Supply chain software: essential for effective inventory management to maximize profits

Companies use supply chain software to manage products from the raw material stage through the different manufacturing and distribution processes until the product reaches the consumer. Supply chain management aims to keep inventories as low as possible while optimizing the speed products flow through the chain.

Supply chain software functionalities

Different supply chain software tools have the following functionalities:

  • Purchase-order processing
  • Distribution and sales
  • Supplier management or sourcing
  • Inventory management
  • Processing of customer requirements
  • Goods receipt and warehouse management

Integration capabilities

Many types of supply chain software include forecasting capabilities that attempt to balance supply and demand disparities by improving business processes and better planning for future needs. Supply chain software typically provides for integration technology to enable companies to trade electronically with their supply chain partners.

Most companies require supply chain software to integrate with finance systems, including accounts receivables, account payables, and general ledgers. The integration of the supply chain software with finance systems makes bookkeeping for companies effortless.

Supply chain software flows

Supply chain software usually has three flows: 

  1. Product flow: the product’s movement from the supplier to the customer, including returns and services needed by the customer.
  2. Information flow:the transmission of orders and updates to the status of deliveries.
  3. Financial flow:details about the transaction, including credit terms, title ownership arrangements, and payment scheduled.

Benefits of supply chain software

It shares information between companies and departments. Although this is riskier than sharing information only within a company, the benefit is that it can reduce a product’s time-to-market and reduce costs. It also facilitates better management of current and future resources and needs.

Types of supply chain software

The main types of supply chain applications are planning and execution software. Planning software applications make use of algorithms to determine the best fulfillment method for a product order. Execution applications track products’ location and status and coordinate resources and financial data between the parties involved in the transaction.

Features of execution applications

The execution applications track inventory using detection devices such as barcode readers and cameras. The application can follow the inventory’s steps from extraction to when it is on the shelves. The supply chain software also creates and sends reports to the parties involved in the supply chain’s different steps.

Choosing a supply chain software is a decision that requires research on the different supply chain software options available. Companies should consider the cost and features offered before deciding on supply chain software.