09 December 2019

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The Supply 'Chain Reaction'

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Considering the importance of supply chain management, SMBs of India are not left behind in adoption of an automated SCM (Supply Chain Management) software solution; writes Faiz Askari, Editor – Technology, Small Enterprise India


There are various stages involved in the overall process of product development and taking it to the customer’s end. These stages are the most important components of doing business, and experts call this part of business as supply chain management.


The combination of skill-set that goes into the way any company sources the raw components that needed to make or develop a product or service and deliver it to customers can be defined as supply chain management (SCM).

SMBs are the segment of industry which deals with large organisations, global companies and they themselves are also registering growth. All these factors are the main drivers of the adoption of technology based software solutions for SCM among the league of SMB organisations.

As far as the contemporary style of doing business is concerned, technology has a major role to play in this direction. Undoubtedly, SCM software solutions are the biggest trustworthy tools of business automation in today’s scenario.

Supply chain management software is possibly the most fractured group of software applications on the planet. Each of the major modules of supply chain steps is comprised of dozens of specific tasks, many of which have their own specific software. As SCM solution covers entire spectrum starting from planning, sourcing, product development, delivering the product to the market and then taking care of customer interface as well.

In the earlier business landscape when internet was not much integrated with business processes, the aspirations of supply chain software was limited to improving the employee’s ability to predict demand from customers and make their own supply chains run more smoothly.

But now with the availability of cost effective and much handy-by-nature Internet, have taken the scope of SCM to a higher level. Now, companies can connect their supply chain with the supply chains of their suppliers and customers together in a single vast network that optimises costs and opportunities for everyone involved. This was the reason for the B2B explosion.

Because of the complexity and diversity of the overall supply chain mechanism the SCM software solution is also a complex solution, so to speak. Customisation is extremely an important aspect of this solution. Some vendors have assembled many different chunks or modules of software together under a single roof, but there is no end-to-end SCM software package been so far available by any single software vendor.

As an example, most organisations need to track demand, supply, manufacturing status, logistics (i.e. where things are in the supply chain), and distribution. These organisations also need to share data with supply chain partners at an ever increasing rate. Many companies decide to go with targeted best of breed products instead, even if some integration is an inevitable consequence.

However, most of the leading software vendors are aggressively targeting the SMB segment and trying their best to woo the customers from this business segment. Leading companies like SAP, Microsoft and Oracle are having their prime focus to cater to the SMB requirements and bring out an appealing product for them.

Microsoft Dynamics and SAP BusinessOne are some of the known products with a varied set of offering, having various modules of ERP and integrating other sets of SCM solution as well.

Why Automating the Supply Chain?

Many SCM applications are reliant upon the kind of information that is stored inside enterprise resource planning (ERP) software and, in some cases, to some customer relationship management (CRM) packages. ERP, perhaps, integrates all that information in a single application and SCM applications benefit from having a single major source to go to for up-to-date information. Most of the IT managers especially from the small businesses segment, have tried to install SCM applications say they are glad they did ERP first. They call the ERP projects "putting their information house in order." Having said this, ERP is an expensive and difficult to roll out, so businesses may want to explore ways to feed their SCM applications the information they need without doing ERP first.

These days, most ERP vendors have SCM modules, so doing an ERP project may be a way to kill two birds with one stone. In addition, the rise and importance of CRM systems inside companies today puts even more pressure on a company to integrate all business essential software packages. In accordance, small and mid sized companies need to decide if these products meet their needs. Interestingly, it is very essential for the SMB organisation to examine this aspect thoroughly and if possible take a third party’s analysis as well.

There are various important steps involved while deploying a SCM solution. However, it is very important for the SMB organisation to examine very carefully these different stages of SCM solution while on deployment phase.


Drafting an Action Plan: The first and foremost stage is to draft an action plan for the proper management of company’s resources and meeting their customer’s demand. This is the most strategic portion of having SCM solution. In this phase the SMB organisation needs a strategy for managing all the resources that go towards meeting customer demand for their product or service. The main aspect of developing an action plan for deploying SCM solution is to deal with developing a monitoring mechanism of the supply chain so that this process can be more cost effective for the company, efficient and delivers their products at the customer’s hand.

Sketching the Sourcing Ecosystem:This is the second phase that could be considered as SCM’s soul. Companies especially the SMBs must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. All these set of information needed for developing the SCM solution for that specific company.

Product Development or Manufacturing: This is the manufacturing or the product development phase. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. With the help of an automated solution in-place, these supply chain manager could get information related to their responsibility area which is to bring out a final product out of factory. In this stage SCM solution comes into picture and becomes an interface of business critical information between different sets of jobs. Companies are able to measure quality levels, production output and worker productivity all in this phase only, and SCM software solution integrates information which is getting developed at multiple levels of supply chain.

Product Delivery or Distribution: With the name itself this is the ultimate phase which actually takes the product out from the factory and takes it to the customer’s end. This is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

Road Blocks

Supply chain automation is uniquely difficult because its complexity extends beyond a company's walls. Employees will need to change the way they work and so will the people from each supplier that a company adds to its network. Most companies have to sell outsiders on the system. Moreover, one company's goals in installing the system may be threatening to their suppliers, to say the least.

However, if all the steps, which are discussed above, can be taken care then the scope of having a stringent and flawless business process will be achieved and enhanced. However, if these solutions vendors are trying to penetrate deep into the SMB segment, then apart from great customization for these organisations, a lot of emphasis needs to be given on making such solution affordable and result oriented. Rest, depends on organisation’s own will of selecting the right path of managing its growth through supply chain.

 

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