ABC: An Introduction to Supply Chain Management Software
– Ben Worthen, CIO Magazine
March 19, 2007
What does supply chain management software do?
Supply chain management software is possibly the most fractured group of software applications on the
planet. Each of the five major supply chain steps (plan, source, make, deliver, return) involves dozens of
specific tasks, many of which have their own specific software. Some vendors have assembled many of
these different chunks of software together under a single roof, but no one has a complete package that is
right for every company. For example, most companies need to track demand, supply, manufacturing
status, logistics (i.e. where things are in the supply chain), and distribution. They also need to share data
with supply chain partners at an ever increasing rate. While products from large ERP vendors like SAP’s
Advanced Planner and Optimizer (APO) can perform many or all of these tasks, because each industry’s
supply chain has a unique set of challenges, many companies decide to go with targeted best of breed
products instead, even if some integration is an inevitable consequence.
It’s worth mentioning that the old adage about systems only being as good as the information that they
contain applies doubly to SCM. If the information entered into a demand forecasting application is not
accurate then you will get an inaccurate forecast. Similarly, if employees bypass the supply chain systems
and try to manage things manually, then even the most expensive systems will provide an incomplete
picture of what is happening in a company’s supply chain.
What is the relationship between ERP and SCM?
Many SCM applications are reliant upon the kind of information that is stored in the most quantity inside
ERP software. Theoretically you could assemble the information you need to feed the SCM applications
from legacy systems (for most companies this means
spread out all over the place), but
it can be nightmarish to try to get that information flowing on a fast, reliable basis from all the areas of the
company. ERP is the battering ram that integrates all that information together in a single application, and
SCM applications benefit from having a single major source to go to for up-to-date information. Most CIOs
who have tried to install SCM applications say they are glad they did ERP first. They call the ERP projects
"putting your information house in order." Of course, ERP is expensive and difficult, so you may want to
explore ways to feed your SCM applications the information they need without doing ERP first. These days,
most ERP vendors have SCM modules so doing an ERP project may be a way to kill two birds with one
stone. Companies will need to decide if these products meet their needs or if they need a more specialized
Applications that simply automate the logistics aspects of SCM are less dependent upon gathering