benefits of supply chain management systems from Epiq Tech

Supply Chain Management Systems

Many managers initially thought that simply implementing a Supply Chain Management (SCM) system would be enough to keep their inventories stocked with the raw materials needed to keep production flowing smoothly. However, implementation of these systems and software has helped most of those managers to realize how unrealistic their initial expectations were. The system itself can easily become overwhelmed by all of the variables involved in supplier-buyer relationships, which is why managers need to take additional steps to ensure that their SCM system stays on top of the situations.

Managers first need to address the faulty logic, which has guided many SCM decisions. Some examples of this bad logic include the ideas that lead times will never change, that suppliers' capacities are endless, and that queues must be a part of the process. None of these things are true, but most managers believe them and those ideas are reflected in the SCM system. The truth is that lead times are extremely variable and depend on both parties. First, if the buyer is not providing a prompt and reliable stream of information to the supplier, then the vendor is not going to be able to produce the necessary goods in a prompt and reliable fashion. Furthermore, suppliers do have other companies that they work with. The fact is that the larger, more profitable project is going to get first attention even if that has a negative effective on one buyer's lead times. When a SCM system isn't flexible enough to deal with these problems, then it can prevent the buyer from gaining the competitive advantage in the market that the system was designed to secure.

Another problem that has hindered many SCM systems has been a lack of manufacturing resource planning (MRP). Once most manufacturing firms relied on MRP as a guide to their purchasing decisions, but during the last two decades most managers falsely believed that they didn't need MRP anymore. Instead, most prefer to rely solely on just-in-time deliveries and pull signals, which supposedly make it possible to keep a limited and almost constantly updated inventory of the goods needed to accomplish manufacturing tasks. While MRP will never replace that newer attitude toward inventory control and purchasing, it should at least co-exist with it.

Additionally, managers need to work directly with suppliers to reduce cycle time. In fact, for most managers this step should be the most important since the less time between the initial order placement and order delivery the better. Cycle time delays can have drastic implications for companies that have not adequately prepared or planned for them. Entire assembly lines have come to a halt simply because cycle time problems have left the buyer without the raw materials needed to continue production smoothly. Unfortunately, most managers and their companies will not be in the position to order suppliers to speed up cycle times, so they need to rely on alternatives. One option is to choose suppliers whose cycle times are more in line with the needs of the buyer's business or which are more reliable. Another is simply to improve the flow of information between the buyer and the supplier. A smooth exchange of information will go a long way toward ensuring a smooth cycle time.

The biggest question most managers have about all these changes though is “Are they worth it?” The answer is absolutely. An effective, realistic, and flexible SCM system can have significant benefits for any business. First, it can make it easier to manage all of the different factors that contribute to the purchasing and production cycle. Additionally, the SCM system reduces the chances of human error. Efficient SCM systems also lead to greater productivity, lower costs, and reduced inventory. Additionally, a fine-tuned SCM system delivers better communication, shorter planning times, and more reliable forecasting. The amalgamation of all of these benefits is a balance between keeping costs reasonable and maintaining production levels. This is definitely worth the effort and delivers value to businesses.

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