Supply chain management (SCM) refers to the way enterprises plan, monitor, and control the flow of materials related to their products and services. For those looking to get ahead in a tough global environment, SCM is critical. High-impact technology, supply chain management solutions have the power to increase flexibility, productivity, and profitability—and future-proof your organization.
Supply Chain Management and Industry 4.0
Supply chain management is software that works with your enterprise resource planning (ERP) system to bring together all elements of your supply chain in a centralized location. Once your supply chain is connected, transparent, and visible, you can trace materials 24/7 and leverage your new wealth of information for real business value.
Powerful, efficient SCM is necessary for keeping pace with the Industry 4.0 trends that define modern manufacturing and distribution. Connectivity, automation, cloud computing, artificial intelligence (AI), and Internet-of-Things (IoT)—these advanced technologies are key components of future growth. They help you capture and analyze real-time data, giving you a foundation to plan, prepare, and operate more strategically.
Before digital technology, information associated with the supply chain flowed more slowly and linearly. To optimize logistics management and planning, businesses only had to understand and control that single stream of information.
Today’s supply chain is a highly complicated and fluid web of interconnected interactions. Between suppliers and buyers, shipping and receiving, and omnichannel sales, employees have multiple ways to communicate across companies, both externally and, in the event of a distributed enterprise, internally.
Adding to the complexity is the concept of the global supply chain. Many supply chains stretch across countries and continents. If your supply chain spans a handful of jurisdictions, then each link in the chain may be subjected to various—and often competing—regulations and business pressures.
Industry 4.0 technologies and a global business ecosystem means more opportunities for growth and scale. But to take advantage of them, not be pulled down by them, you need an easy-to-use supply chain management solution that simplifies and streamlines everything.
SCM In the Cloud
Supply chain management can run on-premises or in the cloud, but cloud computing is a more natural fit. When disruptions occur along your supply chain, you want to be able to flex, without having to make major changes to your code and applications. A cloud environment allows you to operate SCM in an agile manner, so you can respond to unexpected issues efficiently, without compromising future growth opportunities.
In general, the cloud is ideal for SCM because it’s tough to make any key Industry 4.0 upgrades with solely on-premises ERP. For instance, many senior leaders rely on dashboards to alert them to critical issues in real time. This functionality is most effective when pulling and analyzing data from every area throughout the business. In a time of global uncertainty, all your applications, from IoT sensors to AI analytics to SCM systems, operate best when deployed in a dynamic cloud environment.
Using the latest technology to get ahead is one reason why 90% of businesses that Epicor surveyed are planning to move to the cloud this year. But one thing a good SCM application does is allow you to move to the cloud at your own pace, according to your business needs. Ultimately, SCM in the cloud is the optimal environment. But it should be flexible enough so that you can configure it on your terms and test out the benefits as you go.
Benefits of SCM
Supply chain management is such an integral part of manufacturing and distribution that it can affect multiple areas of your business. Here are some of the key benefits of SCM, ones that can power advanced technology to help you build a better, more profitable business.
Quick Responses to Inventory Disruptions
One common—and frustrating—challenge manufacturers and distributors face is delays and cancelations. When shipments never arrive, production plans change or get put on hold. Either result is a loss that can ripple throughout the enterprise.
These disruptions are far too complex for employees to track and resolve using spreadsheets. With SCM, you can see disruptions coming and adapt to them quickly. By identifying the original source, you can get the information you need to make quick adjustments.
3 Ways to Navigate the Labor Shortage
The labor shortage isn’t showing signs of letting up, but supply chain management systems can help in three main ways.
- SCM can minimize confusion along your supply chain, while increasing automation, delivering better supply chain analytics, and decreasing the need for manual processes. This improved efficiency can lead to more productivity, ultimately allowing you to do more work with less people, which can be valuable if you’re feeling the labor crunch.
- SCM can enable a more flexible workplace, especially when deployed in the cloud. Giving end users the ability to manage operations remotely can be a win-win: It can make your workers more productive while boosting their satisfaction.
- SCM can help you attract and retain talent, particularly younger workers. When millennials and Gen Zers join a company, they expect cutting-edge digital tools. Accustomed to a life of smartphones and computers, they’re comfortable with various applications, interfaces, devices, and machines. Empower them with low-code/no-code tools, and they’re apt to design quick solutions to everyday problems.
A Foundation For Your Connected Organization
In an Industry 4.0 context, supply chain management systems can be considered the digital linchpin of the connected organization of the future. A production plant can’t operate without the right supplies. SCM mitigates the risk of that happening, which makes your supply chain more resilient.
To get the most value out of SCM, it should be integrated with your entire ecosystem, such as sales management, product management, production management, and customer relationship management (CRM).
The power to link raw materials to product shipment and customer satisfaction—and to analyze all the analytics for real intelligence—is extraordinary. But it can only happen when all information is available to the right people at the right times.
7 Critical SCM Capabilities
The best supply chain management brings multiple high-impact capabilities to your manufacturing and distribution enterprise, providing powerful end-to-end solutions. These are not the only SCM capabilities, but some of the most critical and relevant ones.
Purchase Management
Communicating and collaborating with your suppliers should be straightforward—especially when you have a lot of them. Purchase management automates manual tasks, helping you streamline purchase order writing, improving order accuracy, and reducing inventory.
Demand Management
Demand contracts can help your business, but only if they’re managed well. SCM’s demand management uses statistical forecasting and planning tools to give you insights to improve fill rates and enhance your customer experience in the short and long term.
Inventory Management
Supply chains are all about managing the flow of materials, from purchase order through manufacturing and shipping—and inventory management helps ensure they don’t get held up. In a global environment, real-time data and analysis tools like shortage monitoring, reorder analysis, and stock status are critical for success.
Warehouse Management
Industry 4.0 is all about connectivity, and SCM seamlessly links your warehouse with order processing and manufacturing operations. Once you can automate your pick, pack, ship, and receiving processes, you can compete on speed by offering rapid fulfillment.
Advanced Material Management
A foundational capability of supply chain management, advanced material management gives you the power to use a mobile device and barcoding technology to easily monitor raw materials in real time, throughout your entire enterprise.
Supplier Relationship Management
Redundant data entry wastes time. Supplier relationship management capabilities eliminate the need to do it by centralizing records for buyers, parts, and suppliers, and gives you automated tools to quickly convert supplier responses into actionable purchase orders.
Supplier Portals and EDI
As many global supply chains adopt electronic connections, your ability to respond may center around traditional methods of electronic communication, such as Electronic Data Interchange (EDI). The sharing of electronic documents with trading partners and leveraging Supplier Portals to share and collaborate provide greater visibility of supply chain activities—giving you the needed tools to predict failure.
Accelerating into the Future of Supply Chain Management
The days of quarterly meetings to get an update on your logistics and supply chain management strategy have long since passed. In the accelerating digital universe, a global supply chain makes managing it a minute-by-minute business need.
In the future, as technology becomes faster and smarter, SCM will continue to evolve to capture and analyze more information in greater detail. More processes will become automated, creating new opportunities for companies that can best build a connected organization. Manufacturers and distributors looking to stay ahead of the competition will be on the forefront of these changes.
Learn more about Epicor supply chain management solutions for manufacturing and distribution.