boost profitability with value chain software

Value Chain Software

Now that more companies have begun to focus on the value chain as a way to improve their market position, the inevitable result has been the evolution of technology to help these firms more effectively accomplish these tasks. Today, a wide variety of value chain software is making its way into organizations and helping the businesses boost their profitability.

Companies have adopted software to help with every step of the chain. Design software, such as CAD for engineering, and demand planning technology have begun helping businesses develop better products that more effectively meet the needs of buyers. Furthermore, online purchasing, warehouse management systems, and enterprise resource planning have helped businesses more efficiently get the goods they need, control their inventory, and manage their manufacturing process so that costs are reduced and production cycles are faster.

A number of other types of value chain software are also available and are being used by a majority of manufacturing firms. Customer relationship management (CRM), electronic data interchange (EDI), and financial management systems are some of the more popular options that have been adopted. These technologies allow for improved internal and external communication, fewer human errors, and superior business performance. All of which help give the firm a competitive advantage in the market.

However, many companies that go to adopt any value chain software need to realize that picking the right technology is critical for their success. Choosing that software means giving serious consideration to the needs and plans of that business, plus analyzing the organization's processes to identify where value can actually be added and where significant profit can be produced.

Without taking these steps, companies can end up spending large sums of money to implement new technologies that may offer some improvements in business performance but which, in the long run, may not generate enough supplemental revenue to cover their initial expense. Also, companies which plan to roll out several new value chain software items either simultaneously or over the course of a short time span need to make sure that all of the technology will work together effectively. Incompatible programs will require more money and more hassle for the company, its IT staff, and its employees. None of which improves business.

Despite these possible problems, adopting value chain software is becoming less than optional in today's competitive, buyer-driven markets. To have any type of advantage in the industry, businesses must take the next step and figure out ways to add value to their products and services. Major manufacturers are adopting the software in astounding numbers. For example, 82% of world-class production firms use financial management software and 77% of them use electronic data interchange technology. Those numbers are impressive, and they signal a need for smaller businesses to do the same to stay in the field.

Of course, staying competitive is only one of the benefits of adopting value chain software. More importantly, these programs do produce additional profitability for a majority of firms. For instance, 91% of world-class manufacturers and 85% of all plants have found that manufacturing resource planning software has boosted their profits. Likewise, 85% and 81% respectively found that warehouse management systems have allowed them to make more money.

Numbers like these, as well as decreased costs for many of these technologies, have helped drive more firms towards the adoption of value chain software. In the end, the success of the software depends not just on the program but on how well it fits into the company's big picture. Careful analysis and planning can allow businesses to make the most of the software and to secure a place in even the tightest markets.

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