Supply Chain Management: How to introduce the subject to the uninitiated?

The oft-consulted Wikipedia gives the definition of Supply Chain Management as “Supply chain management (SCM) is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.”

What do you do when a fresh intern asks you what is supply chain and supply chain management? Well, I go about like this.

Three things make a Supply Chain, namely Customers, Producers and Suppliers. One can extend the Supply Chain to include the customers’ customers and the suppliers’ suppliers. Supply Chain Management is an approach to manage the troika of PPF which stands for Purchasing, Production and Fulfillment, in order.
Purchasing- I/P from supplier
Production- Converting I/P to finished product(O/P)
Fulfillment- Delivering O/P to customer.

Major decisions that are taken before setting up a Supply Chain in place can again be summed up in a triad as where to, how to and from which.
a)Where to locate the DC(Distribution Centre)
b)How to transport goods among the DCs
c)From which places to procure the goods.

 

Things you need to take into account when buying supply chain management software

a)Understand what functions are required by your business before you buy any SCM product. How the product integrates with the other IT systems in place now or in future in your business should play a major role in determining the buy. Let’s straightaway start with a generic example. If you are planning to buy a Merchandising Software from one software vendor and already have a different Warehouse Management Software, make sure that the merchandise software can be integrated with the Warehouse Management Sofware. Another decision making criteria is whether the SCM software you are going to buy can integrate with the ERP system in place.

b)Most often than not, best-of-breed SCM software providers keep adding newer functionality to their base products by constantly taking the best custom features asked by the customers. These may suit your business needs which keep on changing and while fine-tuning your supply chain, you may need a new functionality which is already there in the software but has been switched-off at the time of delivery because it wasn’t asked for.

c)Keep in mind that an SCM product which suits a big player like WalMart may not suit everyone else.Just because WalMart has bought a certain product from an SCM software provider doesn’t mean that the product would be suitable for your business. Walmart is able to invest huge amounts of money in getting the product customized to suit its business. The customized product may more often than not nowhere resemble the base product sold by the SCM software provider. So never go by reputations. Your SCM problem could be unique and if you have luck on your side, a niche player could very well solve your business needs.