Supply Chain Management, which is often called SCM in business, is the business practice of managing materials and information as they go from the supplier to the manufacturer. Since the flow of goods is so important in the world of business, being dedicated to effective SCM is crucial. There are several different dimensions of SCM. Some of these dimensions require management by an experienced professional with an operation management degree and others require the use of an integrated software system. Read on and learn more about the flows of SCM and what you need to know about software programs.
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What Are the Three Flows of SCM?
To really understand what goes into managing a supply chain, you need to first understand the activities that require management. These activities all have their own flows and movements.Currently three different areas of movement or flows exist in SCM: Product Flow, Information Flow, Finance Flow.
In the product flow, products or materials will move from the supplier to the customer. This is also the flow where returns are sent from the customer to the supplier. In the information flow, orders are transmitted to the supplier and the supplier will receive special updates on deliveries and delays. In the final flow, the financial flow, payments schedules are updated and credit offers are extended. Since every flow is unique, there are different systems that should be learned.
Different Types of SCM Software Systems
In today’s world, any business that offers the public or other businesses products and services needs to find a way to streamline the supply-side of their activities. By taking the time to streamline the processes, the company can keep their cost of goods competitive and also maximize customer value to retain their clients. One way to ensure everything is streamlined is to integrate the right types of SCM software systems and applications.
The two most common and most popular types of SCM systems that exist today are planning and executing applications. The planning software system will use formulas and industry-standard algorithms to use data from inside and outside of the enterprise to predict or project what the best way to fill an order will be. The purpose is to fill the order quickly from the best location to keep the operation costs down and to stay most profitable. Execution software programs focus on the processes after orders are filled and before they are delivered. Within these programs, the products and packages will be tracked and the physical status will always be stored and easily accessible. The purpose of this system is so that materials and packaging can be shared or managed in the blink of an eye.
With all of the companies that are operating online or trying to compete with purely online businesses, supply chain management has never been more important. Companies really need to compare e-commerce or web-based applications that have all of the SCM features that are needed to manage their resources, to reduce costs and to plan for their needs in the near future. When a company is fully stocked but does not have too much inventory, they can keep their product management costs down while keeping their satisfaction ratings up. Be sure that you really get knowledgeable in supply chain management and stay on top of your supply chain flow.