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Software that
can transfer data
'upstream'
(or to the
company's suppliers) and
'downstream'
(or to the company's customers or clients) would allow management of the
entire supply chain under a single system. Large companies dealing
with a multitude of diverse entities might also do better with SCM
software that are based on open models, i.e., those that support sharing
of data internally and externally across different database systems or
data warehouses at various sites. Web-based SCM software are becoming
more and more popular for this purpose.
SCM software
are not simple, and are even often fragmented. This is because SCM
per se is composed of dozens of independent, specific tasks that are
best served with their own software. As a result, most of the
SCM-related software in the market are actually
individual
applications
that cater to the various components of SCM. This is why SCP and
SCE software are often referred to as supply chain planning and
execution applications, respectively. A complete SCM software
package that unifies all the necessary SCM components together has yet
to be seen.
SCP software
employs complex mathematical algorithms to identify the
best flow
of materials to make the supply chain efficient. SCP itself has
various components, the most complex and valuable of which is probably
the demand planning software. Demand planning is simply the
process of determining which products and how much of these must be
produced at which particular point in time so that all customer orders
will be fulfilled or served promptly.
Needless to
say, the accuracy of SCP software is largely dependent on the
accuracy
and
freshness
of the data it is using. Thus, in order to have effective SCP, the
system must have a dependable process for collecting
up-to-date
information about customer orders, production status, and sales and
delivery fulfillments.
SCE software
are designed to
automate
the various steps or processes of the supply chain. For instance,
one of its components may be an application program that electronically
orders goods and services from various suppliers so that the ordered
products may be produced, based on the customer orders that need to be
filled.
Related to
the concept of supply chain management is the concept of supply chain
collaboration.
Supply chain
collaboration (SCC)
refers to a
strategic partnership between two different companies and organizations
that agree to hook up their supply chain management systems together in
order to make the delivery of products from the supplying company to the
receiving company virtually seamless. Procter and Gamble and
Walmart have greatly benefited from such an arrangement, with their SCC
system efficiently modulating how P&G restocks Walmart's distribution
centers with its products.
An effective
SCM program is not easy to implement. Common
obstacles
to setting up an SCM system include: 1) gaining the trust of suppliers
and partners to participate in the SCM program; 2) difficulty of
integrating various processes and systems along the supply chain; 3)
internal resistance to change due to the perceived additional work that
comes with the program; 4) possible discouragement and loss of
confidence in the system due to early mistakes during the learning
curve.
See Also:
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