Meeting the Supply chain management (SCM) Challenge
A 1996 definition of supply chain management states that it is the “management of a network of interconnected business involved in the ultimate provision of product and service packages required by end customers.” A check in the internet puts a more current definition of SCM as the oversight of information, finances and materials as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. It covers the movement and storage of all raw materials, work-in-process inventory goods, and finished products from point-of-origin to point-of-consumption. There is also what is called the Supply Chain Event Management or SCEM which is mostly concerned with the consideration of all possible events and factors that may occur to cause disruption in the supply chain. It is with the use of SCEM that possible scenarios are generated and solutions are prepared.
It is said that reduction of inventory is the ultimate objective of any management system. To help achieve this end, many SCM software solution packages are being offered in the market today. And many sophisticated SCM software solution packages with web interfaces are in tight competition with web based application service providers (ASP) who dangle the promise of providing a portion or the entire integrated SCM service package for business that lease their service.
The supply chain management process may be divided into three main clusters:
1. The product flow. This would include movement of goods from a supplier to the customer together with customer returns if there be any, and the associated service needs.
2. The information flow. This involves transmission of orders as well as updating information relative to the status of the delivery.
3. The financial flow. This consists of payment schedules, consignment, credit terms and title ownership arrangement among others.
Management of a supply chain covers the preparation and management of all functions involved in sourcing, procurement, conversion, and logistics management activities. It also includes coordination and cooperation with other partners that could include suppliers, intermediaries, third-party service providers, and customers.
Two main types of SCM software solution are available in the market today: planning applications and the execution applications. There are also many application that have integrated this two critical functionality. Planning applications enable users to determine the best options to fill a given order using advance algorithms. On the other hand, execution applications keep track of the status of items, management of materials, and the associated financial information.
There are SCM applications that have been based on open data models and have the ability to support data sharing within and outside the organization. This is also referred to as extended enterprise that includes manufacturers, supplies and end customers. The shared data reside in a diverse data warehouse and may span several different companies and sites. Sharing data with suppliers (upstream) and clients (downstream) create the potential of improving time-to-market delivery of products, cut down costs and allow all parties involved in the supply chain to better manage resources and plan for future requirements.
There are also an increasing number of companies that rely on web site or web based applications for their SCM solution. There are many web sites that are offering e-procurement programs or marketplaces for manufacturers and supplier to do commerce and even auction bids with different suppliers.
In today’s business environment, there is much complexity created by constantly increasing customer demands, pressure on cost and the availability as well as access to resources. On top of all this is the expectation to improve profitability, grow revenues and capture additional market share. In order to succeed, the use of an SCM software solution could prove to be a critical choice. Successful management of a supply chain requires cross-functional integration within the company and across the network of businesses that comprise the supply chain. SCM system will give your business the ability to integrate its network of business with other supply chain members.
There are literally thousands of tasks and processes that are performed and coordinated within any given company. Every company is involved in a supply chain relationship with another business or company. The structure of these tasks and processes within and between companies play a critical role in a successful management of a supply chain system. One vital key for a successful management is the integration of business processes among key members of the supply chain. SCM software solutions enable different companies to be able to do just this. Much valuable resources are put to waste when supply chains are not properly integrated, appropriately streamlined and carefully managed. Supply chain management software facilitate all these in a single unified package so separate companies share a common language and gain the ability to link up their processes with the other members of the supply chain.