Best Practices for Choosing a Supply Chain Management Solution

Posted on 3rd Dec 2020

Choosing the right supply chain management software can be challenging, but when you choose the right one, it can help keep your supply chain running smoothly.

There are plenty of software solutions available for importers and exporters, and choosing the right one can be a challenge. The options range from software you manage in-house to cloud-based solutions–often called software as a service (SaaS). The right solution can help you better understand and manage your shipments. Benefits range from detailed financial analysis to optimizing management of your supply chain.

Supply chain software is kind of like a digital traffic cop, managing the flow of information between companies. Supply chain expert Daniel Stanton, author of Supply Chain Management for Dummies, says that in order to manage your international supply chain you need a system that can handle planning, sourcing, production, delivery, returns and fulfillment.

Start by Understanding the Process
A good starting point for determining what your supply chain software system should handle is the Supply Chain Operations Reference Model (SCOR), which provides a comprehensive overview of the processes, performance metrics, practices and other functionality needed for global operations.

For most companies, says Stanton, a cloud-based solution is the best option for managing your supply chain. “Cloud solutions are easy to scale and easy to maintain," he says. “You can replicate them to multiple sites to provide resilience, and you largely eliminate the big capital expenses involved in purchasing servers and upgrading hardware."

Stanton says supply chain solutions are often categorized as either planning or execution software. Planning software collects data and estimates the most efficient ways to use supply chain resources. Execution software helps to manage and track shipments.

Managing any supply chain process involves both planning and execution, and often the best solution is one that integrates both capabilities. “Within each category of software, you'll find several companies that sell software packages with different features, capabilities and prices," says Stanton. “If you start by understanding what processes you need to manage, it will help you select the appropriate software tools for your needs."

Analysts at Gartner Inc., a global research and consulting company, conduct an annual assessment of supply chain vendors as part what they call the Magic Quadrant report. A list of the top 20 supply chain software vendors from Gartner by Modern Materials Handling provides a good starting point for assessing the options available in the marketplace today.

Managing Compliance Issues Is Essential
One of the most important functions of your supply chain management software is to help with compliance issues, such as export controls and restricted party screening. “Supply chain information systems are critical to doing business legally and ethically," says Stanton. “There are several points in a supply chain where you need to ensure that your company is playing by the rules, and having these checks built into your software reduces the risk of human error—or errors in judgement by someone on your team."

When you're considering a supply chain software solution, one factor to consider in the context of future growth is integration with other software, such as your CRM or accounting system. Ultimately, says Stanton, “you need real-time information about everything from your customers to your suppliers, and all of the money and products in between."

You also should look for value-added features, such as advanced inventory management, demand planning techniques and delivery metrics. “If your customers are obsessing about delivery metrics because they are implementing lean manufacturing processes, then, guess what, you need to obsess about delivery metrics, too," he says.

Right-Size Your Software Solution
Stanton also cautions importers and exporters not to get too bogged down with technology bells and whistles that make it more difficult to manage your supply chain system. “If you don't have solid, repeatable processes in place, then the complexity that comes from introducing advanced features can actually make your supply chain even more chaotic," he says.

When evaluating potential software solutions, the first question to ask is what problem are you trying to solve, and what is it going to cost. Calculating ROI is one of the toughest steps in making any technology purchasing decision. “Software can improve financial performance," he adds, “but it can also provide benefits to your employees and your customers."

At the end of the day, assessing ROI means looking at how your software investment will help increase sales and revenue, decrease costs by reducing inventory, improve efficiency and/or mitigate risks. “In many cases, the real value of a supply chain software system is that it can help you avoid paying fines or help you to recover from a supply chain disruption more quickly," says Stanton.

These days, supply chains and the software to manage them are all part of an integrated business ecosystem. “Increasingly," says Stanton, “supply chains are the business. They are the way that we collaborate with suppliers, transform inputs and deliver value to our customers."

Finally, adds Stanton, “perfect is the enemy of good when it comes to supply chain software. Trying to make a supply chain model too good is a waste of time, because it's impossible to predict all of the variables perfectly. The goal is to understand the problem you're trying to solve, and find the best solution to meet your needs."

By: Greg Sandler