What is Supply Chain Management (SCM)? When and why do we use SCM software? When should one start using SCM? What are the 5 most important features of SCM?

When we try to answer the question of what is the supply management software, we need to give a business framework or our perspective.

It is not the same to investigate SCM from the perspective of an enterprise or a big business, as from the perspective of a small business. We will focus on SMB implementations and look at the SCM from the small business perspective.

by Investopedia definition Supply chain management
is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace. SCM represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains cover everything from production to product development to the information systems needed to direct these undertakings.

Today more then ever we can see the penetration of software and high tech into a real business. This software interconnection is a new bound strengthening the already established links between different entities in this process.

These entities can be recognized as:

  • Our company
  • Suppliers
  • Manufacturers
  • Contractors
  • Transport
It also represents the connected network of all individuals, resources, activities, and technologies involved in the manufacturing and sales of a product or service. So, it is not by chance that the term used to manage all this was constructed.
So with the process in place and the right software tool, we can expect to really manage the complete supply chain and, in the end, benefit from it.
The core beneficial points are:
  • add efficiencies
  • increase revenues
  • decrease costs
The need to control material flow and provide fluency grows on the priority list as a small business accelerates. There is a point in time where company growth is in direct correlation with supply management. The good thing is that we can very early see improvements in our company, resulting from the efforts invested in supply management.
In the short-term, all our inventory-related costs should decrease, such as:
  • manipulation cost
  • warehousing cost
  • transportation costs
Now, we can feel more confident and with continuous investment in our supply chain management we will strengthen our operations and in the long-term, we should expect:
  • more reliable manufacturing
  • better customer relationships
  • stronger supplier bondings
What are the 5 most important features of SCM?
Now let’s see what are the core components/features of standard SCM software.
Inventory management
for tracking and managing the availability of raw materials, stocked goods or spare parts. This feature can also help with asset management, barcode integration, and future inventory and price forecasting.
Order management 
for automating purchase order processes. For example, generating and tracking purchase orders, scheduling of supplier deliveries, and creating pricing and product configurations.
for anticipating customer demand and planning procurement and production processes accordingly. Efficient forecasting can help remove the need to buy unnecessary raw materials or store excess finished goods on warehouse shelves, hence reducing costs.
Return management  RMA
for inspection and handling of damaged or faulty goods, and processing of refunds or insurance claims.
These are only the core modules, usually, software developers deliver industry-specific modules to round-up the business workflow.

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