AN EXECUTIVE'S GUIDE TO SUPPLY CHAIN MANAGEMENT SOFTWARE SYSTEMS
THE EVOLUTION AND FUTURE OF SCM SOFTWARE
The Evolution of SCM Concepts
Supply Chain Management grew out of the manufacturing needs to reduce cost and inventories. Ford and Toyota are early innovators of modern day SCM, because of their needs to optimally replenish assembly lines with parts and material
Concepts and ideas of modern Supply Chain Management started to build momentum in the 1950s. Many of the new concepts in SCM research were achieved by academia and business consultants.
1958 – Bullwhip Effect – Jay Forrester
1982 - Oliver and Webber came up with the term SCM
1985 – Michael Port – Competitive Advantage – Logistics, Operations, Sales, Marketing & Service
The Evolution of SCM Software
Grocery retailers and Wal-Mart were early adopters and promoters of modern SCM. They pioneered the electronic exchange of data and flow through distribution centers. The distribution software they used was home grown and while the internal IT cost was significant, the payback more than justified the investment.
During the 1980s and throughout the 1990s, supply chain software vendors began developing SCM software systems. Their enterprise software addressed a limited number of SCM functions. The SCM systems were standalone and required customized interfaces to other business software systems. Home grown systems required heavy customization and significant IT resourcing to comply with new and evolving SCM requirements.
During the late 1990s and throughout the 2000s, SCM software vendors started to develop additional functionality and acquire other application software companies to fill out their suite of SCM software products.
In the 1990s, the manufacturing software vendors started the transition from 1970s era MRP/MRP II products to ERP software products. Throughout the 1990s and 2000s, the ERP system vendors took a similar approach to SCM as the prior era SCM exclusive vendors.
The Future of SCM Software
AMR Research expects corporations to continue solid investments in SCM software, fueling continued growth for the application software suppliers. The current supply chain software market is fragmented with vendors addressing different areas of SCM; ERP software vendors are expanding their capabilities into SCM. Analyst firm Gartner projects a consolidation of SCM software vendors. Instead of a fragmented market, eventually there will be a handful of enterprise software vendors with a fully integrated suite of SCM solutions. The remaining niche players will address very specialized industry features designed to work with full featured SCM software.
FUTURE TRENDS IN SCM SOFTWARE FUNCTIONALITY
The future is not certain, but the existing trends can be forecast to continue. Key advances in supply chain management software will include the following capabilities.
Demand Intelligence – Distribution software will provide better analysis for monitoring and recognizing the causal effects on demand and how to respond to changes in demand.
Integrated Planning and Execution – Changes made to a demand plan will update execution modules with new recommendations for scheduling fulfillment tasks. Execution modules will provide updates on the status of WIP that so that plans can be adjusted based on real world conditions.
Integrating with Partners – There are several areas of integration opportunities such as supplier replenished inventories driven by customer planning metrics. Other areas include systems that integrate logistics across trading partners to optimize resources.
On-Demand Supply Chains – Also called pop supply chains. WMS software will become web enabled and will be designed to support temporary distribution centers with full WMS capability without the cost of implementing systems.
SOA Architecture – This technology allows for easier integration of SCM software with other line of business applications, custom applications and interfaces to other business software products such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and Financial systems.
SCM Software Future
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