I covered the basics of ERP previously, and thought I’d move on to supply chain management (SCM), which we’re also featuring in tomorrow’s TEC Newsletter (go to Newsletter archives), with lots of white paper goodness, to boot.
What is SCM?
Supply chain management (SCM) systems coordinate the movement of products and services from suppliers to customers (including manufacturers, wholesalers, and retailers).
These systems are used to manage demand, warehouses, trade logistics, transportation, and facilities, as well as the movement and transformation of materials on their way to customers.
SCM applications link people and organizations (and their activities) to information and resources. The ultimate goal is for all components of the chain to exchange information with maximum efficiency and effectiveness, in order to obtain best results for all parties.
A comprehensive SCM solution allows you to focus on and optimize key components of your supply chain operations:
• demand management
• order management
• warehouse management
• production and supply planning
• service parts planning
• supplier relationship management
• supply chain event management
• international trade logistics
• transportation management
The difference between managing these components effectively and mismanaging them can mean the difference between success and disaster.
Why An Effective SCM Evaluation Process is Vital
IT disasters are not just for SMBs. Even the biggest companies in the world can trip over their supply chains.
In May 2001, Nike announced that sales for the preceding quarter had been $100 million (USD) lower than expected. The official reason, according to Nike? Confusion in its supply chain.
What’s more, as soon as Nike announced its supply chain breakdown, the company’s stock plummeted 20 percent—making a $100 million loss look nearly trivial.
Later that year, Cisco announced a $2.2 billion inventory write-off. The culprit, once again: supply chain problems. This fiasco was—and still is—the largest inventory write-off in history.
These debacles are not necessarily the direct result of poor software selection or faulty SCM evaluation—but they are potent reminders that software evaluation can be the single most important factor behind operational success—or organizational failure.
How the Software Selection Process Can Help
• Understand how different applications will improve supply chain delivery, cost performance, and order execution.
• Review warehouse management features and logic for pick, put-away, and replenishment functionality.
• Select vendors that support appropriate transportation management for your region or globally.
• Evaluate collaboration environments and relationship terms and details for partners within your supply chain.
• Ensure the technology integrates across multiple enterprises, in a way that is appropriate for your environment.
7 Benefits of SCM
Selecting the right SCM system can help get you on the right track.
1. Increase your top-line profit growth through supplier collaboration
2. Increase the quality of your customer service
3. Decrease stock-outs
4. Reduce your inventory carrying costs
5. Reduce your operating costs—corporate-wide
6. Create supply chain visibility among your trading partners
7. Respond quickly to changing market conditions—and adjust accordingly
Want to learn more about SCM applications and how to select the right one for your organization? Visit our SCM Evaluation Center, where you’ll get the skinny on demand management, supplier relationship management (SRM), supply chain event management, supply chain optimization, transportation management systems, and warehouse management systems (WMS).
Don’t forget–you can request other tutorials by leaving comments below.
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Good one for understanding of BASIC-SCM.
I would like to learn more on multi channel order management managment for optimising the supply network.
we are trying to design multi channel order managment application i.e., online ordering.
your text was useful.
interesting article, yet cleared some concepts
i need some information about scm for my student MS. thank you for your information.
i need some info abt SCM for my self i am SAP-PP certified consultant
Iam an ERP consultant and Ineed to guide the user manager’s on change management.
Also help in implementation.
As we move toward a global organization, SCM is vital to our growth and efficiency.
Thanks very much for your comments. I’m glad this was useful. Just wanted to point out some further resources that might be of use to you:
If you’re looking to research RFIs or business requirements, our SCM software evaluation reports provide extensive information about product capabilities for the top vendors (and contendors) in the field.
If you’re looking for a comprehensive overview of SCM functionality, you might want to check out our SCM RFP templates. These templates are also useful for establishing your selection criteria for supplier, manufacturer, logistics, transportation, and customer business processes. An interesting side note: these criteria also expose global and cross-enterprise trade issues.
You can also see our SCM Evaluation Center, which provides a wealth of research resources, including white papers, case studies (good for reference checks), and articles. There’s also a handy “Start Your SCM Comparison” button which generates a shortlist of products that meet your needs. I particularly recommend that you take it out for a spin.
Thanks for the article. I need some information about SCM and healthcare.
i’m interested in SCM. Usaully SCM is divided into SCP & SCE.
can i get some information about the scm trend based on above classification
I beleive the tool will help me know more about management
Still we need more information about exploaitation of IT in SCM. It will be more useful when these information integrated with success stories of business organizations.
good piece of information.pls do send more details about distribution management
Any products/systems working on reducing carbon emmisions & monitoring and monitoring to grrenhouse norms.
thanks for the article .i need some information about SCM in company as work in project field. like EPC CONTRACTOR.
This is very good information regarding SCM. I need how SCM work and effect the retail market.
Its realy good, and thanks for the articale, Its good for general understanding of SCM. I need more infomration like how SCM more benefical in service industries.
I need a best practice of scm (prefer PPT format)
from one of the top SCMs of all over the world.
my job is suppliers developer
I am IT Service Delivery Manager. I want to prepare supply chain management.
So pl. send study material.
very helpful tutorial for basics.
I need a best practice of scm (prefer PPT format)
from one of the top SCMs of all over the world.
my job is suppliers developer
Sir, I am working in TVS GROUP COMPANY.
My job is planning the BOF MATERIAL FOR day to day production for commercial & light commercial vehicle.
Already I completed My MBA ( MM ) Currently I am doing my PGDSCM IN CII INSTITUTE OF LOGISTICS.
Please send more case study papers it will be very useful for SCM students.
I would like to receive white papers and case studies about SCM. Also, the best practices and the know-hows of SCM in the consulting space especially Supply Chain Optimization.
Thanks again for your comments. Be sure to check out our followup blog post, Supply Chain 201: Editors’ Picks.
I would like to know the best business practices under each components of SCM
I need to know how sap can be used for marine fleet management?
As they say ‘Brevity is the soul of wit’
Nice Article! I am looking for Best Practices - thanks
its simplicit to understand.i m pursuing masters degree in prod splz in mfg & have to submit project on plm in mfg sector. kindly guide on its implementation in general for small scale ind
Hi Ganesh, thanks for commenting. I’d recommend you take a look at the white papers at http://whitepapers.technologyevaluation.com. In particular, you may be interested in the white paper “Top 10 PLM Pitfalls to Avoid,” at http://whitepapers.technologyevaluation.com/view_document/5454/Top-PLM-Pitfalls-To-Avoid.html. Best of luck, David
GSE Warehouse and Store Incharge
Abu Dhabi Airport Services
P.O. BOX 3668 AUH, UNITED ARAB EMIRATES
thanks for the article .i need some information about SCM in a univeristy Environment
Thanks for the Article,
One question, what does inventory write-off means, and how did it cause Cisco 2.2 Billion losses, could have Cisco done something that time to avoid this fiasco?
For best practices of Supply Chain you might try and google “SCOR”. Lots of documentation exist on this topic. Or you might try Amazon that has many books on the Supply Chain. I’ve just order a Book from Amazon “Supply Chain Excellence: using the SCOR model”. Also read Esstentials of Supply Chain Management which is an excellent book if you want to start getting to know about the subject.
I can be reached @ Email:firstname.lastname@example.org for further discussion on the matter.
Useful information about SCM also for beginners.
Thanks for the Article,
This is much helpful
It’s indeed a good information.
Good Information about SCM
i want to know about material data center articel, becouse next time i want creat the data center services in indonesia expecialy in Aceh after tsunami.can you give me information its. thanks you
The most insightful article on SCM I have ever read. Give us more for business today need such information.
Thank you very much for your information about SCM. I still need more about information relate with Apparel management, HRM. Best Regards LY Chheng
Good article, it will help businesses
It is a good article. Keep posting such useful articles, so as to enable readers update.
Ramaneswara Rao Rongala
I would like to know the link between market research (for prices) and SCM. But keep up the good work.
Very usefull information regarding SCM. It gives us very basic of SCM, which help us how is the work flow in our organisation.
SUPPLY CHAIN MANAGEMENT MADE EASY…
Folks I have been in Supply Chain Management for over 35 years all the way from assistant buyer (Chaser) to Supply Chain Director and International Sourcing Director. I have lived and worked for some very large, well known companies and some that you have never heard of and have lived and worked in almost every country in the world. In those 35+ years I have saved companies untold
Millions of dollars and have never failed to save any company that I have been employed by at least 10% of their Operating Costs and in most cases at least 20+%.
I only say the above to let you know that I have at least a little experience in the field of purchasing, supply chain management and cost saving.
Now with all that said what I want to tell everyone is that you don’t need all the high priced Six-Sigma people or the fancy consultants - all you need are highly qualified, well trained employees and even higher qualified and trained management. What you don’t need are people that come into the category of “last week I couldn’t spell buyer now I are one”.
You see - Supply Chain Management is really a very simple process - all it consists of is getting the best possible price while also getting a product that meets or exceeds the required specification and having it delivered on time, every time, never to early, never to late.
Yea yea I know what you are thinking - easy to say but impossible to do, at least consistantly…..WRONG! It can be done, it has been done, it is being done, I have done it and others have as well and most importantly you can too!
A lot of it comes down to “pay me now or pay me later” - if you have ill trained and under qualified staff you will get higher prices, iffy quality and crap delivery - why? Because it allows your suppliers to control you instead of you controlling your suppliers. Why should a supplier reduce their prices when no one can give them a good reason to do so? Why should they give you the required quality when no one forces them to? Why should they deliver on time when no one does anything but complain? Now I’m going to tell you what happens when the above happens - you threaten the supplier with various things you will do to him if he does not shape up - correct? Well if you don’t, you may be one of the lucky few who may really know what you really need to do.
The simple answer is that threats don’t work over the long haul. Now they may work in the short term but as soon as the supplier that has been threatened and forced to reduce their prices finds a new company to sell your stuff to he will drop you like a hot rock and leave you at best a ‘second choice’ supplier or at worst no supplier at all. Or if they cannot find one they will reduce the quality and delivery of your goods to attempt to recoup some of their losses. So where does that leave you - no better off and normally worse off than you were before.
I will stop for now but if anyone would really really like to get their costs under control I will be happy to help at NO COST - Free! - I want to give back some of my knowledge and experience to help American companies to become more efficient and cost effective. If you are not interested in getting your company under control and you are happy to lay off staff or out source your work in the erroneous thought that it will make everything Ok then I wish you well.
Thanks for giving information related
supply chain management.
it has nicely covered about SCM and very understanding to every body whose working in this
Help me if possible to prepare Questionnaire for me in SCM
Title : A Study on Effectiveness of supply chain Management in personal Care Products[FMCG] with special reference to Hindustan Unilever Limited in Erode district.
your text is very great.Thank you
Dear all, I’m a student about Brasil, and my teacher want a “Quadrant about Supply Chain Management” (2008), I try but dont find nothing, if someone to have this quadrant please send me a e-mail??
Thanks for sharing Knowledge.
could you please help me with more Information on SCM.
Thanks and Regards
Although it is a short article but it is very informative. We implemented SCM in our company and we we have got positive results. We cut costs on a large scale. And the process is going on.
If somebody has the case study about the implementation of SCM in the global furniture companies please send an e-mail to address email@example.com
Whatever the blog discussing is good & my suggestion is for its development & for the subject it should present some white papers & research articles.
Stop not with this. But to flash news the modern trend. Should release some articles on all the verticals. Should encourage subject peoples by giving statistics & datas on it.
Todays hot topics are WH/Distribution Mgmt/3PL/4PL/7PL/Inventory/WMS/TECHNOLOGY impact & more.
I want to know about the all oracle applications.
oracle scm is oracle technical application or oracle finance application?