SCM system

SCM systems (Supply Chain Management systems) are IT systems supporting supply chain management operations, and coordinating flows of goods.

This system allows easy analysis of the material flows between suppliers, and gives the company easy possibility to adapt to market demand.

Typically includes support for the transport planning at different levels between the different companies involved.

Functions of SCM IT systems

Supply chain management (SCM) IT systems are computer-based systems that support the planning, coordination, and control of activities involved in the movement of goods and services from suppliers to customers. These systems play a critical role in managing the flow of materials and information across the entire supply chain.

The following are some of the key functions of SCM IT systems:

• Demand forecasting: These systems use historical data and statistical analysis to predict future demand for products and services.
• Inventory management: These systems help to optimize inventory levels by tracking stock levels, reordering points, and lead times.
• Purchase order management: These systems automate the process of creating, tracking, and approving purchase orders, making it more efficient and accurate.
• Transportation management: These systems help plan and coordinate the movement of goods and services, track shipments, and optimize routes and logistics.
• Production planning and scheduling: These systems help to plan and schedule the production of goods and services, taking into account demand forecasts, inventory levels, and production capacities.
• Quality control: These systems help to monitor and ensure the quality of products and services through the use of sensors, cameras and other technologies
• Supply Chain Analytics: These systems help to analyze data from the various aspects of the supply chain to identify trends, issues, and areas for improvement.
• Collaboration & Communication: These systems support collaboration and communication among various supply chain partners, and help to share data, documents and other information in real-time.

In general, SCM IT systems help to improve the efficiency, visibility, and responsiveness of the supply chain, enabling organizations to make better-informed decisions and improve their overall performance.

Types of SCM IT systems

There are two types of IT SCM systems:

• internal engaged in supplying, distribution and production,
• and external, integrating the company with its suppliers.

With this system, the partner companies, can find a niche in the market and to use information across whole logistics network.

In manufacturing companies SCM incorporates the majority of the production process planning and supply activities.

The advantages of this system can include: integrating with other companies IT systems via the Internet, the optimum adaptation of production to market needs, search for market niches, optimization of supply sources and identifying constraints in the supply chain.

See also:

• IT systems in production management
• IT systems in value chain management
• Strategic IT System
• Sources of information in logistics

Examples of SCM system

• Enterprise Resource Planning (ERP) System: ERP systems are integrated software systems that enable effective management of all aspects of a business, from accounting to inventory control and supply chain management. The system helps to automate and streamline business processes, improving overall efficiency and reducing costs.
• Warehouse Management System (WMS): WMS systems provide the functionality to manage a warehouse's resources and operations, including warehouse layout, inventory management, order scheduling, and order fulfillment. It also provides real-time visibility into the movement of inventory, allowing companies to optimize their warehouse operations.
• Transportation Management System (TMS): TMS systems provide the capability to manage the transportation of goods, including purchasing, scheduling, tracking, and billing. It can also provide real-time visibility into the transportation process, enabling companies to reduce costs and optimize their supply chain.
• Supply Chain Planning System (SCP): SCP systems provide the ability to plan and schedule the supply chain, including inventory, production, and distribution. It enables businesses to optimize their operations and reduce costs by proactively anticipating supply chain disruptions and responding quickly to changes in demand.
• Manufacturing Execution System (MES): MES systems provide the capability to manage the production process, including scheduling, tracking, and quality control. It enables companies to reduce costs by optimizing the production process and ensuring quality standards are met.

Advantages of SCM system

An SCM system can provide several advantages to businesses, including:

• Enhanced visibility and control: An SCM system helps businesses ensure that their supply chain is running smoothly and efficiently by providing real-time visibility of every step of the process. This enables businesses to better manage and anticipate potential issues, as well as track the progress of their supply chain.
• Improved forecasting: An SCM system can provide insights into current and future demand, enabling businesses to better plan for their orders, inventory, and resources.
• Reduced costs: An SCM system helps businesses reduce operational costs by optimizing their supply chain and removing inefficiencies.
• Increased customer satisfaction: An SCM system can help businesses better meet customer needs by providing them with accurate and timely information about the availability of products and services.
• Improved collaboration: An SCM system can help businesses work more collaboratively with their suppliers and vendors by providing a platform for sharing data, documents, and other information.

Limitations of SCM system

A SCM system has certain limitations, which include:

• Limited visibility: SCM systems are typically limited in their ability to provide visibility into the supply chain, as the data is often siloed or scattered across multiple systems.
• Limited scalability: SCM systems can struggle to scale as the business grows, and additional features can be difficult to implement.
• Limited customization: SCM systems are not always customizable to meet the unique needs of a business's supply chain.
• High cost: SCM systems can be expensive to purchase, install and maintain, making them a costly investment.
• Complex integration: Integration of SCM systems with other company systems can be complex and time consuming.
• Security risks: SCM systems can introduce security risks to the supply chain, with data breaches being a potential issue.

Other approaches related to SCM system

SCM systems are not limited to IT support and coordination of goods, as there are many other approaches that can be utilized to improve the performance of supply chain management operations. These approaches include:

• Business process reengineering - This involves redesigning business processes to focus on customer service, waste reduction, and improved decision making.
• Demand forecasting - This involves using data analysis tools to predict customer demand for products and services, enabling companies to better manage their inventory.
• Collaborative planning, forecasting, and replenishment - This involves working with partners to better manage inventory levels, improve supply chain visibility, and reduce costs.
• Warehouse management systems - This involves using software to optimize inventory management, reduce costs, and improve customer service.
• Radio frequency identification - This involves using radio frequency tags to track inventory in real time, allowing companies to better manage their supply chains.
• Logistics - This involves managing the transportation and delivery of goods, ensuring that products are shipped in a timely and cost-effective manner.
• Automated data capture - This involves using barcode scanners, RFID readers, and other technologies to collect data about products, shipments, and other supply chain related information.

In summary, there are many approaches related to SCM systems, such as business process reengineering, demand forecasting, collaborative planning, forecasting, and replenishment, warehouse management systems, radio frequency identification, logistics, and automated data capture. All of these approaches can help to improve the performance of supply chain management operations.

SCM system — recommended articles

Efficient Consumer Response — Integrated supply chain — Supply chain integration — IT systems in production management — Logistics information system — Supply chain networks — Sources of information in logistics — Strategic information system — Principles of Supply Chain Management

References

• Fawcett, S. E., Ellram, L. M., & Ogden, J. A. (2014). Supply chain management: from vision to implementation. London: Pearson.