Organisations that prioritise sustainability must pay close attention to their supply chain, as up to 85% of the environmental, social, and governance (ESG)-related impacts occur within it. This includes more than 90% of the emissions produced by a company’s supply chain process of products, raw materials and services. Therefore, it is only possible to achieve sustainability by transforming the supply chain.
Fortunately, many organisations are aware of this issue and are taking steps to address it. Nearly half of the companies have set supply chain sustainability goals, and 70% plan to invest in circular economies that reduce waste through reuse and recycling. We prepared the following article to help you take more sustainable actions in your business.
What is a SCM software system?
SCM (Supply Chain Management) software systems are software applications that help organisations manage their supply chain operations more efficiently and effectively. These enterprise supply chain management software systems provide visibility and control over the various processes involved in the supply chain, such as planning, sourcing, manufacturing, inventory management, and logistics.
SCM software systems typically consist of a suite of integrated modules that cover various aspects of demand management of the supply chain, including:
- Demand Planning: This module helps organisations forecast demand for their products or services and plan production and procurement accordingly.
- Sourcing and Procurement: This module enables organisations to manage their relationships with suppliers, issue purchase orders, and track the status of orders.
- Inventory Management: This module helps organisations optimise their inventory levels by tracking stock levels, forecasting demand, and managing replenishment.
- Manufacturing: This module helps organisations plan and execute manufacturing processes, from production scheduling to quality control.
- Logistics and Transportation: This module helps organisations manage the movement of goods and materials throughout the supply chain, including shipping, tracking, and delivery.
SCM software systems can provide significant benefits to organisations, such as improving efficiency, reducing costs, increasing visibility and control, and procurement process management and enhancing customer satisfaction.
Software solution Types for supply chain
Due to the unique requirements and challenges faced by each business in supply chain management, various specialised software solutions are available to improve supply chain performance. These solutions cater to specific industries and can help businesses increase efficiency, reduce costs, and improve customer satisfaction. Companies can optimise their supply chain management and enhance their operations by selecting the right software solution. The main types are:
- Enterprise Resource Planning (ERP) Systems: ERP systems are integrated software solutions that can manage a company’s entire business processes, including supply chain management. They offer advantages such as integration, automation, and real-time data analysis.
- Warehouse Management Systems (WMS): WMS software is designed to optimise warehouse operations and inventory management. Benefits of using a WMS system for supply chain management include improved inventory accuracy, increased efficiency, and better customer service.
- Transportation Management Systems (TMS): TMS software is designed to optimise transportation operations, including planning, execution, and tracking. The benefits of using a TMS system for supply chain management include improved visibility, reduced costs, and increased efficiency.
- Demand Planning and Forecasting Software: Demand planning and forecasting software help businesses predict future demand and optimise inventory levels. Advantages of using this software for supply chain management include improved accuracy, reduced inventory costs, and increased customer satisfaction.
- Supplier Relationship Management (SRM) Software: SRM software is designed to manage supplier relationships and optimise procurement. The benefits of using SRM software for supply chain management include improved collaboration, increased efficiency, and reduced risk.
- Inventory Management Software: Inventory management software is designed to optimise inventory levels and reduce costs. The advantages of using inventory management software for supply chain management include improved inventory accuracy.
What are the four types of supply chain management?
As mentioned, supply chain management is a complex industry. No one definition covers the practices that companies in this domain use. Therefore, there are a lot of software solutions on the market to fulfil different business needs. It seems overwhelming and chaotic, but some patterns can be drawn to help the market navigate through this variety of approaches and requirements. Here are the four main ones:
- Harmonious Supply Chain Management: An approach that prioritises the smooth collaboration between every participant in the supply chain, from suppliers to customers. This model strives to enhance the entire chain by fostering shared information, synchronised activities, and unified goals, ultimately boosting efficiency and customer contentment.
- Dynamic Supply Chain Management: This type promotes agility, emphasising quick adaptability to ever-changing market needs and customer tastes. Key strategies include flexible manufacturing, swift product development, and instantaneous response to demand changes. This approach aims to trim down lead times, uplift customer service, and gain a competitive edge through quickness and skill.
- Efficient Supply Chain Management: Lean supply chain management sets its sights on waste elimination and cost reduction without compromising quality. This model strongly emphasises inventory reduction, process streamlining, and ongoing efficiency enhancement. Implementing lean methodologies like just-in-time production and lean manufacturing helps to fine-tune the supply chain and elevate customer value.
- Eco-Friendly Supply Chain Management: This approach, also known as sustainable or green supply chain management, weighs in the environmental, social, and ethical implications of the supply chain. It’s focused on reducing carbon footprint, slashing waste production, endorsing ethical procurement and fair labor, and advocating for responsible product disposal. It mirrors the principles of sustainability and corporate social responsibility.
It’s essential to highlight that these categories of supply chain management aren’t isolated from each other and can intersect or blend based on market demand and a company’s unique needs and goals. Furthermore, technological advancements and emerging concepts in supply chain analytics, such as digital supply chain management and circular economy principles, are forging the future of supply chain management practices.
Case Studies or Success Stories/examples of solutions
The information above is crucial and insightful, but it may display only some of the topic. You may still wonder: how do I imply this to my company? And yet still for an answer. To help you better understand how useful software solutions in the supply chain are, it’s great to hear about other companies using them to leverage their business. Here are well-known enterprises that used those solutions to their advantage:
- Coca-Cola Enterprises: Coca-Cola Enterprises (CCE) used a software solution from SAP to streamline its supply chain and increase efficiency. The software helped CCE to optimise its manufacturing and distribution processes, resulting in a significant reduction in inventory costs. It also provided real-time visibility into the supply chain, enabling the company to respond quickly to changing market demands. As a result, CCE improved customer service, reduced lead times, and increased overall profitability.
- Amazon: Amazon has leveraged its proprietary software solution, Amazon Web Services (AWS), to revolutionise its supply chain management. AWS provides comprehensive, real-time tracking of goods from the warehouse to the customer’s doorstep. It also uses predictive analytics to anticipate customer demand and optimise inventory management. This has allowed Amazon to significantly reduce delivery times, improve customer satisfaction, and maintain a competitive edge in the e-commerce market.
- Nike: Nike partnered with LLamasoft to create a more sustainable and efficient supply chain. The LLamasoft software provided data-driven analytics and modelling capabilities that helped Nike to identify areas of waste and inefficiency in its supply chain. As a result, Nike implemented strategies to reduce carbon emissions, minimise waste, and increase efficiency, aligning with its commitment to sustainability.
- Walmart: Walmart used JDA software to improve its supply chain management. The software provided sophisticated demand forecasting and inventory management capabilities, enabling Walmart to optimise stock levels and reduce excess inventory. As a result, Walmart was able to reduce costs, improve product availability, and increase customer satisfaction.
- Unilever: Unilever utilised a software solution from Kinaxis to enhance its supply chain visibility and agility. The software’s real-time data capabilities allowed Unilever to respond to disruptions and changes in demand quickly. This agility helped Unilever to maintain high levels of service and customer satisfaction, even in the face of unexpected events or market changes.
Top Supply Management Solutions in 2023
Supply chain management software helps businesses plan, execute, and track supply chain operations, including inventory management, supply chain planning tool, planning, order tracking, and transportation. It’s crucial for companies of all sizes. Here are the top supply chain management software solutions available today, selected based on features, price, support, and more.
- SAP Ariba: SAP Ariba is a cloud-based procurement and supply chain management solution. It offers features such as supplier management, sourcing, contract management, and supplier collaboration to streamline supply chain processes.
- Oracle Supply Chain Management (SCM) Cloud: Oracle SCM Cloud provides end-to-end supply chain visibility and control. It includes modules for demand planning, inventory management, logistics, order fulfilment, and supplier collaboration, enabling businesses to optimise their supply chain operations.
- JDA Software: JDA Software (now part of Blue Yonder) offers supply chain planning and execution solutions. Their software helps businesses with demand forecasting, inventory optimisation, production planning, transportation, and warehouse management to improve overall supply chain efficiency.
- Coupa: Coupa is a comprehensive spend management platform that includes procurement, invoicing, and expense management capabilities. It helps organisations automate procurement processes, manage supplier relationships, and gain insights into spending data.
- Ivalua: Ivalua is a unified source-to-pay platform that covers the entire procurement lifecycle. It offers features such as supplier management, sourcing, contract management, procurement analytics, and supplier collaboration. The solution helps businesses optimise their sourcing strategies and improve supplier performance.
Benefits of SCM solutions:
Until now, I am sure that you recognised the potential of SCM. To better illustrate what your company could gain from incorporating such solutions, I would like to present you with the leading solutions they bring to the table:
- Enhancing Visibility and Transparency: SCM software offers real-time insight into the entire supply chain network, from procurement to delivery. This transparency is vital in tracking inventory levels, shipments in transit, and evaluating supplier performance. By identifying bottlenecks and inefficiencies, the software enables proactive problem-solving and boosts overall supply chain efficiency.
- Optimising Inventory Management: SCM solutions aid in fine-tuning inventory levels, thereby reducing carrying costs. The software’s demand forecasting and inventory planning modules anticipate future needs and plan accordingly. Automated replenishment and order management features further enhance this, preventing stockouts and overstock situations, thus promoting optimal inventory levels.
- Streamlining Supplier Collaboration: Managing supplier relationships and communication can be complex. SCM software eases this process by facilitating seamless collaboration with suppliers. Features like electronic data interchange (EDI) and supplier portals enhance communication, expedite order fulfilment, and track supplier performance, ensuring a more efficient and effective supply chain.
- Automating Warehouse Operations: SCM solutions often include warehouse management systems (WMS), which offer benefits such as automated inventory tracking and pick-and-pack optimisation. Features like barcode scanning further improve order accuracy and reduce labour costs, thereby increasing warehouse efficiency and overall operational productivity.
- Leveraging Data Analytics and Reporting: Data analytics plays a pivotal role in supply chain management. SCM software gathers and analyses data, providing valuable insights for strategic decision-making. Real-time reporting, dashboards, and key performance indicators (KPIs) allow for continuous monitoring of supply chain performance, ensuring objectives are met and facilitating continuous improvement.
8 Must-have Features of SCM Software
SCM tools require essential features for flexible supply chains and handling project deliverables in software engineering. We have identified eight vital features in supply chain management software that enable organisations to establish a robust digital supply chain and take a strategic sourcing approach beyond functional requirements.
- Integration capabilities enable seamless integration with systems and applications, ensuring efficient information flow and eliminating redundancies.
- Real-time collaboration facilitates communication and transparency among stakeholders, enabling project collaboration.
- Process optimisation automates tasks and utilises AI and machine learning to improve efficiency and reduce manual intervention.
- Analytics and forecasting provide built-in capabilities to evaluate performance, identify bottlenecks, anticipate demand, and make data-driven decisions.
- Customisation offers flexibility through prebuilt components and customisable configurations to adapt to unique requirements.
- Cloud-based access and mobility allow remote management of transactions, offering cost-effective and faster deployment.
- Security ensures data protection through encryption, virus scanning, network monitoring, and compliance with communication standards.
- Scalability accommodates business growth, handles increased volumes, and supports multiple applications and channels without compromising performance.
8 Cutting-Edge Technologies Reshaping Global Supply Chains
To map the new upgrades in the supply chain management field, it’s worth looking at the most important technologies that can strongly affect its development. Some of the main ones are:
By harnessing the power of 5G technology, organizations can enhance connectivity and optimize communication and collaboration throughout the supply chain. Integrating 5G into supply chain operations brings about improved visibility. Modern smart sensors equipped with 5G capabilities can gather and analyze supply chain data in almost real-time.
To illustrate, products embedded with 5G-enabled IoT sensors are loaded onto a truck at the factory. Thanks to the scalability of 5G, it becomes feasible to track the entire supply chain of a company with heightened precision. During transit, a manager can even remotely access information and promptly monitor the precise location of the products, as well as any environmental factors such as temperature that may cause delays, all in nearly real time.
Leading companies at the forefront of this technology include Intel, Nokia, Cisco, Qualcomm, Samsung, Apple, and Ericsson.
Augmented and Virtual Reality
The integration of Virtual Reality (VR) and Augmented Reality (AR) technology aids organizations in visualizing and simulating supply chain operations, resulting in enhanced decision-making and reduced errors.
AR technology enables the creation of virtual stockrooms, where holographic representations of products are projected onto shelves. This allows employees to access product specifications such as color and size without physically interacting with the items. By making informed decisions when placing orders, organizations can save storage space and avoid unnecessary expenditures on unwanted products.
Prominent companies leading the way in this field include ScienceSoft, ScaleXM, PTC, Lucid Reality Labs, Groove Jones, and Spatial.
Incorporating autonomous vehicles, such as drones and self-driving trucks, into the supply chain can yield cost savings and improved delivery times by minimizing human error and optimizing routes.
Leading companies in this domain include TuSimple, Embark Trucks, Starsky Robotics, Uber Freight, Volvo Autonomous Solutions, and Waymo. Uber Freight has recently implemented Volvo’s autonomous transport solution on selected routes, initially launching in Texas. This solution aims to alleviate pressure on strained global supply chains and represents a glimpse into the future of transportation.
The integration of vehicle-to-vehicle communications and radar-based collision avoidance systems enables fleets of trucks to operate in close proximity, known as ‘platoons’, leveraging aerodynamics to conserve fuel. These platoons are managed through a cloud-based network that connects trucks using mobile communications and Wi-Fi. Supervised by cloud-based systems, platoons are limited to specific roads and safe driving conditions.
Big data refers to vast amounts of information characterized by high volume and/or high variety, which enables organizations to gain deeper insights, make informed decisions, and automate processes. Data analytics is the discipline of examining raw data to draw meaningful conclusions. Many data analytics techniques and processes have been mechanized into algorithms that analyze raw data for human consumption. Previously, the challenge of handling massive amounts of data impeded value-based decision making and proactive risk management. However, modern organizations now have access to various technologies that assist with procurement, supply chain risk management, and Sales and Operations Planning (S&OP).
Robotic Process Automation
Robotic Process Automation (RPA) enables the automation of manual and repetitive tasks, allowing employees to allocate their time and efforts towards more strategic responsibilities. Robotics is transforming the supply chain industry and generating significant value.
RPA enhances the speed and accuracy of operations, particularly in areas such as warehousing and manufacturing. Robots contribute to increased worker productivity by reducing error rates and minimizing the time required for tasks like picking, sorting, and storing. Additionally, they enable access to difficult or hazardous locations. With the current challenges in labour availability, robots are emerging as valuable contributors to the last-mile delivery process in the future.
Internet of Things (IoT)
The Internet of Things encompasses billions of sensors embedded in various devices, both within the supply chain and across the broader world, such as refrigerators and cars.
IoT enables data exchange, both within and between systems, over the internet, and leverages actionable data from every stage of the supply chain. It is employed for purposes like tracking materials, servicing equipment, and monitoring productivity and efficiency.
In 2013, there were approximately 20 million smart sensors in use in supply chains, providing real-time data to those managing supply operations. By 2022, that number had surged to 1 trillion, and Deloitte predicts the deployment of up to 10 trillion sensors by 2030. IoT technology plays a crucial role in tracking and monitoring products in real-time, empowering organizations to make well-informed decisions about their supply chain.
Leading companies in this field include iTechArt, Siemens, Vates, Samsara, IBM, PTC, GE Digital, Cisco, and Telit.
Cloud computing technology enables supply chain organizations to store and process vast amounts of data, providing accessibility from anywhere and at any time.
It is important to distinguish between the terms ‘cloud computing’ and ‘SaaS’ (software-as-a-service), as they are often used interchangeably but have distinct meanings. Cloud computing, often referred to as ‘the cloud,’ is a comprehensive term encompassing various models that deliver computing services through the Internet, following a utility-based pay-as-you-go approach.
SaaS is the most well-known model within cloud computing, alongside platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS). The true strength of cloud computing lies in its ability to transform the economics of computing, offering scalability, flexibility, and cost-effectiveness.
Blockchain technology is transforming the operations of retailers and consumer-packaged-goods manufacturers within their supply chains. The increasing need for secure transactions and the growing demand for environmental, social, and governance (ESG) and sustainability transparency are reshaping the relationship between buyers and brands. Blockchain addresses these requirements by ensuring the authenticity of goods and enhancing the security of supply chain transactions.
By introducing blockchain, significant improvements can be made to supply chains that often lack traceability and transparency. This technology offers a decentralized and secure database that records every transaction across the supply chain. Imagine real-time tracking and traceability of products, with regular updates provided at each stage of the journey.
Blockchain enables secure and transparent tracking of goods and products, thereby reducing the risks associated with fraud and errors.
Prominent companies leading the way in blockchain technology include Ethereum, IBM Blockchain, Cardano, Ripple, Avalanche, Chainalysis, Hyperledger Fabric, Hyperledger Sawtooth, R3 Corda, and Stellar.
Buy vs Build vs Subscribe: How to Choose an SCM Software Solution
Choosing the right supply chain management platform is a critical decision for companies, often made hastily by executives favouring expensive, complex solutions from big-name firms. This choice significantly impacts every department, not just operations, and can entail a time-consuming onboarding process. To avoid costly mistakes, a comprehensive assessment of current processes and detailed improvement requirements from all departments is crucial. After conducting thorough research and gathering input, businesses can evaluate their options. Therefore to help you make a better choice, we present you with three leading offers that you can determine based on your business needs:
Buying a supply chain management (SCM) solution, a common choice for larger organisations, can be costly due to necessary customisations and a lengthy onboarding process. While such financial management solutions often come with established integration processes, they may necessitate additional maintenance, infrastructure, and consulting services expenses. Despite these costs, for many large organisations, purchasing an SCM solution is often a more viable option than building one from scratch.
Building an in-house supply chain management (SCM) system requires operational expertise and a team skilled in software development, infrastructure architecture, and integrations, which could cost organisations heavily. Outsourcing to contractors may seem like an alternative, but it presents long-term cost implications for updates as the organisation grows and risks proprietary knowledge sharing. One of the biggest challenges is integration; initially, the system will need the necessary tools like APIs, SDKs, or documentation for seamless communication with other systems across the value- sap supply chain management.
Subscription-based supply chain solutions are increasingly popular due to their affordability, scalability, and flexible pricing options. These cloud-based platforms cover platform availability and maintenance within the subscription cost, offering customers the advantage of shared feedback and continuous improvement. Additionally, they simplify configuration, and product lifecycle, for supply chain management, by providing an easy-to-use interface or assistance from customer success managers, making them an attractive option for many businesses.
Caring about the environment is our mutual responsibility and should be our biggest goal. Fortunately, due to the constant evolution of technology, it is possible to create sustainable businesses that work efficiently and with reduced costs. The best example of it is the implementation of SCM solutions in companies.
Supply Chain Management software systems hold many advantages and, if chosen right, can improve many business processes. They also help when trying to obtain the current ESG standards that are required these days. Many companies like Coca-cola, Amazon or Nike have already included those solutions and reduced their costs or boost efficiency.
Once you decide on incorporating SCM into your business, you need to decide where you will get it. The options available are building, buying or subscribing to software and each is suited to different needs.
Thereof if you want to avoid any additional cost of hiring and maintaining a team of developers yourself, and you want your software to be checking all your requirements, we strongly consider hiring an outsourcing company that will develop tailored software just for your company! Contact SolveQ, a software house with experience in Supply Chain Management and logistics, to be sure of your software’s success.