SCM software is one of the most important pieces of technology an organization can have. It streamlines processes, optimizes performance, and creates more visibility throughout the company. According to a recent research report by MarketsandMarkets, the SCM market is expected to reach $10 billion by 2021, growing at a 19% CAGR during the forecast period.

But with so many software solutions available, it can be difficult to determine which one is best for your business. This blog post will introduce you to some available SCM solutions, as well as highlight important factors to consider when choosing one that’s right for you.

Why companies use supply chain management software

Today’s market is highly competitive with dynamic and disrupted supply chains. In order to stay ahead of the game and remain profitable, businesses need to streamline their supply chain processes. That’s why supply chain management software is becoming increasingly important for businesses.

SCM software enables companies to reduce costs, increase efficiency, and cut delivery times by optimizing their supply chains. To select the right SCM solution for your business, you need to understand the various pros and cons of available options on the market.

Supply chain management (SCM) is the process of planning, controlling, and optimizing the flow of material, information, and services through a business network. SCM software can be used for a variety of purposes, such as tracking inventory, calculating supply costs, and managing the flow of products from the supplier to the end-user.

In the B2B world, SCM software can be used to improve the efficiency and profitability of a business by facilitating communication between suppliers and customers. It can also be used to coordinate production processes across multiple locations. SCM software is especially useful in situations where there are complex supply chains with many different suppliers and destinations.

There are many types of SCM software available today. Some are designed to help businesses manage their supply chains from start to finish. Others are tailored for specific industries or companies within a supply chain network. Some are cloud-based solutions that can be accessed from anywhere at any time.

In addition to helping manage a company’s supply chain, SCM software can also help ensure that goods reach their destination in good condition. This is especially important in situations where sensitive products are involved.

Supply chain management software in the B2B world

Supply chain management (SCM) is the process of planning, controlling, and optimizing the flow of material, information, and services through a business network. SCM software can be used for a variety of purposes, such as tracking inventory, calculating supply costs, and managing the flow of products from the supplier to the end-user.

In the B2B world, SCM software can be used to improve the efficiency and profitability of a business by facilitating communication between suppliers and customers. It can also be used to coordinate production processes across multiple locations. SCM software is especially useful in situations where there are complex supply chains with many different suppliers and destinations.

There are many types of SCM software available today. Some are designed to help businesses manage their supply chains from start to finish. Others are tailored for specific industries or companies within a supply chain network. Some are cloud-based solutions that can be accessed from anywhere at any time.

In addition to helping manage a company’s supply chain, SCM software can also help ensure that goods reach their destination in good condition. This is especially important in situations where sensitive products are involved.

How to Select the Right Supply Chain Management Software

The first step towards selecting the right SCM software for your business is to clearly define your requirements. Before you do so, you need to identify your supply chain process and the problems that you are looking to solve.

Once you know what your business needs, you can then look for the best software solution to address those needs. You need to evaluate each SCM solution based on its functionality and ability to solve your specific business challenges.

You also need to consider each solution’s potential ROI and total cost of ownership. When selecting the right SCM software for your business, you need to take into account the following parameters:

Ease of implementation – How easy is it to integrate the software into your existing business processes?
Ease of use – How easy is it to manage the software and perform daily operations?
Functionality – Does the solution offer functionality that matches your supply chain needs?
Security – How secure is the solution against cyber threats?
Support – How responsive is the support team and what is the average resolution time?
Scalability – Can the solution be easily expanded as your business grows?
Cost – What is the total cost of ownership of each solution?
ROI – What is the return on investment of each solution?

Different Types of Supply Chain Management Software

SCM software enables businesses to optimize their supply chains. It enables them to forecast demand, manage inventory, and track products from production to delivery. There are different types of solutions that can fit different business needs.

They all have their own advantages and disadvantages, which is why you need to evaluate them based on your specific requirements. Let’s look at some of the most popular supply chain management software solutions on the market today:

Inventory management software – This type of software is used to track in-house inventory. It can also be used to track orders and manage customer stock. Inventory management software is beneficial for B2C businesses, wholesalers, and retailers.

Warehouse management software – Warehouse management software helps businesses track orders in transit and manage inventory in warehouses. It is often used in conjunction with inventory management software. Warehouse management solutions are beneficial for retailers, wholesalers, and logistics companies.

Procurement management software – Procurement management software allows businesses to streamline their procurement processes. It is used to track the procurement of raw materials and goods needed for production. Procurement management software is beneficial for B2B businesses.

Production management software – Production management software is used to track production activities and manage supply chain workflows. Production management software is often used in tandem with procurement management solutions to track goods from procurement to production.

Shipping management software – Shipping management software is used to track goods from production to sale. It helps businesses optimize operational and customer service metrics.

Transportation management software – Transportation management software is used by transportation and logistics companies to optimize their operations. It is often used in conjunction with shipping management solutions.

B2B Supply Chain Software

For B2B businesses, it is important to track the movement of goods from the point of origin to the final destination. Visibility is key to managing transportation costs and maintaining a good customer experience. Some of the most popular B2B SCM solutions include Wasp Barcode Shipping and Trade360.

These supply chain management solutions help you manage shipments, track goods, and collaborate with customers. They also enable you to create shipping labels, track deliveries, and maintain accurate records.

With B2B SCM solutions, businesses can create visibility into their supply chains. They can also enforce compliance, track assets, and improve customer logistics experience.

B2C Supply Chain Software

For B2C businesses, visibility into the supply chain is important for compliance purposes. It also helps businesses increase operational efficiency and enhance the customer experience. Some of the most popular B2C SCM solutions include BigCommerce and Magento.

These solutions enable you to manage inventory, track shipments, and collaborate with customers. They also allow you to create shipping labels, track deliveries, and maintain accurate records. With B2C SCM solutions, businesses can create visibility into their supply chains. They can also enforce compliance, track assets, and improve customer logistics experience.

eCommerce Supply Chain Software

If you are planning to launch an eCommerce business, there are a few supply chain management solutions that you can choose from. These solutions enable businesses to track and manage inventory, procure goods, and track shipments from one platform.

They also enable you to create effective marketing campaigns and run profitable marketing experiments. These solutions allow you to track orders from the initial sale to delivery.

They enable you to manage inventory and customer orders from a single platform. With these solutions, you can create and manage product listings, run targeted marketing campaigns, and optimize customer experience.

Conclusion

Implementing SCM software can help businesses forecast demand, manage inventory, and track products from production to delivery. It can also help them create shipping labels, track deliveries, and maintain accurate records.

The right supply chain management software can help boost your business in many ways. It can reduce costs, increase efficiency, and improve customer service. With the help of the right SCM solution, you can optimize your supply chain and stay ahead of the competition.

Kreyon Systems expertise in Supply Chain Management Software with advanced analytics and AI capabilities improves the bottomline for businesses. If you have any queries or need assistance in SCM implementation, please get in touch.

The post Choosing the Right SCM Software for Your Business: A Comprehensive Guide appeared first on Kreyon Systems | Blog | Software Company | Software Development | Software Design.

Supply chain management KPI help a company to measure, track and report key numbers of the business. It leads to gamification of the steps involved in building and delivering products and services to the customers. It leads to adoption of the best practices, analysis of the business processes and reducing the lags to achieve superior outcomes for an organisation. Here’s a look at the SCM KPI for improving the business performance:

1. On Time in Full On Request (OTIFR)

The OTIFR represents the percentage of orders fulfilled on customer’s request date. The OTIFR measures the orders completed on or before the date mandated by the customer. This metric can be used to measure the efficiency of the
supply chain.

The OTIFR is measured as:

(Total No. of Orders competed On Time)
————————————————————– X 100
(Total No. of Orders Due for Delivery)

A high OTIFR percentage implies that orders are being shipped to the customers on time. As supply chain complexity rises with international vendors and suppliers, it can be a challenge to keep supply chain costs down and deliver on time. The delivery performance metric is one which customers rate very high on their list. OTIFR measures not only the orders delivered to the customers, but also their schedules.

2. Perfect Order Fulfillment

The perfect order fulfillment rate can be used to analyse the supply chain reliability and quality. It is measured as the no. of perfect orders delivered to the customers The perfect order fulfillment reduces the inventory requirements for an organisation, it reduces return rate and hence improved capital efficiency too. The reliability, consistency and performance of a company’s supply chain is depicted with a high perfect order fulfillment rate.

The perfect order fulfillment rate is calculated as follows:

(Total No. of Perfect Orders Delivered)
————————————————————– X 100
(Total No. of Orders Delivered)

The perfect order fulfillment varies according to demands. When the demand is high, organisations typically need to put in extra efforts to keep up with the perfect orders fulfilled. Companies with matured systems can predict demand and meet the needs of the customers with agility in a reliable manner.

3. Inventory Turnover ratio

One of the most critical needs for an organisation is to keep its supply chain costs optimised. It has an impact on its bottomline. The supply chain costs could be broken down into warehousing, inventory carrying costs, customer service, transport, and logistics etc.

The supply chain performance can be analysed using metrics like:

The total net sales for an organisation in a given time period is used for calculating the inventory turnover ratio. In any given period the ratio of net sales to average inventory value needs to be optimised. When net sales are high and optimised, it reduces the inventory carrying costs, and also meets the sales needs of the company.

Inventory turnover ratio is calculated as:

(Net Sales)
—————————————-
(Average Inventory Value)

where average inventory = (beginning inventory + ending inventory) / 2

The total supply chain costs include warehousing, inventory carrying costs, transportation, damaged/returned items, customer support, compliance costs and other extra ordinary items. Typically, high inventory turnover denotes fast moving items. Apple Inc has an inventory turnover ratio of 8.67 for the 3 month period ending in June 2022. An inventory turnover ratio of 5-10 is considered good.

4. Average Cash-to-Cash Cycle

The cash flow is the backbone of any organisations, companies that operate with good net profits and cash flow rule the roost. The cash to cash cycle is the average time period required to convert resources into cash, right from the time you purchase the inventory till you receive money for the sale of your products/inventory. In short, the cash to cash cycle time represents the cash collection time for your products or services.

The cash to cash cycle should be as small as possible, a larger time window represents poor cash flow for a business. The three financial metrics used for measuring cash to cash cycle are days of inventory (DOI), days of payables (DOP) and days sales outstanding (DSO).

The cash to cash cycle time is computed as follows:

(Days of Inventory + Days Sales Outstanding) – (Days of Payables)

The smaller cash cycle time is ideal for a business. Companies like Apple typically maintain negative cash to cash cycle, infact, Apple had an average of -70 days cash to cash cycle for a period of 4 years.

Companies with negative cash to cash cycle typically collect payments for their goods in advance and even before they paid for their inventory. It also shows high market demand for a company’s products. Cash to cash cycle time is an important supply chain management KPI to evaluate cash position and market demand for a company’s products.

5. Customer Order Cycle Time

The customer order cycle time is the average time (in days) from order date to the actual delivery date of your product. Typically, companies optimise their supply chain operations to deliver their products at the earliest time with good quality checks.

The cash to cash cycle and customer order cycle time have an impact on the cash flow of an organisation. If the cash to cash cycle time is increasing, it could be due to increasing customer order cycle time. Often times, high customer order cycle time and high cash to cash cycle time could lead to poor cash flows for an organisation. The mismanagement of payables, receivables and poor inventory controls could lead to increasing customer order cycles.

With proactive supply chain automation, organisations can configure triggers and alerts at specified inventory levels. It could lead to procurement of inventory items and also alert management about any delays regarding the delivery of the products proactively.

6. Days on Hand

Inventory carrying costs impact the bottomline and profitability. But, the inventory availability is needed for delivering products to the customers. Days on hand is a metric that shows how quickly a company utilises the inventory items. It is defined in terms of the days inventory outstanding.

The days on hand metric can be calculated as:

(Average Inventory)
——————————————–
(Cost of sales)/(No. of days)

Say ABC Company owns an inventory of value $500,000 during the year 2022. The cost of sales for ABC corp is $100,000 for the same year.

Days on hand =  $500,000
———— = 5X365 = 1825 days of inventory for 2022.
$100,000/365

Companies are using automation and supply chain software for predicting customer demands to lower their inventory days. By lowering inventory costs, businesses can improvise their capital spending as well as supply chain costs leading to an improved bottom line.

7. Forecast Error

Forecasting the demand for your products is an essential step in building a good supply chain. Many companies either underestimate or overestimate demand for their products leading to supply chain issues. The best companies use accurate demand forecasting models for coming up with fairly accurate predictions for their business.

The forecast error is calculated as:
(Actual Demand – Demand Forecast)
——————————————————— X 100
(Actual Demand)

The lower the forecasting error, the better the supply chain management for a company. When companies are able to forecast the demands for their products with high degree of accuracy, it can help them right size their inventory, save capital costs and deliver products on time as per customer demands.

8. Fill Rate

Fill rate refers to the customer orders that can be fulfilled by the company from its immediate inventory without backorders, stockouts and delays. Fill rate is a metric that can affect customer satisfaction. The percentage of orders successfully shipped to the customers based on their demand from the inventory available at the company.

The fill rate is expressed as:
(Total Orders Shipped)
————————————- X 100
(Total Orders Placed)

The fill rate is expressed as a percentage of orders successfully shipped in the first shipment to the customers. It leads to higher inventory turnover and reduces customer order lifecycle time. When organisations have a high fill rate, they have happier customers. The delays in shipping products to customers often lead to an increasing no.of cancelled orders. Supply chain automation can help companies improve their fill rates without excessive inventory by right demand predictions.

9. Supplier Performance Score

Supplier standards need to be assessed for creating a smooth supply chain management system. As a company, you need to procure raw materials from your most reliable suppliers and vendors.

Companies need to evaluate their vendors and measure their performance against factors like speed, quality, regulatory compliance, return orders, geographical location, costs and discounts etc.

Companies with strong supply chain capabilities negotiate favourable terms and conditions to maintain high fill rate, cash flows and optimum product quality. Supplier scorecards and metrics can help companies figure out their best suppliers and establish long term relationships with them. Companies need to provide their product requirements to the vendors and conduct their due diligence.

The suppliers could be evaluated based on metrics like average unit cost per item Vs market rate, average time to deliver orders, return rate, payment terms, capacity, risks etc. A good vendor score can be chosen for finalising the procurement of inventory items.

10. Gross Margin ROI

Gross margin ROI is a supply chain management KPI that is used to calculate the the profitability of a company. It shows the ROI from the inventory investment. This metric becomes more pertinent in case of inflation and volatile prices, companies can use this as a measure to stay on top of the pricing for their products.

GM ROI =                                        (Gross Profit)
                     ———————————————————————
                                      [(Opening Stock – Closing Stock)/2] * 100

Companies that operate profitably generally have GM ROI of 200% or more. Many companies procure items at their lowest costs and optimise their inventory costs. The inventory items are bought as per their pricing cycles and movements to improve the profitability of the operations using SCM software. The more expensive and slow moving items are purchased as per the sales demand forecasts etc.

There are other supply chain management KPI used for creating stronger, more efficient and economically sustainable organisations.Some other supply chain performance measures used by leading companies:

Freight Cost per Unit
Accident Reports
Warehouse Cost Performance
Inventory Accuracy
Capacity Utilisation

The leading companies in retail, technology, manufacturing and other industries have mastered their supply chains delivering the goods despite all odds. Business growth is fueled by a synchronised supply chain from start to finish.

Kreyon Systems provides Supply Chain Management Software with advanced Warehousing & Logistics capabilities to improve the bottomline for businesses. If you have any queries for us or need assistance, please get in touch.

The post Supply Chain Management KPI for Improving Business Performance appeared first on Kreyon Systems | Blog | Software Company | Software Development | Software Design.