| 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. |
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