Supply chain management (SCM) covers many areas both internal and external to a company. It can involve suppliers, shipment modes, manufacturing plants, distribution centers, warehouses, customer management and service of product once it is sold. Software tools support the planning, tracking and information flow requirements of SCM.
Most software tools are designed to automate transactions involved in planning, releasing orders and movement of product internally and between companies and facilities. Material requirements planning software is designed to assist a manufacturing facility to plan both purchases and work based on demand from customers. Purchase order management and work order management software are designed to prepare documents to begin, track and report actual purchasing and work activity. Inventory management software provides the transactions to receive, issue and ship product as it moves through the supply chain.
SCM simulation software allows a company to model the various parts of the supply chain including suppliers, plants, warehouses and distribution centers. Simulation of different business scenarios including supply, demand and capacity alternatives provide insight into different ways of running the business. Strategic sourcing software helps determine optimal ways of purchasing materials and components based on purchasing history, usage, grouping of similar parts and testing make or buy scenarios.
Evaluation of SCM software should always be preceded by an analysis of business processes required. This is best done by a project team assigned to the task of identifying current business processes and then enhancing them with the future vision of those processes. This forms the basis for evaluating alternative software solutions and implementation planning.
SCM software is best implemented in phases due to the tremendous amount of change in business processes required. Data cleanliness is also very important as it relates to inventory quantities, customer information and vendor information. In manufacturing situations the accuracy of the bill of materials is extremely important in order for the planning software to produce accurate plans. The bill of materials shows how products are put together including the requirements for purchasing and manufacturing finished goods. A typical first phase will involve inventory and purchasing software followed closely by material requirements planning and accounting.