Introduction to supply chain management (SCM) software

Supply chain management (SCM) software executes processes at nearly every phase of manufacturing, from design, production and procurement to distribution and order fulfillment. Learn the basics of SCM software in this introduction.

A company's supply chain includes activities related to the planning, execution, control, collaboration and monitoring of the design, production, procurement, distribution and order fulfillment of customer orders or needs for products. A supply chain is often referred to as a company's value-chain of activities, which are the processes involved in converting a product design into a finished good that is provided to a customer. 

Supply chain management (SCM) software is the broad term that encompasses various software applications to help companies to better manage their value-chain of activities. These applications address business needs to properly align supply chain resource needs with current or future customer demand for products. They also monitor and control various processes that can span an extended supply chain involving multiple companies.

SCM software applications are often categorized in the following groupings:

Supply chain planning (SCP) or advanced planning and scheduling software (APS). These are applications that help control planning processes related to demand for products, supply of materials across the extended supply chain, the scheduling of orders within production, the distribution of products among distribution outlets, or the allocation and order promising of finished goods to specific customer orders.

Supply chain execution and order fulfillment (SCE). This includes applications that control, monitor and allocate resources related to various supply chain operational processes.Applications included in this broad category would include warehouse management systems (WMS), order management and fulfillment applications, inventory management, logistics and transportation management systems (TMS). Specialty applications that help to monitor and control global trade and customs clearance also fall under this family of applications.

Supply chain collaboration. Generally web-based applications that disseminate, acquire, transmit and monitor key planning and execution information across a global-wide supply chain network involving multiple companies fall under this category of SCM software. This type of application was developed to assist supply chain management professionals gather key information on a more-timely basis via the web, information that often resides in multiple internal systems.

Supply chain performance, reporting, business intelligence and analytics. These are the applications that control and monitor planning and execution processes, report overall performance, provide alerts to non-conforming or unplanned events, or assist in conducting what-if analysis related to conditions of demand, supply, inventory or capacity requirements for a given business scenario.

The supply chain planning, execution and collaboration applications noted above can contain their own embedded performance and reporting functionality, but this broader category umbrellas software applications that extend across these processes. Specialty applications within this category would also include multi-echelon inventory optimization, supply chain management dashboards, or Google-like information utility applications that integrate intelligence involving all forms of structured and unstructured data and information.

Supply chain management software can originate from a number of software providers.

  • All of the large or mid-market ERP providers have incorporated various aspects SCM software within their suite of applications.
  • Specialty or best-of-breed vendors tend to specialize in either of the broad categories and differentiate their market offerings by providing more specialized or deeper functionality within the category of software.
  • Within the past few years, ERP players have considerably narrowed the gap of functionality provided in individual planning, execution and collaboration software offerings.
  • Performance, reporting, business intelligence and analytics applications have become a new battleground, with ERP players either partnering or acquiring other vendors in order to provide their customers with choices in this area.

About the author: Bob Ferrari is the Managing Director of the Ferrari Consulting and Research Group LLC, a supply chain business process and technology consultant firm, and is the creator and Executive Editor of the Supply Chain Matters internet blog.

This was first published in December 2009

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