An effective supply chain can reduce costs, improve quality and efficiency while lowering overall costs incurred by business operations. Have you ever wondered why some companies have more profit than others in the same sector? How can you make money as a manufacturer or a distributor if there isn’t any coordination among suppliers?
In this article, we will show you how to implement supply chain management system and how it can help companies to increase their profits, enhance deliveries, and improve overall customer satisfaction.
What is a Supply Chain Management System?
An SCM system is any software a business uses to coordinate and direct the flow of its goods, from raw materials manufacturing to finished product delivery. SCM systems are used to organize procurement, order tracking, quality control, order fulfillment, distribution, and more.
Typically, SCM implementation installs a collaborative tool accessible to a whole range of professionals and departments involved in the operational chain from production to supply delivery. These include suppliers, manufacturers, logistics managers, wholesalers, retailers, etc.
More modern SCM systems integrate advanced technologies such as artificial intelligence, machine learning, Internet of Things, automation, etc. to supercharge business operations.
How Does the SCM System Work?
A supply chain is a coordinated network. Therefore, any SCM system must also have a cohesive structure that enables functionality and visibility along the product delivery journey. As such, an SCM system would typically integrate features such as inventory management, warehouse management, purchase-order processing, demand forecasting, supplier relationship management, logistics planning, and so on.
Also, most SCM systems are integrated with bookkeeping functionalities to enable the business to manage its ledger and optimize finances effectively.
Over the years, there’s been increased adoption of cloud-based SCM systems as software-as-a-service (SaaS). Cloud management of the supply chain allows businesses to track the entire lifecycle of a project, offering close monitoring and adequate visibility at each touchpoint. It emerged to fill the gaps with traditional SCM systems, which lack the 360° management enabled by cloud technology. Overall, cloud-based SCM systems are more scalable and efficient.
Key Advantages of SCM Systems
1. Cost Savings
A non-optimised supply chain is a financial risk for any business. Every operational mistake, delivery delay, and order fulfillment errors result in the accumulation of unnecessary overhead costs.
However, you can optimise cash flow by optimising your supply chain via an SCM system. The system offers options for managing your inventory, organising the warehouse, automating operations, and integrating financial accounts. Then, you can be certain that every dollar is put to meaningful use.
2. Smart Decision-making
We live in a data-driven world and any business that wants to succeed today must take data seriously. The data from an SCM system can help business leaders and managers make smarter decisions. An SCM solution can help forecast demand changes, analyse market forces, and strengthen your company’s operations. Data from the software can help you identify areas that need improvement as well as implement planned enhancements.
If there was any great challenge that traditional SCM faced, it was the lack of an automated, real-time flow of information. Even to date, many companies still struggle to organise information flow. With SCM software, though, companies can integrate multiple departments involved in product supply and delivery. Such an integrated software solution smoothens the flow of information across the chain so as to achieve seamless operations.
4. Demand Management
Another great challenge for businesses is how to keep up with demand, ensuring that their stock is never way above nor way below the demand. SCM systems typically integrate demand forecasting and inventory management functionalities.
These two features help companies to analyse their market, understand consumer behaviours and find demand patterns. These in turn enable them to project demand and optimise their supply towards consumer expectations.
5. Logistics Management
Logistics is central to supply chain management and by implementing supply chain management system that is efficient, you optimise logistics and shipping operations. It helps to identify the most efficient transportation methods and routes for each type of good. This in turn helps you to save costs on transportation and logistics.
The system can also help you maintain meaningful relationships with drivers and other logistics operators to ensure timely delivery of goods.
6. Business Stability
Another thing to note in the steps involved in supply chain management implementation is that supply chains are business-critical. In the case of e-commerce companies, for instance, the supply chain is essentially the business itself. Therefore, one can see how any disruption to the supply chain can threaten the stability of the business.
However, by efficient supply chain implementation to capture and mitigate risks, businesses can make their operations more sustainable.
7. Quality Control
An SCM system enables a business to exercise greater control (overall) over its goods and supplier relationships. What this also means is that the business can quickly identify and arrest non-compliant behaviour within the chain. Most SCM software solutions have data analysis functionalities so that managers can track information and performance data.
This enables a greater level of quality assessment for improved product delivery. With the visibility that SCM systems provide, no longer should anything be lost to the cracks.
8. Productivity and Efficiency
The main goal of an SCM system is to enhance business productivity and operational efficiency. It enables businesses to manage their supply chain operations in real-time, limiting the possibility of delays or disruption to the process. How else could large enterprises such as Amazon have been able to implement same-day and next-day delivery if not for innovations in supply chain management systems?
Of course, delays are inevitable. However, even if there are delays in the process, an SCM system comes in handy in implementing backup plans so as to quickly close any emerging gap. Today, SCM systems are also integrated with smart automation solutions that minimise delays and enhance performance.
What You Need to Know Before Starting Implementation of SCM
Determine your business goals (short-term and long-term). Having a clear vision for your company helps you to implement the most efficient SCM model that can help you achieve your goals fastest. After all, not every supply chain management is the same. Even if you will build one from scratch internally by hiring developers, you still need to know what you want in order to define its functionalities.
Of course, this begins by auditing your existing system (traditional or digital), identifying its failures as well as key areas for significant improvement.
Set objectives, metrics, and milestones. SCM software solutions are data-driven and unless you define the metrics you want to measure and why, you would most likely be gathering data that’s not useful to you. Therefore, you need to define how success or progress would be determined.
Certainly, you have to be realistic. Setting impossible metrics and timelines is just as bad as not setting a plan at all; either way, you get an inaccurate picture of the state of your business. Avoid that by having a clear plan of steps in supply chain management implementation.
Crucial Steps of Implementing Supply Chain Management System
Step 1. Onboarding
The first among the SCM implementation steps is that you have to get managers, operators, and vendors familiarised with the new system. It would help if there was a business case study, explaining why the old system was out-of-date and how the new system can enhance operations.
Key staff must be aware of the functionalities and capabilities of the new system and so it is important to communicate frequently throughout the process. This onboarding stage may take up to a couple of weeks.
In addition, you should give room for some learning curve, especially if you’re transitioning from a very traditional model. Often, staff augmentation through a development company is the best choice here because the additional staffers only need to know so much to integrate well with the rest of the team.
Thus, supply chain management system implementation means that some of the former procedures will definitely change. You want to ensure that your employees respond well and quickly to this change. More so, you want to ensure that there is no disruption to your pending deliveries during the roll-out.
Step 2. Technology Considerations
This is one of the most important decisions you would make in any SCM implementation plan. You need to determine if it’s an on-premise or a SaaS product.
Examples of questions to ask at this stage:
- How many servers do you need?
- Do you have supporting infrastructure?
- What development stack would it be built on?
- Will you build a new solution in-house or outsource the development?
Have answers to these questions before setting out on the actual implementation process. Even if it will take a month to decide the finer details of the project, that’s worth enough. Above all, choose options that support your business operations best.
Step 3. Start testing early and test often
An SCM is an overarching solution that transcends and connects all business departments. Thus, you want to ensure that it is perfectly fit for your business before the final implementation. The way to do this is to start testing early in the supply chain management implementation steps.
Carry key staff along throughout all the steps, including the preparation stage. Collect feedback from stakeholders (including vendors and third parties) and use the information gathered to refine the system before launch.
Finally, don’t think all the work comes to an end once you have finished implementing your SCM system. Not at all. Engineers and developers must continue to work in the background to assess the stability and functionality of the system, ensuring that it is working according to its defined purposes.
In all, depending on the size and complexity of the project, the whole process should take a couple of months. For instance, a project we undertook for HANDLE took seven months to execute.
How Can the ProCoders Team Help You to Implement the SCM System?
Of the many options available, building your own SCM system from scratch is a great way to transform your supply chain operations. Many on-demand software solutions today may not be comprehensive enough to cater to niche needs, especially if your business operates in a non-typical context. What to do, then? You don’t even have to hire developers. A software development company such as ProCoders will listen to your needs and assemble a team of developers for you.
One of the real advantages of having a supply chain management implementation plan is business expansion. At ProCoders, we have witnessed this first-hand by building an SCM system that enabled a client to expand its core offerings to meet market demand. The client in question is HANDLE, a company that procured and sold medical equipment to healthcare organisations.
As you know, the COVID-19 pandemic has put serious strain on hospitals and healthcare facilities. Stretched beyond its capacity at the time, HANDLE decided to explore a fantastic business opportunity to expand their supply pool by building an efficient SCM system. Before then, HANDLE only provided a marketplace for their clients (healthcare organisations) to sell old equipment. Now, it needed a comprehensive tool that enabled the company and its clients to track assets, manage warehouses, set budgetary allocations, and project demand. That’s where ProCoders came into the picture.
ProCoders always has ready developers in its talent pool; so, within days, a team for HANDLE was ready. Going through the supply chain management implementation stages took some months and HANDLE’ supply chain management was transformed for good.
HANDLE’s revolutionary story is one that we try to replicate in every company we work with. Our software development process is essentially a partnership with the client, sustained by frequent interactions, meaningful communication, and consistent iteration until the project is complete to the client’s satisfaction.
Worried about offshore development? There’s no need for that. Ukraine has one of the most affordable prices for software development, while keeping the quality top-notch. More so, at ProCoders, our developers are masters of communication and we strive to maintain a good relationship with our clients to fulfill their needs.
A supply chain management system is any software a business uses to coordinate and direct the flow of its goods, from raw materials manufacturing to finished product delivery. SCM systems are used to organise procurement, order tracking, quality control, order fulfilment, distribution, and more.
Over the years, there’s been increased adoption of cloud-based SCM systems as software-as-a-service (SaaS). Cloud management of the supply chain allows businesses to track the entire lifecycle of a project, offering close monitoring and adequate visibility at each touchpoint. Having a clear vision for your company helps you to implement the most efficient SCM model that can help you achieve your goals fastest. After all, not every supply chain management is the same.
The system offers options for managing your inventory, organising the warehouse, automating operations, and integrating financial accounts. Then, you can be certain that every dollar is put to meaningful use.
If there was any great challenge that traditional supply chain management faced, it was the lack of an automated, real-time flow of information. Today, SCM systems are also integrated with smart automation solutions that minimise delays and enhance performance.
As discussed, there are many benefits to using supply chain management software. It can help cut costs due to systematic tracking of materials and equipment along the value chain. It can also help ensure consistency in rules and regulations by facilitating communication between different parties involved in the supply chain such as manufacturers, distributors, and retailers.
The implementation process consists of intricate stages requiring careful planning and execution. Decisions about how to hire developers and which tech stack to use must be taken carefully. There might be problems during the process but proper communication is important, especially if you are using an offshore software development company.
Therefore, to supercharge your supply chain operations, you need a reliable software development company to handle the implementation of supply chain management systems. That company is ProCoders and we would be glad to have you work with us. Contact ProCoders today.