply chain and heighten overall throughput. Furthermore, researchers suggest that SAP has a significant offering which cannot be ignored or overlooked. With greatly sophisticated repetitive manufacturing functionality, J.D. Edwards is said to be a growing force amongst large-scale enterprises (Foster, 2002).
Conclusion
In the present market scenario, vendors who are based on planning and optimization software, like i2 Technologies, continue playing a crucial part, albeit orthodox ERP providers, such as Oracle and SAP, have turned into real market leaders.
Today’s enhanced and renowned supply chain management is capable of assisting businesses in achieving and maintaining a competitive edge by empowering them to streamline and improvise their most vital supply chain functions from beginning to end. With an efficient SCM in place, companies can increase cost-efficiency, and raise productivity. .
Supply chain management software (SCMS) allows the company to realize of all these benefits by providing a wide array of robust features, delivered via a comprehensive package of tightly integrated applications and modules. Furthermore, this functionality is engineered to fully automate and include supply chain processes from end-to-end.
References:
Association of Modern Professionals. (2013). Supply Chain Management. Retrieved from
http://www.itinfo.am/eng/supply-chain-management/
Balko, J. (2002). “Today’s supply chain software tools had better be easy to install, easy to
manage, and render a quick return on investment – no room for error”.
Foster, T (2002). The Supply Chain e-Business Top 100. Retrieved June 4, 2003, from
<www.schneiderlogistics.com/company_info/sli_in_the_news/ebiztop100_0802b.html>.
Wood, L., (2008). Face-Off: Supply Chain Management Software. Retrieved from
http://writer4u.com/Samples/scm%20software.pdfYang, J., & Whitfield, M. SUPPLY CHAIN MANAGEMENT SOFTWARE
DEVELOPMENT: AN EMPIRICAL EXAMINATION. Retrieved from <http://faculty.de.gcsu.edu/~jyang/Publications/Supply-Chain-Conf-IIMA.pdf>.
