Taking Supply Chain Management to the Next Level

Trends in supply chain management (SCM) are coming and going faster than ever before. The essential — but once technically outdated — world of SCM has transformed itself into a dynamic environment, using emerging technologies to improve productivity and efficiency. Until recently, supply chains were managed by way of non-electronic communication paths. Vendors would send representatives into the field to seek out customers. Producers would take orders from wholesalers who dealt with retailers to determine what products would be required. And retailers were the interface with the customer, providing sales assistance and customer support.

Emerging Trends in SCM
Well, all that has changed. Now supply chain management is defined by everything from eCommerce to ERP to e-chains. But this new, dynamic SCM market goes beyond the alphabet soup of just WMS, TMS and ERP. Where a traditional Warehouse Management System (WMS), for example, works toward automating the warehouse to improve efficiency, and where supply chain software helps warehouses and manufacturing facilities work together more effectively, SCM initiatives focus on optimizing the entire operation.

New solutions are emerging, such as combining WMS with Transportation Management Systems (TMS), combining WMS with global logistics-management capabilities and creating inventory visibility across the supply chain, which allows rerouting of shipments already in transit, a flexibility not available with Enterprise Resource Planning (ERP) software.

So what's next? Boston-based AMR Research reports that major trends in the industry include the integration of product suites as backbones to support real-time supply chain decision-making, the alignment of vendor applications to ERP systems to allow easier integration, and product and marketing strategies focused on market segments and niches. New market opportunities, including the addition of customer-facing, Internet-enabled and optimal decision-support functionality, are also emerging to shape the SCM market. With these developments, ERP vendors are promoting the SCM market and generating greater user interest in purchasing SCM applications.

AMR forecasts a 48 percent growth rate over the next five years for the SCM market and SCM-supplier revenues of $18.6 billion by 2003. Market penetration is currently low, but as supply chain concepts become more pervasive, SCM initiatives could rival the impact of ERP systems and are expected to provide substantial strategic benefits to users.

Growth of E-Commerce
These trends will undoubtedly drive supply chain management into the next century. But uncovering more and more of the staggering potential of the Internet continues to be the industry's most significant development. SCM activities are increasingly being accomplished online as manufacturers and value added resellers develop new and better solutions. And why not? The explosive growth of the Internet has affected all types of day-to-day business functions. That it now plays a significant role in supply chain management is only a logical progression.

From the supply chain perspective, companies are attempting to reposition themselves to accommodate the impact of the Internet on their product offerings and their ultimate value offering to customers. To that end, manufacturers and value added resellers are looking to harness the technology to provide systems that coordinate the multitude of processes and technologies required to supply goods or services in the most efficient way. Instead of their traditional roles as providers of software that optimize manufacturing, distribution, planning and scheduling within the supply chain, SCM specialists are reinventing themselves to harness the growing capabilities of e-business. They still provide the software, but now there's enhanced implementation and support, the creation of Internet-based trading communities, mastery of new technologies and partnerships with related providers.

From Supply Chains to "E-Chains"
Fifteen years ago, few would have predicted the enormous impact the Internet would have on SCM. Now, as we look ahead, new emerging trends define the future of supply chain management. Some companies are already envisioning the end of supply chains as we know them, as they evolve instead into e-chains that offer quick returns on investment, positive impact on corporate growth and profitability for new e-business operations. The ability to plan ahead in a fast moving world and to rely on trading partners delivering to specified schedules is the promise Web-based businesses and their customers will come to expect.

How companies succeed with these changing strategies will be watched closely and judged over the next few years. With the development of high-speed electronic marketplaces and the significant capabilities of the Internet still untapped, there are more opportunities than ever for creative, forward-thinking value added resellers to penetrate and exploit new business opportunities.

Linda Delaney, Director of Marketing, Monarch Marking Systems