Maintaining a functioning supply chain is one of the most complex tasks in ecommerce industry.
It's a long-standing balance between planning accuracy, speed of order execution and simplicity of control over the entire process. If any of these components begin to run out of control, it will affect the other components in a significant way.
The SCM (Supply Chain Management) system is an advanced supply chain planning and optimization system that allows you to control product, information, and service flows. It is created by integrating a group of applications that serve different logistics areas. It allows businesses to more flexibly influence both their suppliers and customers, to better forecast their market opportunities and to see and avoid costly mistakes more quickly.
How can SCM help you address the biggest supply chain management challenges in your organization? Here are some examples:
1. Strategic and operational issues in purchasing
Efficient execution of strategic purchases is the foundation and beginning of the supply chain. In the absence of process transparency, errors in ordering and comparing supplier offers, problems will have a huge impact on other supply chain processes and potential purchasing costs. The SCM-type system is a solution that helps speed up the purchasing process. It helps to bring multiple suppliers together in one place, adds the ability to compare prices and other product information, improves transparency of the purchasing path, and reduces time spent through the whole process. It also helps in tracking trends and statistics about purchasing decisions in the company.
2. Storage problems
Insufficient or excessive stock is a perennial problem when tracking warehouse activities. Collecting information on the location of a given product in the storage space, its condition and quantity, and any damage that may occur requires a very efficient organization and poses a real risk as to the amount of time spent on daily routine warehouse operations. SCM systems are able to improve managers’ work and can improve the oversight of routine warehouse operations. They also reduce the time to obtain information about a specific article, its condition and location in the warehouse space. It also allows to install an alert system in the event of low status of a given item or even automate the purchasing process in such a case.
Terex Corporation specializes in the production of a wide range of aerial work platforms. Tracking the position and condition of items in a manual manner became increasingly inefficient as the company's production increased. The management decision to purchase and implement an SCM system to reduce the time spent by an employee to find an articles has brought evident, positive results. Despite the cost of system development and system integration, the company saved approximately 70 weeks of work each year of the system’s operation, reducing the time spent searching for a product in an outdated logistics system from 6 minutes to less than 30 seconds.
3. Transport problems
Every industry is dependent on efficient product transport. Delivery times, route planning, delivery of items in the right place and without transport damage are areas where the SCM system is able to reduce or eliminate the risks arising from them entirely. There are many ways to improve the transportation process - keeping a clear log of the transport decisions, their progress, recording possible damage or delays in delivery, functionality to help you plan the most optimal transport routes, ending with tracking specific live transports along with their location and planned delivery times. It is also possible to integrate SCM with 3PL contractor systems to facilitate transparency and speed of business-to-business communications.
4. Purchase planning issues
Asset and material tracking can be a very complex process, especially when there are many information sources and they are stored in a variety of formats. Optimization in this area helps reduce reporting and planning time by eliminating, for example, the use of multiple files in Excel, harmonizing how employees enter data, and clearly visualizing statistics. This helps to predict future needs more accurately and flexibly.
In 2009, Avaya, a telecommunications company, won a tender to purchase and take over a division of Nortel Enterprise Solutions. The newly integrated company quickly discovered many shortcomings in the organization of the supply chain - compared to the company's software, the software used by the newly integrated department thus far turned out to be too complicated and time-consuming to ensure a smooth flow of information and optimize the company's work. The introduction of a unified SCM system enabled the company to enter a new level of efficiency, significantly improved inter-departmental communication and improved the effectiveness of purchase planning for the entire company.
But why it is worth it to have SCM?
To visualize some of the benefits of SCM, here are some important statistics:
According to a study by the Logistic Bureau, companies whose supply chain is well-optimised incur 15% lower costs associated with the supply chain, reduce the amount of unused goods in warehouses by up to 50%, and the time from placing an order to its completion is reduced by as much as 3 times.
of managers see improved customer satisfaction
Accentrue stressed that as many as 70% of Supply Chain Managers recognize that the introduction of SCM is directly linked to customer satisfaction.
of management saw significant cost reductions
Studies by the Hackett Group show that as many as 81% of logistics managers recognize that SCM systems and financial analysis will significantly reduce costs.