Supply chain management software

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Supply chain management software is used to modern planning and control methods to integrate in companies and this within the supply chain (Engl. Supply chain crosslink).

definition

Supply chain management software is the IT implementation for supply chain management . A large number of different software solutions are available to meet company-specific requirements. A distinction is made between integrated supply chain management systems and add-on solutions. The aim of the supply chain management software is to increase competitiveness through the use of planning and control instruments .

Historical development

The beginnings of supply chain management software lie in the material requirements planning systems (MRP systems) from the 1960s. After these material requirements planning systems were extended to the Manufacturing Resources Planning systems (MRP-II systems), they encompassed all areas of production planning and control. Due to the sequential working method, this technology is unsuitable for modern planning processes and simultaneous planning methods. In the 1990s, the systems mentioned were replaced for the first time by ERP systems , which are based on a company-wide database . Their functions cover all internal areas of a company and can also be expanded beyond the company.

Advanced Planning and Scheduling systems (APS systems) were developed to expand the range of functions . In addition to refining the internal planning options, their purpose is to enable extensive functions for cross-company planning. The supply chain management systems should also offer functions for planning and controlling the supply chain through specialized modules. The delimitation of the software types in use today is difficult due to the blurring of boundaries. Sometimes it is no longer carried out at all. The software developer SAP refers to its complete software package as SAP ERP.

Integrated supply chain management systems

Advanced planning & scheduling and supply chain management systems

APS systems work on the basis of existing ERP systems and, in conjunction with these, represent the prerequisite for inter-company supply chain management. Their main purpose is to improve internal planning options and production planning, both in terms of reliability and Speed, because ERP systems often do not achieve the desired effect despite their high price. However, for the first time, through the use of more complex procedures, they also offer extensive functions for cross-company planning, so they can also be established as a central, cross-company system in order to serve the coordination of the supply chain. It should be noted, however, that people as decision-makers should not be replaced as a rule, but rather a decision-making function should be sought. The functional scope of supply chain management systems cannot be clearly defined and fluctuates greatly. Like ERP and APS systems, SCM systems consist of modules and thus offer different functions depending on requirements. As a rule, functions for in-house production program planning are offered as well as help with supply chain control. Due to the similar scope of functions, a differentiation from APS systems is problematic. If there is already an APS system that is integrated into the ERP system, then it makes sense to add the missing modules from the SCM system.

Range of functions

The functions offered by supply chain management software start with strategic corporate planning , which is the most long-term. This is followed by tactical supply chain planning and finally operational planning with the least long-term focus.

Strategic corporate planning includes network planning, which supports the company in finding suitable locations for plants and warehouses. Not only the location is relevant, but also the number of locations. Optimizing procedures are then applied in such a way that all products are distributed to the warehouses or production sites. A variety of factors can be involved in these processes, including: B. the structure of your own suppliers and customers , the quantity restrictions resulting from capacities and certain service levels that have been agreed with the customers.

This is followed by more short-term tactical and operational supply chain planning. The reason why internal planning steps are also included is the prerequisite for their one hundred percent correctness for successful cross-company planning.

Add-ons and integration in ERP systems

The second solution in addition to the integrated supply chain management system, which is ideal for optimizing the supply chain, are the so-called add-ons. With this type of software solution, one does not try to rethink the entire supply chain by changing structures and processes, but rather complements and supports the existing system. You just improve parts of the internal supply chain, so to speak.

Task of the add-ons

In order for an add-on to be integrated into the company, a classic transaction system (e.g. ERP system) must already be in place . Add-ons counteract the main problem of these classic transaction systems. This deficit is the lack of transparency in the planning situation. Because the systems support the planning decisions only to a small extent. To make matters worse, there are weaknesses in the operation of merchandise management systems that are not designed for planning over a longer period of time and also do not draw attention to emerging problems (e.g. build-up of excessively high safety stocks).

The task of the add-ons is to support the existing transaction system in such a way that the production model can be reflected over a longer period of time, from the past to the future. In addition, the software solution should simplify the user interface of the system, so that simple operation is possible and decisions are made quickly and in an optimized manner. In order to improve the speed of reaction, it is essential that the system can plan ahead. The most important thing is to correctly interpret the effects of the forecasts made. For example, the forecast for material requirements, changed demand for capacity and bottlenecks must be interpreted correctly. The software solution must be intelligent enough to be able to react to any type of problem within the supply chain at any time and to give the optimal answer.

Optimization options through add-ons

Requirement for a supply chain optimization

There are no explicit requirements for the initialization of supply chain optimizations. It only has to be an industrial or trading company that controls its processes and inventories via a PPS (production planning and control system) or a merchandise management system. There are enough inconsistencies and starting points in the individual areas of these systems to optimize the processes with the help of a supply chain management software solution.

Differences between add-on and integrated SCM systems

Basically, both approaches try to achieve the same goal, namely to improve competitiveness through optimal customer service at minimal costs. The add-on solution is all about locating the main problem in the supply chain and optimizing it later. Therefore, the add-ons only have a small impact on the internal supply chain and only deal with the most important link. This software solution can later be expanded without any problems so that a very large part of the supply chain can be optimized. In contrast to the add-ons, the integrated supply chain management systems deal with a holistic improvement. This software aims at a complete solution. The integrated SCM systems refer to the entire existing supply chain. All available data, processes and partners are networked and integrated in the company so that not only parts of the internal supply chain, but the entire supply chain can be optimized.

Possibilities as well as limits, advantages and disadvantages

The integrated supply chain management system is a more expensive solution compared to simpler systems, but offers companies that are internationally oriented, more advantages, as this software covers all parts of the supply chain from sales planning to production control to delivery . So the entire supply chain is being reconfigured. This software solution is therefore only profitable for companies that have globally networked supply chains and have the necessary investment capital. However, often only large partners or 1st tier suppliers are included in the supply chain. Medium-sized service providers are not integrated because the high investment costs in the software are too high a barrier to entry. Such service providers cannot benefit from the project, while the central system again lacks the data on the smaller partners.

However, a large number of corporations shy away from investing in such an expensive complete solution. For these companies, an add-on software solution makes more sense, because you don't run a high financial risk if you improve your supply chain with an add-on. In addition, the option is also left open to further perfect the supply chain through further investments in add-ons. Thus, such an output is usually more efficient and less risky for medium-sized companies. Another problem arises in the integrated supply chain as soon as a company is involved in not just one but several different supply chains. It is quite possible that the software solutions from several providers will have to be integrated into the company and used in order to be compatible with the higher-level systems. Modules therefore exist twice, and unnecessarily high costs arise. If the company does not have its own besides the central planning system (e.g. an APS system), then it can only act to a limited extent outside the supply chain. These points in turn speak in favor of a decentralized supply chain management approach, even if only under the condition that all IT systems are standardized.

Cloud computing in terms of supply chain management

Instead of operating software and hardware locally in the company, cloud computing makes them available via a third party and the service is rented out. The spread of cloud computing approaches in German medium-sized companies is eleven percent. In this regard, however, a tripling of the sales volume was predicted from 2012 to 2016. With regard to supply chain management, a. appreciated the following benefits:

  • Location-independent data access
  • Less incompatible data and hardware interfaces
  • Lower investment costs
  • Easier integration of new partners into the supply chain
  • Fast implementation of global software updates and system adjustments

The falling fixed costs for customers are shifting to rising variable costs . The reason for this lies in the usual payment model that the cloud service provider is paid based on usage. In addition, there are problems and uncertainties in cloud computing:

  • Uncertainty about important aspects of data protection and data security
  • Legal problems that can arise from the lack of location of the data
  • Lack of large, established cloud solution providers

The European Commission wants to make cloud computing more attractive for companies through certification and standardization. Before that, however, these standards should first be worked out by the industry itself.

literature

  • G. Knolmayer, P. Merterns, A. Zeier: Supply chain management based on SAP systems. Springer-Verlag, Berlin / Heidelberg 2000, ISBN 3-540-65512-3 .
  • N. Gronau: Enterprise Resource Planning. 2nd Edition. Oldenbourg Wissenschaftsverlag GmbH, Munich 2010, ISBN 978-3-486-59050-0 .
  • C. Alberg: Cross-company supply chain management . Oxygon Verlag, Munich 2008, ISBN 978-3-937818-37-5 .
  • DB Grant, DM Lambert, JR Stock, LM Ellram: Fundamentals Of Logistics Management European Edition . McGraw-Hill Education, Berkshire 2006, ISBN 0-07-710894-9 .

Individual evidence

  1. ↑ Bertrand, Muntslag: Production Control in engineer-to-order firms. 1993, p. 21.
  2. ↑ Albert: Cross-company supply chain management. 2008, p. 71ff.
  3. ^ Christoph Siepermann: Enterprise Resource Planning System . www.wirtschaftslexikon.gabler.de. Retrieved June 16, 2014.
  4. ↑ Fuchs: IT increases supply chain performance - always? . In: HMD - Praxis der Wirtschaftsinformatik. No. 50, dpunkt.verlag, 2013, p. 107 ff.
  5. ↑ Knolmayer, Merterns, Zeier: Supply chain management based on SAP systems. 2000.
  6. ↑ Small and medium-sized businesses should use the tools ( Memento of the original from April 24, 2013 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. . procurement-aktuell.de. Retrieved on June 16, 2014 (interview with Prof. Dr. Dr. Hans-Jürgen Zimmermann). @1@ 2Template: Webachiv / IABot / www.beschendung-aktuell.de
  7. ^ Baumgarten, Walter: Trends and Strategies in Logistics. 2001, p. 57.
  8. ^ Gronau: Enterprise Resource Planning. 2010, p. 264ff.
  9. ↑ Albert: Cross-company supply chain management. 2008, p. 151 ff.
  10. ↑ Schlatt: Supply chain management - planning through the cloud still has to overcome a few hurdles. GBI-Genios Deutsche Wirtschaftsdatenbank GmbH, 2012.