Supply Chain Management:
What is it – and why is it so important?
An efficient supply chain management strengthens the entire production flow within a company. This makes the associated software solutions an important tool in everyday business.
What is Supply Chain Management?
Supply chain management covers the entire production flow of items. This includes physical products as well as services. The exact meaning of supply chain management varies, however, depending on the company. While the supply chain always involves the same basic elements, the specific steps may vary depending on the company. Nevertheless, it includes all the steps between the purchase of raw materials and the delivery as part of a customer order.
Meaning and definition of Supply Chain Management
Supply Chain Management (SCM) has the task of tracking and analyzing the flow of data, finances and goods. SCM normally focuses on a single product or service. In both cases, SCM begins when raw materials are sourced and ends once the customer has received the product. Although logistics and Supply Chain Management go hand in hand, they are by no means synonyms. Instead, Supply Chain Management services involve all parties which are relevant within the production process: Suppliers, manufacturers, distributors, and logistics and transportation providers, for example.
The task of a supply chain manager is to keep the supply chain intact. This includes optimization, but also supply chain risk management. Ideally, these strategies optimize the entire supply chain, from reducing warehouse costs to avoiding returns. The use of new technologies and concepts like industrial augmented reality, smart farming and smart manufacturing also play an important role in strategic supply chain management.
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Overview: The Supply Chain Management process
Modern supply chain management software takes into account many different approaches. But while supply chain management tools recognize that each company is unique, they all support the same basic processes.
- Planning: This category includes all resources required for a specific product. Additionally, the planning phase can help determine if SCM supports the company’s goals.
- Procurement: The next step is to select suppliers for the procurement of raw materials, components or products. With the help of supply chain management tools, it is possible to continuously check the effectiveness of ordering, receiving and inventory management.
- Production: Here, supply chain management services take into account all activities related to production, quality inspection and shipping.
- Delivery: In the context of delivery, strategic supply chain management supports the tracking of shipped goods, their outgoing invoices and the receipt of payments.
- Returns: Finally, the supply chain management software looks at the steps implemented to take back surplus or defective goods.
Important aspects of Supply Chain Management
Supply chain management combines different aspects to provide the best possible benefits to companies:
- Sustainable Supply Chain Management considers sustainability throughout the supply chain process.
- Inventory management: Here, existing materials or components are analyzed to ensure smooth production.
- Order management enables the traceability of customer orders.
- The blockchain supply chain deviates from the traditional definition of supply chain management, but it offers numerous advantages to the customer. The most important one is the high level of transparency along the entire supply chain.
- Regular analysis of the supply chain and electronic data exchange of real-time data promote high quality standards throughout the whole supply chain.
Examples and possible applications
In practice, supply chain management services can be used in many different ways. Well-known examples in this area are BASF and Chemonik:
- BASF: Digitalization was intended to help BASF improve its own efficiency and expand the company. Together with IBM, BASF eventually implemented a way to examine and audit inventory decision-making along the supply chain.
- Chemonik: Chemonik and IBM jointly developed a way to track shipments along the supply chain. This functionality is called ARTMIS. Thanks to it, Chemonik has been able to manage its orders well in advance.
Frontline Customer Success Story
By using wearables in combination with TeamViewer AR solutions, Schnellecke Logistics optimizes their processes.
The AR platform TeamViewer Frontline offers reliable support for Schnellecke Logistics’s operations. Its solutions improve processes along the entire value chain through augmented reality-based wearable computing technology. The foundation of the success: visual step-by-step presentation of information, ensuring quick and intuitive processing. The vision picking solution xPick supports logistics procedures, enabling multiorder picking for up to 24 orders simultaneously. And TeamViewer Frontline’s Make-by-Vision solution xMake supports assembly procedures.
The importance of Supply Chain Management for companies and businesses
Strategic supply chain management enables companies to save time and money. Not only does it reduce warehouse costs, but it also eliminates the costs associated with waste. In addition, supply chain management reduces the amount of garbage. At the same time it improves production cycles. It is therefore not surprising that the just-in-time supply chain has already established as an industry standard.
To make the most of supply chain management services, it is necessary to analyze existing real-time data. Such analysis helps companies gain a better understanding and enables them to optimize necessary areas:
- With retail supply chain management, it is possible to optimize prices dynamically. This makes it possible to ship seasonal products or items with a short shelf life first. Through targeted supply chain management services, prices can also be automatically adjusted so customers first choose products with a shorter shelf life.
- Supply chain management tools help companies identify potential problems. This includes identifying potential supply bottlenecks even before customers place their orders.
- Improving inventory levels is also possible with effective supply chain management. Here, it is important to create the basis for the sales forecast by analyzing the data inventory and to include it in the planning accordingly. This allows incorrect orders to be noticeably reduced, which benefits the company financially.
The evolution of Supply Chain Management
SCM has a long history. The definition of supply chain management dates back to ancient times. And although the strategies for managing the supply chain have changed significantly, the fundamentals of the supply chain remain the same.
History of Supply Chain Management
Supply chain management can be traced all the way back to antiquity. However, at that time there was only a manageable demand and production capabilities were limited. This changed during the industrialization. Since this era, supply chain management has become increasingly important for companies. After all, goods and services should be delivered to customers as efficiently as possible.
With the introduction of computer-based software solutions, the complexity of logistics and supply chain management increased rapidly. But despite the more complex structure, the supply chain still represents a largely linear process.
SCM in modern industries
Today, the supply chain management system is based on modern technological approaches and is commonly referred to as industry 4.0. In particular, supply chain management tools focus on sustainable methods, machine learning and automation.
How well operations and supply chain management work depends on various factors. For example, it is much easier to build a stable supply chain using augmented reality in the retail industry. This is because smart factories or smart warehouses automate and optimize large parts of their environment. This means not only that reducing warehouse costs is possible, but that ordering and delivery processes are more punctual and reliable. In this case, punctuality and reliability help to ensure that supply chain management can continue without interruption.
What an efficient supply chain management system should look like?
Supply chain management plays a significant role in how customers perceive a company. Effective supply chain management enables a company to operate sustainably and maintain its reputation and corporate image. It is therefore not surprising that it is becoming increasingly important to optimize processes around the supply chain.
The task of the supply chain manager is to choose the right system and optimize all processes as best as possible. To achieve this, the supply chain management software should be equipped with the most important key features:
- Cognitivity: Managing the supply chain works best with self-learning algorithms. AI technology helps companies gather and coordinate information. It then automates key components for optimal supply chain management.
- Collaboration: Managing the supply chain also means that software should strengthen collaboration between companies and vendors. Here, a special form of vendor-based inventory management can be useful.
- Connectivity: You should be able to combine different data. This includes traditional data sets but also information from the IoT and unstructured content from social media.
- Comprehensiveness: It is also important that the real-time data collected is as comprehensive as possible. Only with a large data pool well-founded statements can be made.
- Cyber-awareness: Protection against cyber-attacks is one of the most important measures in supply chain risk management. After all, these solutions should strengthen the company instead of opening up weak points.
1. Customer Focus
Sustainable supply chain management focuses on sustainable approaches while keeping efficiency and cost in mind. Nevertheless, companies are encouraged to put the customer at the center of their own optimization approaches. After all, particularly low costs only provide additional profits if the customer experience remains excellent. Companies therefore benefit from aligning their supply chain management solutions with customer satisfaction.
2 Agitable supply chains
In many areas, agility is the key to success. Like software development, supply chain management is characterized by its depth and continuous evolution. This means requirements cannot be set once and then maintained for years. Instead, many different paths are required, which customers can use according to their own requirements or capabilities. This degree of individualization can only be realized if retail supply chain management is agile.
3 Cloud-based SCM
Although cloud-based solution approaches require specialized cyber supply chain risk management, they are among the most forward-looking strategies. This is because the cloud is as fast-moving as the modern world, while also excelling in flexibility and adaptability. For companies, these online tools have another advantage: They are continuously being developed and improved.
As supply chain management becomes increasingly important for companies, it pays off to invest in the latest solution approaches. They ensure that the latest functionalities and updates are always available to enrich supply chain management.
4 Intelligent Blockchain Solutions
Using intelligent blockchain solutions in supply chain management is necessary to provide the desired efficiency and transparency. Additionally, this technology enables a high level of traceability and trust. This enables companies to strengthen the entire supply network in online supply chain management.
Blockchain is particularly recommended for managing the supply chain in the food and beverage sector. Here, supply chains are extremely complex and customers expect a high level of transparency. Companies that opt for this form of traceability strengthen their customers’ trust in their own products.
How TeamViewer helps companies improve their supply chain management
When it comes to technologies such as Augmented Reality (AR) or Virtual Reality (VR), TeamViewer is the perfect partner. Our software Frontline helps companies modernize their production chains and logistic processes.
Through such solutions, it is possible to maintain employee satisfaction even with tightened fulfillment schedules. Digitized environments such as the AR-warehouse provide a good foundation for an efficient SCM. Here, augmented reality solutions, smart glasses software, and other helpful wearables are used to simplify the workday. But how exactly does Frontline help companies improve supply chain management?
- The software provides real-time insights into the AR-warehouse.
- Modules like xPick combined with our smart glasses software make picking
- Problems and exceptions can be resolved in real time.
- AR-technology minimizes the number of errors and ensures that companies are more competitive.
By the way, more and more well-known big names are now relying on the use of AR. Among the well-known companies that no longer want to do without this modern technology is DHL.