Supply Chain Management Software
It is quite possible that supply chain management software is the most fractured software application group in the world. While the vast majority of supply chain steps include their own specific kinds of software, a lot of vendors have put together different chunks of this software together under a single roof in order to make the job easy.
There is no such thing as a supply chain management total software program that will be perfect for every single business. The vast majority of organizations will have to figure out a way to keep track of supply, demand, product status, distribution, as well as logistics. Thus, it is vital to find ways to share data with other members of the supply chain – and fast. Some ERP vendors, such as the Advanced Planner and Optimizer from SAP, can take on several of these tasks at once. But because every company has their own set of unique challenges to meet, sometimes it is best to go with a best of breed product. The result might be some level of integration.
Systems are only as good as the info they contain. This holds true for SCM, as well. If you do not have accurate information entered in to the application, then you will not wind up with an accurate forecast. Also, if workers bypass the supply chain system and attempt to handle things on a manual basis, then even the most advanced system will give you a bad picture of what is actually happening in the supply chain of the firm.
On ERP and SCM
A lot of SCM applications rely upon the sort of data that is stored in vast quantities within the ERP software. In theoretical terms, you might be able to put together the data you require to feed the SCM applications from legacy systems, but it can be quite difficult to get all that data to flow in a reliable fashion to all aspects of the business. ERP manages to integrate all that data in to a single application. This means you will have a single place to go to in order to get all the latest info about your company. A lot of people who have tried installing SCM applications express their relief for first installing ERP. The ERP is an effective way to put all your info in order.
One drawback of ERP is the fact that it can be quite costly and difficult to learn. You might want to figure out other ways to explore SCM applications the data they need without doing ERP first. A lot of ERP vendors also have SCM modules, so by doing an ERP project, you very well might be able to kill two birds with a single stone. But ultimately, the business will have to come to a decision as to whether or not this type of product fits their needs or whether they would be better off utilizing a different kind of system.
Why Install Supply Chain Management Software?
Prior to our Internet era, supply chain software users had the primary goal of predicting what their clients would demand and making their supply chains run on a smoother basis. The Internet has changed everything. Nowadays, businesses can connect with the other members of their supply chain in to a single network that effectively optimizes opportunities and costs for all involved. This is why the B2B explosion occurred. It has to do with the idea that everyone you do business with could be connected together in to one big family.
While it might not be as cooperative as it sounds in actuality, the fact is that the vast majority of companies today share data with their supply chain partners. The end goal is supply chain visibility on a higher scale. Most supply chains operate like a vast card game. While the players might not want to show each other their cards for fear of revealing pertinent information, the fact is, the more info they share, the more everyone around the table benefits. Once everyone is aware of all the pertinent data, then the suppliers will have a better idea of how many raw materials they need to order, while the producers will not have to worry about having more than they need from the suppliers. Retailers will benefits also, in that they will not have as many empty shelves by sharing information with the manufacturer. Companies are only recently starting to shake off centuries of distrust in order to use the Internet to their maximum benefit.
Another reason why companies have been force to overcome their distrust is because bigger industry players often bully them in to sharing information. For example, companies who wish to sell their goods in such chains as Wal Mart are forced to share a lot more information than they might want to share otherwise.
Timely and accurate supply chain data aids companies in shipping off or manufacturing only the amount of the product as there is a market for. This is called “just in time manufacturing.” This allows firms to cut down on their inventory storage, and thus save money.
Supply Chain Management Collaboration
When surveying the field of consumer packaged items, one finds many instances of collaboration. Two of the most obvious examples are Wal Mart and Procter & Gamble.
In the ‘80s, these two firms began collaborating during an era where this was extremely rare. But they decided to build a massive software system anyway that would connect Procter & Gamble to the distribution centers of Wal Mart. This sends a signal to Procter & Gamble whenever their products begin running low, so that they know to ship more products immediately. In some instances, the system might go all the way to specific Wal Mart outlets. This allows Procter & Gamble to monitor the process and be alerted every single time one of their products sells at a Wal Mart store.
This kind of up to date info keeps Procter & Gamble aware of when they need to ship more products, when they need to manufacture more products, and when they should display a particular product at Wal Mart. That way, they do not have to keep a bunch of products stocked up in their warehouses while they await Wal Mart’s call.
What’s more, stores can arrange it so that payments and invoices are automatically made, as well. Procter & Gamble are thus able to save time, money, and inventory and continue to give Wal Mart their “every day low prices” without risking going bankrupt.
Avoiding SCM Software Roadblocks
The first obstacle you might have to overcome when trying to install supply chain management software is the trust issue among your supply chain partners. Some members of companies are intimidated by the fact that their information will be going outside of their company’s walls. Employees are thus forced to change the way they work – as will the employees of every supplier that comprises your network.
Only large, powerful manufacturers are able to force supply chain management software upon their suppliers. The vast majority of companies, however, will have to convince their partners why supply chain management software is a wise option. This is especially the case if your goals in installing the software are even vaguely threatening to your suppliers.
If we look back at the case of the collaboration between Procter & Gamble and Wal Mart, the former company had to take on more responsibility in terms of inventory management, which in the past has been something that retailers have done themselves. This is something that Wal Mart demanded of Procter & Gamble, but it also gave Procter & Gamble more immediate access to information regarding their products’ demand at Wal Mart – this helped Procter & Gamble start manufacturing their goods in a more effective manner.
In order to attain a successful collaboration, it is vital that you take your supply chain partners’ goals in to consideration as well as your own.
Within your organization, it is possible that you will encounter a lot of resistance to the changes posed by supply chain management software. Your operations department will probably not be used to dealing with faxes, telephone calls, hunches scrawled on paper, and will probably not want to deal with these things. If you are unable to convince your colleagues that using the software is worthwhile, then they will probably find ways to work around it. After all, you can’t disconnect fax machines and phones just because supply chain software has been installed.
Using supply chain management software can be difficult at first, and you can expect that many errors will be made. Supply chain systems will always process information as they have been programmed to do, but that does not mean that the technology will automatically absorb a business’s entire history and processes immediately after it has been implemented. The system might have to be tweaked a bit until you get it perfectly right. The system is naïve at first, and your employees must be aware of this – or else they will think that it is simply useless and dismiss it altogether.
To give one example, just before one major automotive supplier installed a new application that would predict demand for a product, an automaker ordered an unusually large number of items. As a result, the system started predicting huge demand for this particular item based on a one time order that was unusually high. If you follow the technology blindly without using common sense, then you might end up ordering an inaccurate number of materials. The firm was able to catch this error after a demand forecaster came up with his own numbers. As a result, another problem was created: the demand forecasters stopped trusting the software altogether and vowed to work with their own information. As a result, the supplier had to fix the system, and then regain his employees’ confidence in the software.
Once your employees are able to understand that they can use their skills together with the system’s technology, they will be able to see how it can benefit them in innumerable ways.
