Supply chain software is used to help every facet of the supply chain run smoothly. Software can be used to organize the client-supplier relationship, keep track of transactions and control all business processes—the possibilities are endless!
However, in order to explain what the sometimes elusive “supply chain software” really means, we first need to give a little background on what supply chain management is, since the two go hand in hand. Supply chain management is how a business coordinates the various activities involved from their smallest suppliers all the way to the end customer; a system to connect those participating in production, services and movement of goods required to ultimately satisfy customer needs. The utilization of a supply chain management system streamlines the process and enhances communication to create a competitive advantage and maximize customer value. This brings us to supply chain software. Supply chain software are the modules used in executing supply chain transactions. The functions of supply chain software typically include customer requirement processing, purchase order processing, inventory management, warehouse management, supplier performance and transportation activities.
Not all software programs and companies are the same, and there is a great deal of variety from one company to the next. In the most basic form, there are two types of supply chain software: planning applications and execution applications. Planning applications use algorithms to determine how to fill an order. Execution applications track the status of the products, manage status of materials and record financial information. Both applications work hand in hand to create a well-formed supply chain. There are assortments of companies to choose from when it comes to supply chain software. Often the most utilized software is a combination of codes from a handful of companies working in congruence with each other. Utilizing the different applications and flow of data can allow for a larger network; therefore, more data can go through the system and be used for improved customer and company satisfaction. Compatible applications “speaking” to one another, within a company or between suppliers and customers, are absolutely critical. Otherwise the supply chain will have communication gaps, which lead to vulnerability and increase the chance of missing customer requirements.
Supply chain software provides companies the infrastructure needed to work together to optimize their functionality, improve sales and reduce potential waste. When the supplier, manufacturer and distributor work together and share their numbers, there is less risk for potential loss and errors. The suppliers can ensure they have enough raw materials for the manufacturer. Ideally, the manufacturer won’t have to worry about ordering excess from their suppliers or not having enough if need increases. The distributor will always have the optimum amount of product to sell to customers—product never runs out and does not sit on shelves, multiplying as more orders come in. In utilizing the improved communication of the supply chain software, companies can improve their business practices to best serve their customers, and increase profitability. The more employees and companies utilize and trust supply chain software, the more manufacturers, distributers, service providers and customers will benefit.
The improved coordination provided by supply chain software is critical in enhancing logistics activities. While these systems involve some complexity at points, supply chain software is a necessary tool that almost every company should invest in at some level to ensure customer satisfaction.