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Supply Chain Management Software (SCM) Information

Supply chain management softwareSupply chain management software (SCM) is used in the management of producing a product from raw materials through the various manufacturing and distribution processes until the product ends up in the hands of the consumer. The goal of good supply chain management is to keep inventories down while ensuring that the speed of flow of the product through the chain is optimized. Supply chain management is the whole vertical management of a product from the extraction of its raw materials to its sale to the consumer. While this is easier in a single, vertically organized company, in most cases, multiple companies are involved in the product’s life cycle, making the process more complicated than managing flow through a single organization.

 SCM can be broken down into three main flows:

  1. Product flow
  2. Information flow
  3. Financial flow


Successful supply chain management programs require sharing sensitive information between various companies and departments. This is more difficult and riskier than sharing information between different departments in a single organization. By sharing this data upstream (or with an organization’s suppliers) and downstream (with an organization’s clients), SCM software applications have the potential to improve the product time-to-market, reduce costs, and allow all parties in the supply chain to better manage current resources and plan future events for future needs.

SCM software increasingly relies on web-based systems in order to let users in different organizations, companies, and locations, using different internal networks and devices, link up and share information. This shared information can reside in diverse databases or data warehouses, at several different sites and in various companies. These types of SCM software are based on the open data model. Predictions are that SCM software will move rapidly to cloud-based subscription services, or SaaS technologies, rather than the traditional in-house software owner and installation model.


There are two main types of SCM software applications: planning and execution. The planning software applications use advanced algorithms to determine the best way to fulfill a product order. Execution or event management applications track the physical locations and statuses of the goods, the coordination of necessary materials, and financial data tracking for all parties involved. 


The execution or event management part of the application performs inventory tracking. This involves interfacing with various sorts of detection devices such as barcode readers, radio frequency identification (RFID) receivers, and cameras. The cameras can interface with optical character recognition, or OCR, modules and they can read the labels off of the parts in the inventory system. This is a digitized version of the older manual process of inventory taking. More advanced visual imaging systems can identify the part by its shape and dimensions, so mislabeled parts can be investigated and corrected. Barcode technology usually requires the objects to be manually scanned since the barcodes may not be consistently placed in an accessible side of the inventory part. RFID technology allows more remote monitoring since RF is more flexible than visually based barcodes and camera systems. Also, the RFID chip can store more data than a simple parts label, barcode label, or old style text. SCM software typically has the drivers and modules to interface with the various visual and digital recognition technologies mentioned above. 

The inventory items are usually inventoried along every step of the way from the extraction to the final store shelf phase of its trip through the vertical supply system. Then the SCM software will create and propagate reports to the various parties who need them at each level of the supply chain.

These SCM software packages can cost a lot, sometimes over a million dollars (USD). It is prudent to invest the time and research into any software decisions. As SCM software matures and computing power increases, SCM software applications will get more detailed as new features are added. As with a lot of these emergent software applications, the vendor prices will widely vary. Third party software consultants can be a real asset for an organization in order to choose the right supply chain management software for a reasonable price. 


TechTarget—Supply Chain Management (SCM)

Wikipedia—Supply Chain Management Software

Image credit:

Andreas Wieland / CC BY-SA 3.0


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