What is a SCM and its benefits

Nowadays, goods and services are exchanged on a global scale. Their journey requires accurate planning, thorough demand forecasting, effective procurement, logistical expertise and, more importantly, seamless cooperation between all of those steps, as well as between their coordinators. What plays a vital role in managing these processes is modern technology and, to be more specific, a supply chain management software. What is it and how can your company benefit from implementing such a solution?

What is a SCM

Regardless of the product or service they offer, manufacturing companies use a supply management software on a daily basis, so that they can address the needs of their customers more effectively and efficiently. A supply chain management can generally be described as designing, planning, executing and monitoring all supply chain activities. With a wide range of functionalities, companies with a focus on meeting customer demands can improve all of their business operations, from finding and acquiring raw materials to shipping ready-made products. It is made possible due to a constant flow of information concerning each order and excellent communication between various departments.

SCM processes

Enterprises aiming to provide their customers with ordered products very often follow the same steps. They might slightly differ depending on the product specification, however, the supply chain pathway usually resembles the following:

1. Planning – which involves designing and evaluating supply chain strategies and activities. Every part of the supply chain has to be based on predicted customer demands and taken into consideration.

2. Procurement – which includes ordering required raw materials, components and goods, as well as processing and verifying all of the invoices. The process requires selecting solid suppliers who will boost their efficiency.

3. Production – which covers manufacturing, often in multiple warehouses, the very goods which are ready for testing, packaging and delivery. The results of the entire sales depend on how this process is handled.

4. Distribution – which requires sufficient delivery of goods or services in the right quantity to the right place and at the right time. A seamless cooperation with multiple transportation companies and third-party logistics firms is necessary.

5. Customer interface – which means handling product returns, which, regardless of the industry, are unavoidable. Aside from reviewing return products for their quality, managers must ensure every order is fulfilled perfectly.

How to tell you need a SCM

Nowadays, running a manufacturing enterprise without the support of modern technologies is more than unwise. Not only does it slow down each of the supply chain processes, it also limits your possibilities of growing your business. Only through consistent and attentive order tracking during each part of the process can you gain full control of the chain supply.

Furthermore, a SCM gives you another valuable factor which drives your business forward – data. Gathering and then analysing data concerning each process and each product, you are able to make better decisions in a shorter period of time. Without this, you might be wasting money on raw materials which you will never use, and losing customers because you are not providing them with what they need.

Key features of a SCM

With the right supply chain management software on board, you can boost your productivity, reduce the production time and maximise your savings at the same time. Depending on the type of your business, you may want to extend the software and equip it with more functions which support other business processes in your company, for example contract management, but the most important features that will revolutionise the way you work are:

• Inventory management – to easily supply, track and manage raw materials, components and additional parts for your products or services. Once they arrive, this feature allows you to control their storage to make sure your company never deals with understocking or overstocking.

• Order management – to automate generating sales orders, which speeds up their production. More importantly, this feature enables you to better estimate what your clients need and thus manage the inventory more efficiently in the future.

• Warehouse management – to better manage storing of both components and ready-made products. Gaining control over your warehouse, or more probably several warehouses, allows you to optimize stock levels and speed up placing and shipping of orders.

• Logistics – to better coordinate transportation and delivery channels, no matter whether your company expands locally or globally. Tracking the delivery enables you to achieve the lowest possible costs and boost customer satisfaction.

• Forecasting – to more accurately anticipate customer demands by turning customers and orders data into valuable information. A thorough analysis allows you to better estimate the amount of raw materials and components needed and thus save money.

Benefits of a SCM

In general, a supply chain management software solution supports all of the business processes of your manufacturing company. However, simplifying and speeding up your work is not all such software is capable of. The greatest benefits coming from implementing a SCM, which will revolutionise the way your company works in the long term, are:

• Lower costs – gathering data gives you valuable insight into how many materials and components your company uses and wastes, which allows you to efficiently lower the costs of materials. As well as this, you are able to cut costs even more once you establish better and long-term relationships with vendors.

• Improve collaboration – a complete visibility of what happens with an order on every step of the supply chain pathway allows all your employees to better communicate with other departments in order to become more efficient.

• Boost cycle time – when all departments collaborate and data is automatically stored and analysed, you are able to discover new means of operations and thus speed up the time it takes your company to process and complete an order.

• Gain more customers – with better forecasting, you are able to more easily meet the demands of your customers and better estimate what is stopping others from becoming ones. As well as this, by providing an excellent customer service you can expect fantastic customer recommendations.

No matter whether you expand locally or globally, a supply chain management software solution is a great way to make your work not only easier but, more importantly, profitable. By automating various business operations, you are able to gather and analyse valuable data and by tracking an order on every step of their journey, you can gain control of your business.