The Role of Business Software for Supply Chain Management

Before we look at the role of business software for supply chain management, let us look at the supply chain processes and documentation.

Starting at the retailer end, a standard supply chain can involve the following:

• Order from Customer: A retailer receives a supply order from a major customer, for items that might or might not be in stock.
• Product Replenishment Order: If an item of merchandise is not in stock, or nearing stock out, the retailer initiates a replenishment order to the distributor
• Shipping Form: If the distributor has the products in stock, they arrange with their transporter to ship these to the retailer. The transporter prepares a shipping form/shipping advice that is used by distributor, retailer and truck driver.
• Distributor’s Request for Supplies: This represents the communication distributors periodically send to manufacturers
• Manufacturing Order: This is an internal request initiated by the manufacturer to fulfill a distributor’s request for supplies. It forms the basis for production scheduling by the production department
• Warehouse Order: Where the manufacturer already have the requested items in a warehouse (their own or third party) instructions are passed on to them to ship the order to the distributor
• Request for Transport: A general request checking a transport company’s readiness to transport a shipment to a specified destination. It gets translated into a shipping order if the transport company is in a position to do so, on terms acceptable to the shipper

It would be noticed that a lot of communications flow back and forth during the above transactions. The more efficiently the communications proceed, the quicker the transactions can take place.

It is in this context that integration of systems between manufacturer and distributor organizations become valuable. With such an integrated system, the distributor’s supply requests, for example, can be converted into production schedules or warehouse orders. Efficiency and speed of transportation can also be enhanced through carefully tailored system integration.

Another dimension is added to supply chain management when manufacturers seek to gain a competitive advantage through SCM in an environment of short product life cycles. They seek to convert new designs into products in the shortest possible time. To do this, they need to communicate design information to prospective suppliers in an effective, secure and at the same time easily accessible manner. And the more widely they can do this, the more suppliers they can reach and hope to get the best bargains.

The issues now become how to:

• Communicate requirements in rich detail to suppliers - 3D models, 2D drawings, relevant data, documents in different formats, etc.
• Secure sensitive design information from unauthorized access
• Allow access to proposal requests even to competent suppliers with only modest IT infrastructure
• Attach expiry dates to documents after which they cannot be edited or opened
• Prevent indiscriminate copying, printing and editing of documents
• Allow respondents to submit their bids online, with digitally authorized signatures

Business software for supply chain management can make both manufacturer-supplier system integration and enhanced RFP processes possible. It then becomes possible to move designs to products and products to markets much more quickly and efficiently.

In the case of RFP, suppliers can be from anywhere in the world and yet they can respond to RFPs with almost the same ease as local suppliers. This becomes a big plus point with many competent and low-cost suppliers emerging in developing economies.