SCM supply chain software

 

SCM supply chain software

What is SCM (Supply Chain Management)?

At the most fundamental level, supply chain management (SCM) is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination.

Although many people equate the supply chain with logistics, logistics is actually just one component of the supply chain. Today’s digitally based SCM systems include material handling and software for all parties involved in product or service creation, order fulfillment, and information tracking―such as suppliers, manufacturers, wholesalers, transportation and logistics providers, and retailers.

Supply chain activities span procurement, product lifecycle management, supply chain planning (including inventory planning and the maintenance of enterprise assets and production lines), logistics (including transportation and fleet management), and order management. SCM can also extend to the activities around global trade, such as the management of global suppliers and multinational production processes.

The history of SCM

Supply chains have existed since ancient times, beginning with the very first product or service created and sold. With the advent of industrialization, SCM became more sophisticated, allowing companies to do a more efficient job of producing and delivering goods and services. For example, Henry Ford’s standardization of automobile parts was a game-changer that allowed for the mass production of goods to meet the demands of a growing customer base. Over time, incremental changes (such as the invention of computers) have brought additional levels of sophistication to SCM systems. However, for generations, SCM essentially remained a linear, siloed function that was managed by supply chain specialists.

The internet, technology innovation, and the explosion of the demand-driven global economy has changed all that. Today’s supply chain is no longer a linear entity. Rather, it’s a complex collection of disparate networks that can be accessed 24 hours a day. At the center of these networks are consumers expecting their orders to be fulfilled―when they want them, the way they want them.

We now live in a time of unprecedented global business and trade, not to mention continual technology innovation and rapidly changing customer expectations. Today’s best supply chain strategies call for a demand-driven operating model that can successfully bring people, processes, and technology together around integrated capabilities to deliver goods and services with extraordinary speed and accuracy.

Though SCM has always been an enterprise fundamental, the supply chain today is more vital than ever as a marker for business success. Companies that can effectively manage their supply chain to adapt to today’s volatile and ever-changing, technology-driven business environment are the ones that will survive and thrive.

Industry 4.0 and SCM

Today’s application of radical new technologies to manufacturing has been dubbed Industry 4.0, or the “fourth industrial revolution.” In this latest iteration of industrialization, technologies such as AI, machine learning, the Internet of Things, automation, and sensors are transforming the way companies manufacture, maintain, and distribute new products and services. It can be said that Industry 4.0 is built on the supply chain.

In Industry 4.0, the way enterprises apply technology to the supply chain is fundamentally different from how they applied it in the past. For example, within the maintenance function, enterprises would typically wait until a machine malfunctioned to fix it. Smart technology has changed that. We can now predict failure before it happens, and then take steps to prevent it so that the supply chain can continue uninterrupted. Today’s SCM is about using technology to make the supply chain―and the enterprise―smarter.

Industry 4.0 SCM also provides a significant advantage over traditional SCM because it enables aligned planning and execution while at the same time delivering substantial cost savings. For instance, companies that operate under a “plan-to-produce” model—in which product production is linked as closely as possible to customer demand—must create an accurate forecast. That involves juggling numerous inputs to ensure that what is produced will meet market demand without exceeding it, avoiding costly overstocks. Intelligent SCM solutions can help you meet customer demand and financial objectives at the same time.

Intelligent SCM has other advantages, too. For instance, it can free up supply chain employees to contribute to the business in ways that add more value. Better SCM systems that automate mundane tasks can equip supply chain professionals with the tools they need to successfully deliver the products and services the supply chain is designed around.

Today’s SCM is all about the customer

SCM has historically been about increasing efficiency and reducing costs. Although those needs haven’t changed, what has changed is that the customer is now playing a front-and-center role in setting SCM priorities. It’s been said that “customer experiences live and die in the supply chain.”

Customer loyalty is predicated on an enterprise being able to quickly and accurately fulfill customer expectations. Raw materials, manufacturing, logistics, and trade and order management must all be coordinated to get a given item to the customer within a reasonable timeframe. To accomplish this, companies must look at their supply chains through their customers’ eyes. It’s not simply about getting the order to the customer on time; it’s about doing everything at the right time—before, during, and after order delivery.

SCM supply chain software