SCM (supply chain management) is being introduced mainly in the manufacturing industry. It aims to properly manage inventory, shorten lead times, and improve profits by managing the entire process from raw material procurement to manufacturing, logistics, sales, and delivery to the customer.
However, although SCM offers various benefits, there are also some challenges in its introduction and operation.
In this article, we will look at the challenges of SCM, especially in the manufacturing industry, and provide an overview of the SCM system that can solve them, as well as the benefits of introducing it and the key points for properly proceeding with its introduction. If you are a company representative considering introducing supply chain management, please refer to this article.
Issues of SCM (supply chain management) in the manufacturing industry
The main challenges facing SCM in the manufacturing industry are as follows:
Diversification of suppliers leads to increased complexity in management
For example, when AI is incorporated into home appliances, high-performance semiconductors, sensors, and other components that were not previously necessary, as well as voice recognition and image processing technologies, are now required. In addition, in order to improve efficiency and reduce costs, it is not rare to see companies using logistics real estate instead of their own warehouses to store and manage products. As suppliers become more diverse, supply chain management has become more complex than ever before.
Globalization of the supply chain
As business globalization progresses, such as by moving manufacturing departments overseas and seeking markets overseas, it is essential to globalize the supply chain as well. In order to centrally manage globalized suppliers, it is necessary to adapt to the culture and customs of each country, which is much more difficult than managing a supply chain that is solely domestic.
For more information on supply chain management, please see this article:
What is SCM (Supply Chain Management)? Explaining the advantages and disadvantages and the background behind its popularity | Stratus Blog
What is the SCM system that solves SCM (supply chain management) issues?
There are various measures that can be considered to solve supply chain management issues in the manufacturing industry, but the first step is to introduce an SCM system.
What is an SCM system?
An SCM system is a system for optimizing and streamlining supply chain management, visualizing the information and data held by each supplier, and managing and analyzing it centrally.In addition, analyzed data is linked and shared between suppliers, enabling appropriate and prompt business execution.
Elements of an SCM system
Depending on the type, the main elements that make up an SCM system include the following:
- In order to implement business process integration supply chain management, it is first necessary to integrate business processes within the company. Core business processes such as raw material procurement, manufacturing, sales, and accounting are centrally managed using ERP (Enterprise Resources Planning).
- We use SCP (Supply Chain Planning) to manage everything from demand forecasts for planned products to production, inventory, logistics, materials, delivery schedules, and supply/receive adjustments.
- Execution System:
In order to improve efficiency and control quality in the storage and logistics of completed products, they are managed using a WMS (Warehouse Management System) or TMS (Transport Management System).
Benefits of implementing a SCM system
SCM is difficult to carry out manually alone, but introducing an SCM system brings various benefits and makes the process smoother. The specific benefits are as follows:
Efficiently manage the entire supply chain
This allows you to manage each supplier in a centralized manner, which makes overall management more efficient. When performing SCM manually, it is necessary to communicate with each supplier and collect and consolidate information each time. However, by using an SCM system, you can automatically collect, consolidate, and analyze information by setting it up, which greatly improves efficiency.
Proper inventory adjustments become possible
In addition to visualizing the information held by each supplier, it is possible to quickly analyze past performance and the latest sales situation, making it possible to make appropriate inventory adjustments. Furthermore, if appropriate inventory adjustments are possible, it will become easier to respond to sudden fluctuations in demand.
Check sales status in real time
This allows you to check the real-time sales status of your products and immediately identify where inventory is running low or excessive, which in turn optimizes your logistics process and reduces logistics and warehouse management costs.
Key points for introducing a SCM system
There are many different types of SCM systems. Therefore, if you do not choose a system that suits your company, you cannot expect to achieve the results you expect. Here, we will explain the key points to consider when introducing an SCM system.
Accurately understand the current supply chain
Depending on the type of SCM system, the functions and scope of what can be done vary. Therefore, it is necessary to clarify what functions are necessary for your company and to what extent you need to manage suppliers. In order to do this, you need to correctly understand the details of your current supply chain.
Check the integration with existing systems
For example, if you have already implemented ERP (Enterprise Resources Planning), you do not need an SCM system with ERP functions. However, if the existing ERP and the SCM system you are introducing cannot be linked, there is no point, so it is essential to check whether it can be linked with the existing system.
Make sure you have a good support system
It is also essential to check the extent of support provided, such as whether support is only available by email or by phone, whether a training system is in place, etc. The quality and quantity of support will greatly affect the operational system after implementation, so be sure to check the level of support provided.
Choosing the right SCM system is important to achieve results in SCM (supply chain management)
Supply chain management is the one-stop management of the procurement of raw materials, manufacturing, logistics, and sales, all the way to the point where the product is delivered to the customer. By implementing SCM, you can improve business efficiency, properly adjust inventory, and shorten lead times, making it possible to provide high-quality products to customers.
However, there are many hurdles that must be overcome in order to implement SCM, such as reviewing and improving business processes and collaborating with each supplier. To overcome these hurdles, it is first important to share goals such as providing value to customers and maximizing profits across departments within the company or among suppliers.
On top of that, by utilizing the SCM system, it is necessary to create an environment where the information and data held by each department and base, as well as each supplier, can be visualized and managed and analyzed centrally. If the supply chain is optimized, it may be possible to propose completely new values such as mass customization in the future.
By introducing the SCM system discussed in this article, it will be easier to properly adjust inventory and respond to fluctuations in demand, which will significantly reduce the burden on field staff. However, in order to do this, it is important to select the best SCM system for your company from the various SCM systems available.
When selecting an SCM system, it is important to check the status of your suppliers, how it will work with your existing systems, etc. Correctly understand the details of your current supply chain and aim to introduce the SCM system that is best suited to your company.
