When original equipment manufacturers (OEMs) leverage the right supply chain management (SCM) software, they can reap a slew of benefits, many of which can contribute to lean manufacturing. But choosing the perfect system can sometimes seem a monumental task. Rather than pick the first option that sounds decent, you should take the time to weigh the choices. Different software will have varying features and functions, so choosing one that sounds good at a glance may not be the smartest move. This is an investment, and making the wrong selection will lead to less return and likely another software purchase down the line. Getting it right on the first try means immediate positive changes along the supply chain, but how can you narrow the search and ensure you invest in the best choice for your plant's needs?
Know what you need
First and foremost, you need to define what you want and need. Are you aiming for more cost efficient manufacturing? Do you want to reduce your factory's carbon footprint? Is lead time reduction across the supply chain the primary goal?
- Cost reduction – SCM software can help your company save in numerous ways. The increased visibility that comes along with being able to monitor the entire supply chain can aid with that, especially if you're planning to outsource things like kitting services and inventory management to third-party vendors. According to Technology Evaluation Centers, outsourcing will make the chain even more complex, so this could be especially useful in keeping your affairs in order.
- Lead time reduction – In the same vein as cost reduction, the additional visibility that comes with SCM software can help improve lead times by making it easier to eliminate downtime, Technology Evaluation centers reported. When you're able to track the entire supply chain process, you can better anticipate things like order fluctuations and logistics changes.
- Quality improvements – When you're able to oversee the entire supply chain, you can make smarter decisions regarding the companies you partner with, the options you can offer your customers and the way you run your factory. Say you decide to invest in a vendor managed inventory (VMI) solution, this can lead to better control over your inventory, access to higher quality class C components and a reduced risk of stock-outs and production downtime.
- Risk mitigation – ERP Search highlighted an IBM study which found that risks are more prevalent when software is not fully integrated and processes are not standardized, two factors SCM software can help with. SCM software can also help you monitor risks across the entire supply chain and stay on top of the latest legal and compliance updates.
Keep in mind that there may not be one option that meets every single need, so it can be useful to determine which functions and features you could do without and which are absolute necessities. For instance, if you're already working with VMI solution provider, inventory management will not be on your list, as VMI vendors will be able to monitor and analyze this aspect of your operations for you.
Know what else SCM systems can do
It's important to not only consider what you already need but also the other ways this type of software can contribute to improving your supply chain. There are plenty of opportunities to make an SCM do more for your factory than those listed above. Inbound Logistics pointed to customer relationship management (CRM) as being a must. The right software can help you manage customer service, as the source highlighted benefits like order status reporting, query backups and even requests to alter orders.
At the same time, it is worth noting that the additional functions will only be useful if you have the ability to use them, as CIO pointed out. CRM services, for example, might be attractive on paper but not as lucrative in practice if your current customer service methods will be difficult to integrate with the software.
"Eliminate SCM software that doesn't meet your must-have qualifications."
Compare vendors side-by-side
After you've defined your qualifications, start sifting through the options. Eliminate supply chain management systems that do not meet the qualifications for your must-haves right away. If the remaining group is still too large, start sorting it by the more variable options. Those SCM systems that meet the lowest number of "maybe" functions on your list can be ejected from the competition. Continue in this fashion until you have a manageable number of options to explore further. That number will depend on both the available systems and how much time you can devote to researching them. If you have, say, 12 seemingly suitable software options, but only two or three employees who can devote their time to researching them, you may want to pare the list down a bit more before you move forward. When the amount of research needed is more evenly matched with your available resources, move on to the next step.
Do a bit of matchmaking
Once you have your options whittled down, it's time to start researching. Beyond the software functionality, you will want to find a reliable, credible vendor to work with. Inbound Logistics suggested looking for vendors with a high implementation success rate. Where the average rate is only about 50 percent, Inbound recommended holding out for a vendor with at least a 90 percent rate.
"Hold out for a vendor with a 90% implementation success rate."
The relationship you foster with your vendor will play an important role as well. Beyond implementation, you'll likely need support from the vendor regarding any number of issues, including major upgrades to the system or changes made in your plant. It'd be ideal to find an SCM vendor that works exclusively with OEMs, but the breadth of customers served is probably a bit wider, so find out which vendors have any experience in your specific industry. Vendors familiar with your operations will have a more in-depth understanding of your needs, according to the source.
With the right SCM systems in place, you'll have the tools to better manage your entire supply chain, from tracking demand to managing logistics and distribution. With greater visibility, you can also more easily spot weak links in the chain, which can then be addressed and strengthened.