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What Is a Supply Chain Management System?

A supply chain management (SCM) system is a set of software solutions that manages and oversees the flow of goods, data, and finances as a product or service moves from point of origin to its final destination. Supply chain activities encompass procurement, product lifecycle management (PLM), supply chain planning (SCP), logistics and order management.

A complete, end-to-end supply chain management system includes the material handling and software packages for all the parties who work together to create the product, fulfill orders, and keep track of information including suppliers, manufacturers, wholesalers, transportation providers, logistics providers, and retailers.

Supply Chain Is the Backbone of Commerce

You could say that supply chains have been around since ancient times, when the origins of what would become linear supply chains moved products from the point of origin to the point of distribution.

Along the way, trade networks and routes multiplied. Shipping lanes opened. Ports were created. Railroads were built. Communication was streamlined to help supply chain management processes flow more efficiently. Over time, these simple supply networks would evolve to become more sophisticated and complex SCM models.

For generations, these various supply chain solutions remained isolated specialties—managed by specialized professionals who worked at making their particular process or system more efficient. Enter computers, which brought on-premises SCM solutions that automated and optimized SCM processes, enabling supply chains to scale and begin to meet the growing demands of globalization. These early supply chain solutions, while part of an overall distribution network, remained isolated in separate silos.

Traditional SCM solutions were created for every supply chain activity that exists, including production planning, product lifecycle management, supply chain planning, procurement, logistics, order management, and maintenance management. No part of the supply chain ecosystem was left untouched.

Moving to Modern SCM

While traditional supply chain solutions met the early challenges of a globally minded and burgeoning world economy, they eventually reached their limits. Goods and information could not cross easily from one part of a supply chain to the next without a lot of manual effort—and a high potential for errors. Inventory visibility and transportation management across the supply chain were limited by systems that were not integrated. Organizations needed more insight with real-time views across the entire supply chain.

The arrival of the internet changed the way traditional supply chain systems worked. A more dynamic, customer-focused marketplace demanded smarter and more agile ways of working. Waiting for goods to be transported from a manufacturer to a showroom had become a consumer option. And linear supply chain solutions took too long. Consumers wanted to interact with products at any link of the value chain.

Transforming the Supply Chain

In this new, demand-driven economy, the supply chain operating model was turned outside-in. At this point, the supply chain is not a chain anymore; the supply chain management system has evolved into a collection of webs—disparate webs that can be accessed 24 hours a day. At the center of these webs are consumers waiting for their orders to be fulfilled.

Today’s best supply chain strategies call for a demand-driven operating model that can bring together all the people, processes, and technology around integrated capabilities.

SCM Moves to the Cloud

Cloud technology is fast becoming the go-to IT model for SCM. For a lower cost and with minimal risk, the cloud enables the transformation of a supply chain into a digital and scalable solution—integrated and ready for the connected marketplace. With improved inventory visibility, businesses can spot opportunities for growth and profit, and then take full advantage of them quickly, securely, and cost-effectively. Cloud SCM also enables businesses to access intelligent data and predictive analytics from the Internet of Things (IoT). Extending these capabilities to your employees and business partners makes everyone more efficient, accurate, and collaborative in their work—helping them deliver better business results.

The Business Value of Modern SCM

As more and more companies transform their supply chain systems by moving to complete, secure, and connected cloud-based suites, the benefits are becoming more evident. They include:

  • Visibility—Modern supply chain software shows you where your inventory is—every pallet, parcel, and unit—anywhere along the global supply chain, from the manufacturer to storage to transportation to the store shelf.
  • Agility—Market changes demand fast action. With cloud SCM, you can quickly and securely deploy new services and capabilities and easily scale to meet new challenges.
  • Lower Operational Costs—Integrated SCM systems enable you to get out of the IT business so you can focus on core business decisions.
  • Ease of Use—Modern SCM software offers simple and intuitive user experiences that provide quick access to accurate and timely analytics, accessible anywhere and from virtually any device.
  • Security—Cloud data centers provide embassy-grade security. Cloud-based software offers best-in-class security features, including encryption, virus scanning, and white list support.

The Advantages of End-to-End SCM Functionality

A complete, fully converged, integrated suite of cloud-based supply chain management solutions consists of the following components:

  • LogisticsLogistics manages all warehousing needs and transportation modes within and across borders to reduce costs, increase efficiency, and ensure compliance
  • Product Lifecycle Management—A product lifecycle management system enables you to innovate, develop, and commercialize profitable products to grow your business.
  • Supply Chain Planning—A supply chain planning solution helps you stay ahead of marketplace changes by proactively devising revenue growth and cost reduction strategies—and consistently execute them with enterprise-wide alignment.
  • Procurement—A procurement management system streamlines your source-to-pay process through automation and social collaboration, while controlling costs and achieving higher margins.
  • Order Management—An order management system manages orders from all your channels to get a single view of your customer.
  • Manufacturing—A manufacturing management system streamlines your manufacturing process through visualization, back-flushed transactions, and social collaboration, while controlling costs.
  • Maintenance Management—A maintenance management system connects your organization’s maintenance, supply chain, and financial applications, enabling you to streamline maintenance activities.
  • Internet of Things (IoT) ApplicationsIoT applications enable you to harness the power of the connected world with real-time IoT data and insight.

The Future of Supply Chain Management Systems

The Future of Supply Chain Management Systems

In a changing business landscape, the old supply chain management paradigm isn’t up to the challenge. Supply chain professionals need to stop thinking of their supply chains as cost centers to be managed and made more efficient. Instead, think of your supply chain as a business advantage—with the potential to differentiate your company from the competition.

Given the value of ecommerce and its forecast for growth, businesses should refocus their efforts on aligning digitally connected purchasing with their own digitally connected solution. In other words, businesses should match their technology to their business model. A modern business requires a modern supply chain.

Today’s leading-edge supply chain management systems are end-to-end product suites that help businesses manage and optimize their supply chains as one complete ecosystem. Because they are fully integrated cloud technologies, these systems enable 100 percent visibility across the supply chain and scale up or down to react to market reality. With a modern, demand-driven supply chain, you can meet the challenges of increased buyer expectations, shorter product life cycles, and fluctuating demand.

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