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Supply chain management (SCM) is the
oversight of materials, information, and finances as they
move in a process from supplier to manufacturer to
wholesaler to retailer to consumer. Supply chain management
involves coordinating and integrating these flows both
within and among companies. It is said that the ultimate
goal of any effective supply chain management system is to
reduce inventory (with the assumption that products are
available when needed). As a solution for successful supply
chain management, sophisticated software systems with Web
interfaces are competing with Web-based application service
providers (ASP)
who promise to provide part or all of the SCM service for
companies who rent their service.
Supply chain
management flows can be divided into three main flows:
- The
product flow
- The
information flow
- The
finances flow
The product
flow includes the movement of goods from a supplier to a
customer, as well as any customer returns or service needs.
The information flow involves transmitting ordersand
updating the status of delivery. The financial flow consists
of credit terms, payment schedules, and consignment and
title ownership arrangements.
There are two
main types of SCM software: planning applications and
execution applications. Planning applications use advanced
algorithms to determine the best way to fill an order.
Execution applications track the physical status of goods,
the management of materials, and financial information
involving all parties.
Some
SCM applications are based on open data models that support
the sharing of data both inside and outside the enterprise
(this is called the extended enterprise, and includes key
suppliers, manufacturers, and end customers of a specific
company). This shared data may reside in diverse database
systems, or
data warehouses,
at several different sites and companies.
By sharing
this data "upstream" (with a company's suppliers) and
"downstream" (with a company's clients), SCM applications
have the potential to improve the time-to-market of
products, reduce costs, and allow all parties in the supply
chain to better manage current resources and plan for future
needs.
Increasing numbers of companies are turning to Web sites and
Web-based applications as part of the SCM solution. A number
of major Web sites offer
e-procurement
marketplaces where manufacturers can trade and even make
auction bids with suppliers. |
