The Advantages of Using Supply Chain Management Software

the advantages of using supply chain management software

5 Clear Advantages to Using Supply Chain Management Software

Supply chain management software, also known as SCM software, is a tool used to monitor the progression of goods throughout the supply chain. The supply chain covers every activity from the sourcing of raw materials to the delivery of finished products to an end customer.

Supply chain management is difficult as it deals with a variety of processes often occurring simultaneously. SCM software decreases the complexity of supply chain management processes while providing businesses with significant benefits.

Choosing the best supply chain management software is dependent on specific business needs, wants, and objectives. 5 business process categories that are universally benefited by supply chain management software include-

1. Communication

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Great communication and collaboration are foundational for any successful and productive business. SCM software offers a centralized communication channel which is incredibly important considering that 76% of companies report that there is no automated flow of information in their supply chain.

Risk management assessments should not fail to identify communication issues when 50% of companies report sales opportunities were lost as a result of incomplete information accessibility. The best supply chain management software presents users with real time update capabilities and cloud based remote accessibility.

Supply chain management software should be considered a part of business best practices for both improved collaboration and communication.

2. Supply Chain Logistics

Studies have shown that shipping costs are increasing significantly over time and show no sign of becoming more affordable. For example, from 2016 to 2017, freight transportation costs increased 7% with private trucking costs going up 9.5%.

Best practices for shipping optimization include the use of SCM software which can track where raw materials or products are throughout the entire supply chain. With machine learning and artificial intelligence advancements, supply chain management software can provide not only real time updates but also more complex business intelligence solutions.

3. Demand Planning

Sales forecasting and demand planning processes are both positively impacted by supply chain management software. For example, the bullwhip effect can occur if real time updates are not made and demand planning results are not up to date.

The bullwhip effect refers to incidents when a business incorrectly orders products based on outdated demand rates. Businesses can avoid order management or inventory management disasters like the bullwhip effect through proper SCM software usage.

The efficiency of business planning and business intelligence processes are enhanced as a result of more accurate demand planning and sales forecasting initiatives. Additionally, businesses are better equipped to stay ahead of current market trends and maintain a competitive advantage with demand planning and sales forecasting accuracy.

4. Risk Management

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Disruptions in the supply chain can cost businesses a lot of money. In fact, studies reveal that businesses who experience a prominent supply chain disruption suffer as high of a 7% share price reduction.

Supply chain management software helps businesses to identify potential risks and proactively avoid them. SCM software also offers solutions and backup plans for when a disruption cannot be avoided, decreasing the damage that a supply chain disruption inflicts on businesses.

Proper risk management can also result in leaner business operations with 87% of companies reporting that they could reduce their inventory levels by 22% if they had a better supply chain risk management understanding.

5. Quality Control

The rule of 10 states that for each step of progression, the cost to repair or replace a product increases by tenfold. Understandably, businesses are focused on identifying and correcting issues as early on in the supply chain as possible to avoid incurring additional costs down the line.

As supply chains continue to expand, businesses are becoming more concerned with not only the quality control standards of their immediate suppliers but secondary suppliers and beyond. Best practices should insist on the implementation of a standard minimum quality control criteria and regular audits in order to maintain quality control levels.

SCM software presents a great solution to product lifecycle management and supplier management issues. With fewer quality control problems to deal with, transportation management and inventory optimization processes are also positively influenced.

SCM solutions sort through big data to deliver businesses the quality control information they need to analyze. As a result, SCM software makes it easier than ever before for businesses to contract with suppliers and vendors that share their high quality control standards.

Key Takeaways

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Top supply chain management software supplies businesses with a wide range of benefits, from improved communication to increased demand planning accuracy.

The automation software provides businesses combats the issue of 75% of companies reporting they have no automated flow of information within their supply chain.

The best supply chain management software for a business depends on their specific needs, wants, and objectives.