Supply Chain Management (SCM) Software Update: SCM Keeps the Cogs in the Supply Chain Turning

As the global pandemic, labor shortages and rising freight rates have forced companies to rethink their supply chain management approaches in 2021, supply chain management (SCM ) rose to the top to address at least some of these issues. Responsible for managing the flow of goods, data and finances from raw materials to final delivery, this category of software encompasses enterprise resource planning (ERP), warehouse management (WMS), transportation (TMS), global trade management (GTM), procurement and other applications.

Working independently or together, these solutions help companies manage and automate their end-to-end supply chain activities. At a time when disruptions and labor shortages have become the norm, the demand for these applications is on the rise. In many cases, supply chain visibility – that ability to see where everything is at any time and from anywhere – is the end game for these organizations.

“The most important thing that everyone wants is better visibility, more actionable sooner,” says Terri Hiskey, Vice President, SCM and Manufacturing Product Marketing at Oracle. “What we saw in 2021 was that even though companies felt like they had that visibility, that visibility was not [accessible] early enough for them to act or do anything about it.

For example, a company may have received alerts that their imported cargo was entering a particularly busy seaport on a certain day, but by the time they received this information, it was already too late to pivot. “If the ship was already in port,” Hiskey explains, “there was no way to save it and move it somewhere else.”

These points of frustration have directly affected end customers, many of whom have come to appreciate the value of a well-functioning supply chain and the technology that supports it. According to a September 2021 Oracle survey, 87% of Americans have been negatively impacted by supply chain delays and disruptions, with concerns about delivery delays, product shortages and increased disruptions topping their lists. list of concerns.

And while supply chain disruptions have clearly had a widespread impact on day-to-day life, almost half (45%) of respondents said they have never thought about how products are delivered before the COVID-19 pandemic. “Now,” reports Oracle, “almost everyone [91%] consider the supply chain when making a purchase.

Money flows into logistics technology

End customers aren’t the only ones gaining insight into supply chains over the past two years. Wall Street has also taken notice and has squarely put logistics and supply chain applications in its sights in recent months.

According to the Wall Street Journal, investors are literally “cramming” into supply chain technology, with some of the investments targeted for 2021 involving e-commerce fulfillment specialist ShipBob Inc., the digital warehouse provider and distribution Stord Inc. and Flock Freight, a platform that matches shipper loads to trucks.

“Backers, including major investment funds, are pouring money into logistics technology at a rapid pace,” reports the WSJ, “pushing up valuations of digital-focused companies in freight areas. , delivery and storage”.

Koray Köse, senior director and analyst, supply chain research and consulting at Gartner, Inc., credits supply chain visibility gaps with creating at least some of the interest in stock market shares. investors. For example, he says that 50% of organizations have visibility into about 90% of their Tier 1 suppliers, and those percentages drop dramatically for Tiers 2, 3, and beyond. And only 8% of companies know 25% of the suppliers with whom they contract from time to time.

“If you ask a supply chain organization if they know of a specific supplier, there’s a 75% chance the answer will be ‘no’,” says Köse. “That means a lot of companies are flying blind and it gets worse when you start talking about Tier 2 and Tier 3 suppliers.”

Of course, the yin and yang of it all is that as businesses continue to struggle with visibility gaps, someone else recognizes the problem and helps them do something about it. Today, that “someone” includes software vendors who refine their solutions, add new features, and market them to an audience of shippers willing to invest in and adopt these solutions.

“When it comes to any type of supply chain visibility software today, the [software developer] who makes four cold calls is probably going to make three sales,” says Köse. “The selling opportunities are real, which is probably why we’re seeing money pouring into the [sector] of Wall Street.

The question is, how long will this boom last? Köse estimates that by 2025, at least half of supply chain operations will have a dedicated risk management function stacked with the people, processes and technologies needed to effectively manage their end-to-end supply chains. end and maintain competitiveness in their respective industries.

Dividing the remaining 50% of shippers into two different categories, Köse also expects the sales environment to change over the next three years.

“After 2025, market dynamics will change and SCM buyers will fall into two different groups,” Köse predicts. “About half will be companies that aren’t happy with the software investments they’ve already made, while the rest will be organizations that are investing in new technologies they haven’t implemented yet.”

What shippers want

Some industries have suffered major disruptions and losses during the pandemic, but the SCM sector has remained largely strong and stable for the reasons cited above, as well as other drivers that have pushed technology to the forefront. supply chain and logistics managers.

Bill BrooksVice President, North America Transportation Portfolio at Capgeminisays software that integrates predictive analytics, real-time data, artificial intelligence (AI), machine learning (ML), and other advanced technologies is in high demand right now.

“Companies are realizing the importance of being analytical about what’s happening in the world, predicting what’s going to happen next, and then aligning accordingly,” says Brooks. To achieve these goals, companies need software that integrates with the rest of their business operations and gives senior executives visibility into all aspects of the business, whether it’s transportation, warehousing, procurement or other function.

Businesses also need access to real-time data that can not only be used to make accurate forecasts, but also takes into account more than basic data points and numbers. For example, organizations want to be able to integrate voice calls, emails, purchase histories, and other metrics into their databases and use them to make good decisions.

“Companies want better analytics and predictability than they’ve ever had in the past,” Brooks adds, “and are becoming increasingly creative in how they use that analytics to plan, save money and improve their results.

Vendors are answering the call and offering solutions that integrate well with other applications and support a more centralized data management approach. When logistics managers don’t have to pull data from a WMS, TMS, and supply system and then use spreadsheets and email to combine and evaluate that data, they get information when it’s fresh, relevant and actionable.

“Vendors know that for best results, their systems must be compatible not only with their own modules, but also with external applications,” says Brooks. “They understand that when data can be easily extracted and used elsewhere, it will only strengthen the need for their software applications in the future.”

Abandon paper and manual systems

Some companies want more analytics, AI, and ML from their SCM software, but others are still struggling to ditch their manual, spreadsheet, and paper-based approaches to supply chain management in favor of systems. more automated and technology-based. “We’re seeing a lot of technology being adopted in an effort to automate previously paper-based processes,” says Hiskey, who sees the current labor shortage as one of the drivers of this trend.

“Companies may have had employees running from one production line to another in the past to get approvals on certain parts or processes,” says Hiskey, who adds that, in addition to labor market constraints, outbreaks of COVID and the need for proper social distancing in the workplace have interfered with some of these age-old business management techniques.

As a result, companies that were once reluctant to embrace technology and automate processes – and perhaps didn’t want to be seen as “taking away” jobs from people – are now changing course and moving in a more automated direction. This, in turn, drives interest in SCM software ranging from very basic applications to extremely sophisticated and multi-faceted platforms.

“Where many companies are looking at advanced options like AI and ML, some are still replacing simple paper-based processes with automation, bots and apps that can manage workflows,” adds Hiskey, “and without necessarily needing to have people physically on site”.