5W – Supply Chain Management (SCM)

Thank you for reading! Please see “Why 5W?”  for context, methodology and disclaimers.

Supply Chain Management Overview

The term Supply Chain describes the planning, sourcing, manufacturing, distribution, warehousing, order management and fulfillment of products / services from points of origin to delivery.

The Council of Supply Chain Management Professionals defines Supply Chain Management (SCM) thusly:

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.

SCM software captures information flow about products, from raw materials through delivery in a digital format. SCM is a very common, yet very complex set of business processes that relies heavily on digital, physical system and human integration .. more so than most other organizational processes. SCM:

• Requires complex digital and physical implementation, with myriad endpoints as it must manage aspects of the physical world in the form of raw materials, sources, inbound shipment logistics, manufacturing plants, assembly sites, warehouses, distribution centers, commerce / Commerce, fulfillment and so on.
• Manages the people engaged with the Supply Chain, including source facility operators, distribution center operators, drivers, warehouse operators, forklift operators, manufacturing operators, assembly, kitting, pick-pack, fulfillment and shipping.
• Provides alerting and reporting at all stages as materials are acquired, flow through the pipeline and finished products are shipped.

SCM connects multiple business processes enabled by modern technology. Managing the Supply Chain is essential to ensure the availability of materials, manufacturing, assembly, management and fulfillment of products to consumers. Modern Supply Chains are evolving to be more dynamic and data-driven, seen as a key competitive advantage for companies. This evolution impacts how efficiently and profitably companies can plan, source, make and deliver products to their customers. It’s not just inputs and outputs in motion .. SCM also manages and tracks inventory, costs and assets that contribute to overall efficiencies and profitability.

SCM Business Benefits

SCM has become increasingly important for businesses as it offers a range of benefits that can help companies to improve their operations, reduce costs and stay competitive in a rapidly changing market.

SCM provides businesses with real-time visibility into their supply chain operations. This allows companies to monitor everything from inventory levels and shipments, further helping to identify potential bottlenecks or delays. With this information, businesses can make informed decisions about their operations, quickly responding to changes in demand or supply chain disruptions. This visibility helps companies to optimize their inventory levels, reducing the need for excess stock and minimizing the risk of stockouts.

Process automation in SCM provides increased efficiency and productivity. SCM helps businesses to streamline their operations and reduce manual workloads, thus reducing errors and delays.

SCM enhances collaboration and communication between different stakeholders in the supply chain, such as suppliers, distributors and retailers. Sharing these data in real-time enables businesses to work together more effectively, identifying potential issues earlier and responding to changes more quickly. This leads to better relationships between suppliers and customers, and ultimately, better business outcomes.

Companies with robust SCM implementations enjoy a competitive advantage over those with manual processes. SCM allows faster response to changes in the market. The increased visibility and control over supply chain operations enables companies to be more agile and adaptable .. better positioned to capitalize on new opportunities. This is especially important in industries where competition is keen, and margins are thin.

SCM Capabilities

SCM can drive both direct business impact by reducing costs and improving the bottom line through operational efficiencies. It can also drive indirect business impacts in a variety of ways:

• Improved access to information across the entire Supply Chain through integration and collaboration.
• Simplified alerting and reporting through silo aggregation and automation.
• Insights from AI and reporting using data that is available as close to real time as possible.
• Increased agility in supplier interaction.
• Data-driven forecasting.

To restate the obvious: a successful Supply Chain relies on high levels of system integration and appropriate levels of knowledge dissemination.

Note there’s a lot of interaction between Supply Chains and Enterprise Resource Planning (ERP) systems, as many of the processes that serve the Supply Chain fall under the ERP bailiwick. Again, integration is key, versus adapting non-compatible ERP processes into SCM components. This is an ongoing discussion (and process improvement opportunity) with many companies, as ERP likely picks up the slack of many process operations prior to a company deploying SCM.

SCM Use Cases

SCM is effectively its own use case, purposefully serving the need for end-to-end movement of raw materials through finished product and into distribution. However, the deployments will vary widely and bear review. When working with prospects in an SCM engagement you should expect to find:

• Companies with an integrated and automated Supply Chain, but lacking centralized monitoring, alerting and reporting.
• Companies with mature manufacturing and logistics components, but falling short in integration.
• Companies who recently went through an acquisition of a supplier, manufacturing or assembly facility.
• Companies in the process of adding new, or removing old Trading Partners.
• Companies with the need, but lacking a durable Supply Chain.

.. and every case in-between. SCM sales engagements will consist of Discovery and iterative discussions. Implementation will include a substantial Services component, as deep assessment is required to understand the breadth of the Supply chain (does it extend all the way to Warehousing, Order Management and Fulfillment?), where shortcomings in operations and integration exist, and which components of an SCM vendor will fulfill the requirements.

SCM Providers

All the major software providers claim some sort of SCM implementation .. some actually have one:

There are thousands of smaller SCM and ERP-SCM vendors out there .. many are SaaS-based, representing low barriers to entry, with trial versions.

ED: As Article Publish dates are frozen in time, it is quite possible reviewed vendors and their capabilities may have advanced beyond those presented herein. Please accept my apologies for my shortcomings. A note to vendors: please reach out to advise your current offering capabilities and I will update.

SCM Audiences

Many industries rely on supply chains and can benefit from a robust SCM implementation:

• Retailers with complex supply chains require a lot of coordination and inventory management. SCM can help to streamline processes by providing real-time visibility into inventory levels and product availability. Retailers will see reduced costs and improved efficiency by optimizing their inventory levels and reducing stockouts.
• Logistics companies have to manage large volumes of shipments, coordinating with multiple parties, including suppliers, manufacturers, carriers, and customers. SCM helps to automate these processes, providing real-time visibility into shipment status and location. Logistics companies can improve efficiency and reduce costs by optimizing transportation routes and reducing delays.
• Manufacturing companies have complex supply chains that require coordination and supply management across multiple vendors for raw materials. SCM helps to streamline material acquisition processes with real-time visibility into production status and material availability. This helps manufacturers manage costs and improve efficiency by optimizing their production processes and reducing downtime.

In short, DSCM can help businesses in a wide range of industries to improve efficiency, reduce costs, and improve sustainability. Within these companies, titles a sales effort should pursue include:

• SC and SCM Owners / Operators
• SC Operations, SC Logistics Titles
• Logistics and Transportation Operators
• IT Admins
• Finance
• Materials and Manufacturing Processes Operators

Conversations will engage a wide variety of departments .. be prepared to orchestrate cross-department discussions.

Conclusion

In conclusion, digital supply chain management has emerged as a critical strategy for businesses to stay competitive in today’s fast-paced and highly interconnected world. By leveraging the power of advanced technologies such as big data analytics, artificial intelligence, and the Internet of Things (IoT), organizations can gain real-time visibility and insights into their supply chain operations. This enables them to make more informed decisions, reduce costs, improve efficiency, and enhance customer satisfaction.

Implementing digital supply chain management is not without challenges. It requires significant investments in technology, infrastructure, and talent, as well as a cultural shift toward data-driven decision-making. Organizations must also address concerns around data privacy and security, supply chain disruptions, and the potential impact on human jobs. In the mid- to long-term, the benefits of digital supply chain management far outweigh the cost and effort, and businesses that embrace this approach are well-positioned to succeed in the future.