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Executive's Guide to SCM (Supply Chain Management) Software System

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SCM Executive Guide

Supply chain management software systems are required to streamline and integrate the functioning of whole supply chain itself and establish communication with other departments of the company like human resource, CRM and accounts. Supply chain management is comprised of five main activities planning, sourcing, manufacturing, logistics and return. Supply chain management software system tries to integrate all the five steps of SCM and helps in integrating it with other departments to exchange information, as and when necessary, to avoid excess or low inventory of raw material or finished products, delayed supply of products or services to the customers and from the suppliers, timely invoice raising for payments and either replace or service the defective products. The integration of SCM with accounts helps the company in manufacturing cost effective products and forecasting customer demand.

Supply chain management software systems previously were only limited to predict the demand and ensure smooth supply of raw material from its own suppliers but with internet, SCM software system can link the supply chain of the company with its customers and vendors which improve cost effectiveness by reducing excess inventory or over production. Supply chain management software systems provide facility of keeping track of extended supply chain which means the company can keep track of the suppliers who supply raw material to their own vendors. This keeps company aware that whether their vendor will be able to supply raw material to them or not in case of sudden demand.

Setting up proper network of warehouses and selecting cheap and cost effective means of transport for timely supply of finished products to the customers is another step of supply chain management software system which has grown immensely after the inclusion of wireless technology in ERP systems and SCM applications. Replacement of defective products and after sales services is another part of SCM which is monitored by software systems much effectively than legacy systems.

The automation of SCM is not so easy and it is a fact that till today there is no ERP system or SCM application which can provide satisfactory solutions to every industry. Some SCM applications or ERP systems with industry specific designs do provide effective solutions to this complex department of manufacturing, service providing and distribution companies. The major reason for the failure of supply chain management software system is mistrust on the software itself and amongst the company, suppliers and customers. The linking of supply chain of three concerned parties is not possible if they do not share the data on a common platform with each other, this fails the idea of SCM software system providing realistic customer demand forecast and inventory requirements.

Any software is as good as the information supplied to it, same applies for SCM software system, employees expect the system to predict demands right from the beginning and when it is wrong they stop trusting the system, whereas, initially the experience and expertise of employees shall be applied to groom the system according to company's old established processes to work accurately later. The internal changes in the company are hard to bring about as employees are reluctant to change and do not feel comfortable with the new system and its way of working.

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