The supply chain management process refers to the act of optimizing all aspects of supply chain activities in order to maximize output and minimize resource use. Supply chain management is an integrated whole, as it includes service, product, and financial aspects of supply chain activities. It also includes service and product development, inventory management, and customer service. Supply chain management also involves the use of information technology and activities such as software and training for better management of the supply chain network. The aim of supply chain management is to improve productivity, cut cost, increase throughput and minimize waste.
The supply chain management process is generally characterized into five stages: Planning, sourcing, production, processing, and distribution. In ERP applications, supply chain management is further categorized into functional areas: Logistics, material management, and shipping and transportation. Using supply chain management analytics and supply chain management components in ERP systems, companies generate long-term strategic plans to fulfil customer demand for a specific product and prevent a major supply chain effect known as a "bulwark effect." Among the components that ERP applications use in supply chain management are inventory management, demand forecasting, and order administration. ERP applications have a series of analytical models such as the ERP: Hierarchy, Loop, or Problem-Solution method; the Production Based Method; and the Inventory Based Method.
Supply chain software has several advantages over supply chain management systems such as ERP because of the flexibility provided by logistics management software. In supply chain management systems, there is one single database to track all transactions, whereas in logistics software, users can create separate data structures for each product category, group, and sub-category. Another advantage of supply chain software is the integration with ERP applications. Since ERP has limited capacity to handle additional data, logistics management software makes additional use of the existing information in ERP to enhance the functioning of the overall supply chain system. Another advantage logistics management software has is its capability to forecast the demand and supply of a product over a period of time and make decisions regarding the next production phase once capacity has been reached.
One problem faced by most industries today is the over-supply or under-supply of certain products in comparison to demand. To remedy this problem, most supply chains include an improved logistics process wherein the company is able to foresee demand based on statistical analysis and current supply structure and determine which processes need to be accelerated or slowed down depending on the current status of the supply chain. To help improve logistics operations, many supply chain management process software solutions are available in the market including inventory management software, order management software, and SCM software.
Inventory management software facilitates planning and the collection of inventory data and other information to support the supply chain management process. Inventory management software includes functions like asset tracking, work planning, material management, and project management. Work planning involves organizing workers, resources, and equipment for maximum productivity, and project management help in coordinating project tasks from conception to execution to avoid delays and costs.
Inventory management software also helps companies keep abreast of their competitors as well as their market share position. It allows you to make timely updates in your manufacturing process to obtain the best possible results. On the other hand, inventory management SCM software helps you improve the logistics and supply chain management process by making changes to increase productivity and cut costs. It also provides real-time information for better decision making and resource allocation.
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