Why an SMB should use a supply chain management system

Small to medium-sized businesses face many of the same challenges that large enterprises face within their supply chains: Labor shortages, rising raw material costs, supply shortages, higher transportation costs, and weather-related disruptions are just a few. Many smaller businesses use Excel spreadsheets to manage their data and processes. But in today’s volatile market, supply chain processes are getting harder and harder to manage.

Without a supply chain management (SCM) system, SMBs face rising transportation costs, more volatile demand, inconsistent supplies, lack of visibility, and lower customer satisfaction. SMBs need a supply chain management system to meet the 7 "Rs" of the supply chain – the right product, in the right quantity, in the right condition, at the right location, at the right time, to the right customer, and at the right price.

Companies need to know what a customer will order, how much inventory is needed, where inventory should be located, and how to transport the order to the end customer. Without a supply chain system in place, SMBs lack a competitive edge to compete against larger enterprises.

But can a smaller company afford an enterprise-level tool like SAP? Probably not, yet small businesses need most of the functionality in a supply chain management enterprise system: transportation management, sourcing and procurement, inventory management, reporting and analytics. With an SCM system, businesses can streamline a business’s supply-side activities to maximize customer value and gain a competitive advantage by cutting excess costs and delivering products faster and more efficiently.

An SCM system will help a small shipper make better choices in the face of supply chain adversity. It will allow the business to source, produce, sell, and deliver products while minimizing disruptions. All processes involved in producing and delivering products to customers must be smooth and seamless to ensure happy customers and unwanted interruptions.

Here’s how a supply chain management system can help a small to medium-sized business:

  • You may be shipping with a parcel carrier, whereas an LTL provider may be the more economical choice. Are you paying for premium transportation where delivery time is not critical? Does your system today provide guidance on which distribution center to ship from? A top-tier SCM system can assist in mitigating these “profit leaks.”
  • An SCM system helps you organize and segment your data to reduce your costs by three to six percent right off the bat. It provides better visibility into where you’re spending money and where you can save it. You can make wiser decisions on all your tasks–from shipment routing to carrier selection, load optimization, and shipment consolidation—all while eliminating costly human error and manual inefficiencies.
  • A supply chain management system provides detailed analytics on your supply chain trading partners, transport modes, and SKUs, aggregated into a single dashboard where you can define and track key metrics and shape (and re-shape) your shipping process in real-time for the best most cost-effective results.
  • An SCM system helps you to understand your inventory – what it is made of, the amount of inventory, its location, and more. Once you know what you have to offer, you can match demand with supply and sell more.
  • The SCM system provides access to a consistent flow of incoming materials so that you never run out of raw materials. If one of your suppliers goes out of business or performs poorly, you can find alternative sources of materials. Make sure to vet these new suppliers so that they meet your KPIs and you will never be out of stock of your products. Supplier websites may look respectable, but some are false fronts owned by fly-by-night companies. An SCM system with supplier management capabilities will allow a buyer to vet multiple suppliers on quality, cost, and delivery. Once a choice is made, everything from PO to delivery will be managed seamlessly without human intervention.
  • An SCM system should have control tower capabilities, providing you with visibility into incoming materials and outgoing orders. You should be able to track your incoming and outgoing materials in real-time to make quick decisions on the fly if a disruption in material flows occurs.
  • Using transportation management features within the SCM, shippers can choose lanes with a preferred carrier that provides the best quality service for the best price to save costs. The key is to make the customer experience the best it can be. Mode optimization allows you to find the best price for the load based on specific parameters, such as the number of stops, time, and delivery requirements. Using an SCM system reduces transport costs because of better planning, improves service levels, leads to more sales, streamlines the transportation process and operation, and helps improve efficiencies by eliminating manual procedures.
  • An SCM built in the cloud is easy-to-use and can be up and running quickly without extensive training, IT support, and customization. Vendors support cloud-based systems, so SMBs don't need to employ a large staff for software implementation and upgrades, which helps to keep operating costs at a minimum.

SMBs need to have flawless supply chain processes – from ordering to production to packaging to shipping – to keep customer satisfaction at an all-time high.

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