Supply chain management is a cornerstone of a complete Enterprise Resource Planning system providing an enterprise with a complete view of their inventory, on-order goods, and sold goods facilitating fine tuning of inventory and purchasing decisions allowing a company to carry a smaller inventory that is turned more frequently, to seek best suppliers using many different metrics, and match purchases to sales more efficiently.
Lower Inventory Needs
Filling more orders with less on-hand inventory is the goal of supply chain management. With a deeper understanding of outstanding sales, incoming purchase orders and on-hand inventory, this can be easily accomplished.
Increase Inventory Turn
Using historical information in conjunction with current sales trends, you can implement just-in-time fulfillment of sales orders to reduce your need for on-hand inventory. Moving toward a just-in-time system may allow you to increase your inventory turn rate significantly by lowering or even in some case eliminating the need to carry long term inventories.
Seek Best Supplier
With a supply chain management system proving information on demand and supply, you can begin seeking best suppliers based on different metrics such as price, timeliness, or quality. Knowing what your needs are going to be in advance can provide you with significant leverage in negotiating pricing, and other terms with your suppliers.
Match Purchases to Sales
For enterprises that handle orders on an individual basis, such as commodity products suppliers, matching orders is an important part of managing the supply chain. Knowing what incoming purchase order is going to fulfill a sales order is critical to the smooth flow of goods. With a supply chain management system, it becomes possible to match sales orders with purchase orders earlier then before. The greatest inventory situation a supplier can be in is having their incoming purchase orders all allocated to sales orders. With knowledge from a supply chain management system, you can reach this goal.
Conclusion
For many businesses, supply chain management represents a significant step forward which can lower their inventory needs, raise inventory turn rates, handle suppliers better and use sales to guide purchases.