13 Essential Types of Supply Chain Management Tools
Specialized tools and established supply chain management techniques make it possible for users to reduce errors and costs while optimizing the entire supply chain. Let’s start with the 13 different types of supply chain management tools that make these solutions valuable to companies.
1. Shipping Status
An increasingly popular shipping tool, real-time alerts provide timely information on all shipping activities. Fishbowl Inventory, Oracle WMS and QuickBooks Commerce are some shipping software most preferred by small and large businesses. Typically, large companies have high-volume supply chains with many different types of cargo shipped to customers around the country or around the world.
While these factors allow for growth, they also leave your supply chain vulnerable to errors. Real-time updates keep you in the know, so you and other stakeholders can take action before small issues become much larger. Additionally, these alerts can be sent to your mobile device to inform you of the status of your supply chain at any time, day or night.
Order processing is massively important to any supply chain. Order fulfillment processes provide the tools needed to make this task easier and more efficient. These tools support all functions across order processing like sales order processing, order management, order fulfillment, billing and order to cash.
These supply chain optimization tools can automate most activities in order processing using EDI software and similar technology to capture order data directly. It reduces the time it would take to traditionally process an order by eliminating the need to generate and send POs and invoices manually. It also minimizes human error since there’s no need to manually take down order information and re-enter it into a different system.
3. Lean Inventory
Lean production is a concept that dates back to the 1940s, created by Toyota and inspired by Henry Ford’s just-in-time production. The idea is to only create what’s needed at the moment, determined by current and projected customer demand. Before lean production, manufacturers would create and house large surpluses of goods. This technique resulted in massive inefficiencies, wasting time and effort.
The overall goal of this practice is to optimize your production planning by cutting down on warehousing space, inventory costs and the different procedures for storing excess inventory. Lean inventory tools can provide a lot of return on investment for a business, decreasing the need for warehouse space and streamlining their labor force.
Businesses can implement lean production principles without these tools. However, this type of supply chain management takes efficiency to the next level. By using demand forecasts, materials planning, scheduling and simulation tools, you can gain a much deeper insight into the future of your supply chain. These tools make planning production alignment with lean manufacturing principles much easier.
4. Warehouse Management
Depending on the tools you select, they can help manage the day-to-day operations within your warehouses. These solutions provide a wide array of warehouse management capabilities as broad or specific as your company requires. Some solutions provide advanced supply chain planning tools, allowing users to handle complex logistics related to receiving, product tracking, cycle counting, route planning and more.
Moreover, warehouse management tools help manage the kitting and bundling process and multiple warehouse locations. This method is ideal for bundling multiple products from different warehouses.
5. Specialized Freight Handling
In addition to various shipping features, tools can also incorporate different types of industry-specific freight-handling functionality. For example, the evolution of cold chain logistics and new regulations concerning perishable goods has changed compliance standards. In such cases, some platforms provide integrated technology to verify these goods, ensuring the temperature is right up to the last mile of delivery.
Vendors offer this tool as a standalone product or integration with larger solutions depending on customer preference.
If you ship goods in this industry, you must implement this tool. Maintaining product quality across the supply chain will help reduce costs associated with perished goods. It also includes the cost of a recall, item disposal, legal response and more.
6. Bid and Spend
Sourcing and procurement are major parts of supply chain operations for many businesses. Therefore, tools that support these activities should also be a top priority. Sophisticated tools for supply chain management can help you dig down and take a granular look at what you’re spending on each item you take in and send out during production.
Bid and spend tools also automate procurement processes, reducing errors and resources spent. For instance, top tools can automate the entire procure-to-pay process.
These tools evaluate bids from different suppliers by helping you spot opportunities for improvement. Many of today’s tools incorporate automated spend analysis to help users better understand their overall procurement processes and develop ways to improve. For procurement teams with many members, these tools allow procurement officers to set limits for employees by creating approval processes and spending limits.
7. Supplier Management
Tying in strongly with bid and spend tools, supplier management is a must-have when it comes to procurement. Along with assistive features for cost issues, supply chain management tools can also help businesses better understand how they relate to their suppliers. These tools show the history of a business partnership and how it affects the supply chain.
Using supplier performance analysis, users can see how any given supplier has contributed to a business model. With the ability to continually assess your partners’ contributions, decision-makers can act more confidently to change or manage supplier relationships. Furthermore, supplier management tools often offer a workspace to perform bids, auctions and negotiations for more centralized procurement.
8. Demand Forecasting
With analytics, today’s supply chain tools can process large amounts of data in a fraction of the time it would take a team of analysts. It provides insight into past practices and can also create forecasts to predict future demand.
Based on past trends, supply chain demand and forecasting tools help you anticipate customer demand. This tool provides the essential information to make crucial decisions regarding production planning, labor management and supplier relationships. With forecasts, you avoid stock shortages during periods of intense demand. On the other hand, when demand is unexpectedly low, you risk running high carrying costs you could’ve avoided otherwise.
You can view and create forecast reports via the dashboard. For more on dashboards and reporting, see the next section.
9. Analytics and Reports
In addition to analyzing consumer demand and your suppliers’ performance, this supply chain analytics tool performs data analysis on the entire supply chain. Analysis tools provide complete visibility not just into the physical inventory location but also the health and performance of the company. Analytics can provide insight into the company as a whole or individual sector.
Demand forecasts give visibility into the popularity of certain items, whereas warehouse analysis might tell you the most efficient way to store and move that product. Users can analyze order processing to uncover the source of delays and errors. It also provides transportation and logistical process updates.
Decision-makers can understand carrier performance along with delay and error patterns. Complete transportation visibility improves their processes while retiring less useful methods.
Users can convey analytics in the form of a report. Different tools offer different reporting methods, including tables, charts and dashboards. Dashboards are one of the most common methods, as they offer quick information as soon as a user logs into the system. Dashboard configuration is available to show the most relevant key performance indicators (KPIs) as determined by the user.
10. Collaboration Portals
In addition to providing a hub for procurement, modern supply chain monitoring tools also allow companies and their suppliers to collaborate in other ways through a designated portal. Supply chain portals can eliminate collaboration challenges, including communication issues, bottlenecks in requisition and order, and other issues.
Collaboration portals allow all parties access to production progress, order forecasts, product specifications, purchase orders, shipment history, schedules and more. Collaborating directly on certain documents eliminates the need for continuous emailing back and forth to get the right information and the errors commonly associated with this form of communication.
It supports full supply chain visibility, allowing companies and their suppliers to stay up-to-date.
11. Security Features
There’s another element among supply chain tools that focus squarely on security. Data theft can cause you to lose market position and damage supplier relationships. For instance, if a third party has access to your demand forecasts, they will likely have insight into your customer interests and preferences.
It enables other companies to sell to your market more effectively, reducing your profit. With financial data stolen, you’re more likely to lose the trust of the parties affected, such as consumers or business partners.
To prevent these security failures, implementing defensive features is a must. Most vendors today offer security assurances to let their clients know the efforts made to safeguard their information. These might include avoiding third-party vendors with low-security standards, forbidding backdoor creation, aggressive patch management and response procedures in the case of a breach.
There are also security measures your company can take to protect your data further. Businesses can restrict user dashboard reporting to ensure that only approved personnel can access the data. Many tools also allow a system administrator to set file permissions. Further, you can integrate biometric devices to provide accountability.
12. Transportation and Logistics
Achieving a complete solution requires transportation management. Transportation and logistics tools help users manage the movement of inventory and materials from one location to the next. With a solution equipped with transportation management, users can plan multi-stop trips, consolidate shipments to maximize space and plan for less-than-load (LTL) shipping.
In addition to planning transportation, these features help users address issues as they arise. Through inventory tracking, individuals can see when inventory is slowing down and intervene to find the cause. Collaboration options within transportation modules enable all supply chain players to manage the shipping process.
13. Compliance and Auditing
Consumers, now more than ever, want their products to be well-made, safe and ethical. Thankfully, today’s tools give users the means to easily adhere to environmental and ethical regulations. For instance, some solutions allow users to inspect suppliers to ensure minerals obtained are conflict-free.
Auditing tools make it easier for businesses to remain transparent during third-party investigations. These inclusions may collect and store data related to relevant policies and regulations.
We’ve got the top tools nailed down, but it’s worth mentioning that supply chains come in different types with significant management styles.
Types of Supply Chains
Supply chains are the lifeblood of countless industries across the globe, and they each require different strategies to make them work. There are numerous methods and models that businesses subscribe to, but here are some of the most popular types of supply chains:
1. Continuous Replenishment
This type of supply chain is fairly straightforward, if not risky. It continually replenishes inventory but requires tight coordination with suppliers, integration between your production and ordering processes, peerless demand forecasting and a constant flow of real-time information.
However, if one of these cogs in your supply chain machine is off, you could be looking at costly damage control. If consistently replenishing your inventory involves numerous shipments, the costs associated with this method could be too much even to consider.
This type of supply chain focuses on constructing an order as soon as the consumer or client places it. Dell was the first to push this strategy. They used customizable PCs ready for shipping when clients decide on their specifications.
However, a dependable flow of common pieces is necessary to make this work. In Dell’s case, they need to have all their computer components available and ready to be brought together as soon as needed. No one wants to put together a brand new PC only to see that their order is delayed for days or weeks while one particular part is still in transit.
3. Channel Assembly
This type of supply chain involves constant coordination with third-party logistics (3PL) partners and builds a product piece-by-piece as it travels down your distribution channels. As order parts come together across the different supply chain channels, they are gathered up and shipped together by your 3PL partner.
So, instead of receiving your computer monitor first, your keyboard a day or two later and then finally the PC itself, nothing would ship before all the parts are ready.
4. Integrated Make-To-Stock
This type of supply chain focuses on tracking real-time customer demand, ensuring that the production process restocks finished goods inventory. With real-time demand information, you can create and improve production plans and schedules for your organization. You can support production plans and schedules through seamless integration with the procurement process.
This method maintains timely and accurate coordination of supply with multiple distribution channels to fulfill demands. There is a constant flow of information about demand, storage capacity, inventory, transportation scheduling and more through information systems.
There are numerous other methods and strategies that go into making the various types of supply chain function at maximum efficiency. Here are a few other examples of successful supply chain models:
- Agile: This method is perfect for businesses dealing with niche items that rise and fall with demand. The agile method is ideal for oscillating between high-demand and off periods where there aren’t many shipping updates.
- Efficient: Supply chains in aggressively competitive markets have to rely on efficiency to give them an edge over other businesses in their space. The efficient method focuses on end-to-end support for smooth distribution at high volume.
- Fast: Have popular items with short life cycles? The fast method focuses on moving numerous popular products out quickly before their temporary demand fades.
- Continuous Flow: This method is suitable for businesses that require high-demand stability. It can benefit industries that manufacture similar goods with minimal variation. It provides regular information flow and product cadence, making it ideal for commodity manufacturing.
- Flexible: The flexible supply chain focuses on meeting high-demand peaks and managing extended periods of low demand. It is highly adaptable, with the capacity to reconfigure internal manufacturing processes.
- Custom Configured: This method combines agile and continuous flow supply chains that provide custom configurations during assembly and production. It is suitable for businesses that require products with multiple and potentially unlimited configurations.
These models may get your supply chain headed down the path to success, but we also need to consider the overall management strategies that keep them running.
Methods and Theories
You may have a winning model in place with all the best tools on the market, but you’ll hit an expensive snag without following proper supply chain management techniques. Much like the tools and types of supply chains, there’s no one-size-fits-all method that can solve the issues of every industry.
Before jumping on a particular strategy, speak to your logistics partners to find the best way to streamline your supply chain management. In the meantime, let’s look at different types of supply chain management.
1. Materials Logistics Management
You’ll need physical goods to create the products that your customers demand. Materials logistics management (MLM) takes care of everything from planning, sourcing, procuring, building and distributing materials with the help of 3PL partners.
Bringing in a 3PL partner isn’t absolutely necessary, but they often have connections and partnerships with other companies that can help them cut costs.
2. Transaction Cost Analysis
This method may sound complicated, but the short version is that it helps supply chains ensure that they buy their supplies at a low cost while their final products are sold high. By accessing historical data, TCA can determine when to purchase goods at the lowest prices to prepare for an upcoming influx in demand.
Transaction cost analysis leverages market data to determine when to purchase products for stocking them at low cost before selling off when demand reaches its zenith.
3. Material Requirements Planning
Holding onto unnecessary components or goods can get expensive quickly, especially if your business has multiple warehouses in the mix. Material requirements planning (MRP) discovers the minimum amount of required inventory needed to keep up production without taking up excess space.
This type of planning also considers independent and dependent demand, or more simply, the demand for finished goods or component parts. Cutting down on warehouse space is a great way to reduce the costs of keeping your supply chain running smoothly.
Here are a few more methods:
- Network Perspectives: Supply chains succeed with the help of third-party partnerships. With current network connections, businesses can identify potential networking opportunities.
- Total Quality Management: If your supply chain has multiple underperforming areas, total quality management can help you straighten them out. If end-to-end optimization is your goal, TQM identifies flagging areas for managers to strengthen.
- Requirements Chain Management: Countless supply chains rely on the expertise of 3PL partners to deploy and manage their supply chains properly. This method has your business and your 3PL partner sit down to hammer out the specific requirements of your supply chain.
- Customer Relations Management: 3PL partners can leverage customer data to position their supply chain to attract new customers and retain return clients. Good customer service optics are invaluable and can give you an edge over competitors.
- Channel Coordination: The companies that manage supply chains for multiple businesses require regular coordination. Channel coordination realigns channels to meet the demands and objectives of numerous customers, reducing overall costs and saving time. It is also ideal for inventory management and ordering.
- Theory of Constraints: If a constraint limits supply potential or production potential, the theory of constraints can provide an appropriate solution to mitigate the detected constraint. 3PL partners can implement its best practices to resolve their issues.
- Supply Chain Roadmap: This method maps out your entire system through in-depth research and analysis. It considers multiple variables and helps determine how your supply chain should run from the beginning. It mostly emphasizes alignment, managing risk, value addition and metrics.
Think about how these supply chain management tools could empower your operations in the digital age. If what you’re imagining is where you’d like to see your company in the near future, it’s high time you invested in a solution. To select a system with the tools your business needs most, you’ll have to create a list of requirements.
If you need help getting started, be sure to check out our requirements template. Use it to create a checklist of features you can send to stakeholders for feedback. Careful consideration of your business needs among all parties will ensure you get the right tools to support your operations.
Source : selecthub.com