supply chain management system

supply chain management system

The Evolution and Impact of Supply Chain Management Systems

1. Introduction to Supply Chain Management Systems

Globalization of business has significantly changed how companies operate today. Companies have realized that technologies, market capitalizations, know-how, and competitive advantages are often more perishable than in the past. The need to create relationships among companies has driven a dramatic transformation in management’s focus. The primary purpose of a business from a network-based management perspective has changed from a viewpoint of the company serving the interest of company shareholders to a perspective of structuring the company to serve the stockholders by effectively managing relationships with customers, suppliers, employees, constituents, financiers, and other stakeholders. The fundamental question becomes, “What strategic intent should drive company development to ensure that company relationships are effective, institutional barriers to performance are minimized, and effective returns on these relationships are achieved and delivered?” Surprisingly, this strategic question has not yet received extensive treatment. Once a strategic intent is defined, enterprise systems and supply chain management can provide the necessary process performance to deliver business results that are synchronized with the company’s strategic needs.

Throughout most of the 20th century, management’s business strategy heavily focused on developing specific competencies to differentiate and defend individual companies from competitive threats. Better technology, higher productivity, lower cost, and superior quality became basic strategy components to ensure growing market share, profits, and developing products to exceed customer needs. Companies frequently utilized vertical integration strategies and acquired multiple capabilities to improve both cost and quality performances of products, which also expanded their scope of capabilities that became difficult for competitors to duplicate. Improving competitive performance often increased investments in R&D activities and capital assets to expand internal company capabilities as well as prevent competitors from developing similar advantages. They also controlled relationships with employees, suppliers, and other stakeholders to enhance investment returns, competitive advantage, and overall business performance.

2. Key Components and Functions of Supply Chain Management Systems

These functions and facilities provide good handling of unit movements, demand fulfillment and accounting flow management required for supply chain investments to payoff. In other words, it supports the organization’s value-added strategy.

– Clearly articulated inter and intra-organizational operations policies and procedures – Exact channel payment transaction records – Online work tools – Multi-location connected fax systems – Bar-code technology for inventory transactions – Most importantly, an information system to facilitate production, sales or unit transfers, shipments, and single product identification in process or finished goods inventory.

In doing so, the supply chain management system also provides some or all of the following facilities:

– Production and materials planning – Transportation vehicle scheduling – Inventory management and control – Demand forecasting – Information system location for the transfer of supply chain information.

In order to perform the above higher-level objectives, a supply chain management system combines the following basic functions, to some degree:

3. Benefits and Challenges of Implementing Supply Chain Management Systems

The dynamics of companies’ interactions with suppliers develop and are enhanced over time as companies become more efficient in utilizing the software. Cost savings and product improvements help motivate suppliers to implement and utilize the software. The streamlined, more efficient relationship that emerges from better supply chain coordination approaches and improves operations and provides enabling technology through a SCMS or other process tools. The process of selecting and implementing a SCMS starts by assessing how well processes are managed today. The requirements for managing a supply chain are assessed, as well as the ways the SCMS can help automate processes and coordinate supply chain operations. The development of the new efficient business processes CSCMS typically requires modification to supporting policies, procedures, and organizations which help improve customer satisfaction.

Supply chain management systems (SCMS) offer the managerial benefits of operations and management through facilitating increased process coordination. With a high degree of operational efficiency, companies can reduce supply chain process and transaction costs; as a result, the chance of a competitive edge increases. Under certain conditions, SCMS offers significant potential to those companies which try to achieve a competitive edge through increased flexibility, speed, and adaptability with the markets. There is a positive feedback loop between SCMS and adopting suppliers of SCM. As firms can realize the benefits of the software, they can more successfully piece together why a supplier should be willing to make changes to better suit customer requirements.

4. Innovations and Trends in Supply Chain Management Systems

The trend is definitely towards applications that virtualize entire supply chain processes across multiple supply net members by linking disparate best-of-breed systems, allowing organizations to exploit global purchasing capabilities. Increasing distributed enterprise applications provide sophisticated, yet far simpler, means of aggregating all product and planning information from all supply network nodes (not just enterprise data) to identify bottlenecks, rejects, and defects. Powerful new graphical analysis tools and dashboards have been developed to allow substantial business intelligence, which use biometrics, speech technology, keystroke data, data warehouse, and data mining. With the rapid growth in and deployment of new technologies and solutions in supply chain management, coupled with the growing complexity and scope of supply chain challenges and opportunities, the lines and definitions of supply chain management systems are also changing rapidly.

Supply chain management systems have produced much corporate investment in testing and redesigning of business processes, which technology advancements uniquely enable. The supply chain management system technologies have made significant advancements during the last few years. The digitized economy calls for new, more sophisticated solutions that promise to revolutionize both the supply chain IT structure and the very way companies create and capture value. Savvy companies are, more than ever, using such systems for competitive advantage, no longer developing the technology merely for operational and efficiency gains, but instead using it to address business drivers to justify investment in new technologies. The capabilities of supply chain systems have expanded to include integrating supply chain planning technologies and logistics technologies to optimize operations and automate execution, making better decisions, and diminishing process inefficiencies upstream.