13 Essential Types of Supply Chain Management Tools

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As Amazon continues to raise the bar, the margin of error within the various types of supply chain management gets thinner and thinner. A simple mistake could easily cost your business thousands of dollars and allow your competitors to get ahead. But thanks to supply chain management software, it’s never been easier for companies to avoid such pitfalls. Specialized tools and established supply chain management techniques make it possible for users to reduce errors and costs while optimizing the entire supply chain. Let’s start with the 13 different types of supply chain management tools that make these software solutions valuable to companies:

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Types of Supply Chain Management Tools

Types of Supply Chain Management Tools

Here’s a list of the most essential types of supply chain management software tools:

1. Shipping Status Alerts and Updates

An increasingly popular tool, real-time alerts provide timely information on all shipping activities. Typically, large companies have high-volume supply chains with many different types of cargo shipped to customers around the country or around the world.

While these factors allow for growth, they also leave your supply chain vulnerable to more errors. Real-time updates keep you in the know, so you and other stakeholders can take action before small issues become much larger. Additionally, these alerts can be sent to your mobile device to inform you of the status of your supply chain at any time, day or night.

2.Order Processing

Order processing is massively important to any supply chain, and as such, solutions provide the tools needed to make this task easier and more efficient. These tools support all functions across order processing like sales order processing, order management, order fulfillment, billing and order to cash.

Order Processing

These supply chain optimization tools can automate most activities involved in order processing using EDI software and similar technology to directly capture order data. This reduces the time it would take to traditionally process an order by eliminating the need to manually generate and send POs and invoices. It also reduces the opportunity for human error since there’s no need to manually take down order information and re-enter it into a different system.

3. Lean Inventory

Lean production is a concept that dates back to the 1940s, created by Toyota and inspired by Henry Ford’s just-in-time production. The idea is that companies create only what’s needed at the moment, determined by current and projected customer demand. Before lean production, manufacturers would create and house large surpluses of goods. This resulted in massive inefficiencies, wasting time and effort.

The overall goal of this practice is to optimize your production planning by cutting down on warehousing space, inventory costs and the different procedures of storing excess inventory. Lean inventory tools can provide quite a bit of return on investment for a business, decreasing the need for warehouse space and streamlining their labor force.

While lean production principles can be implemented without these tools, this type of supply chain management software takes efficiency to the next level. By using demand forecasts, materials planning, scheduling and simulation tools, you’re able to gain a much deeper insight into the future of your supply chain. These tools make planning production in alignment with lean manufacturing principles much easier.

4. Warehouse Management

Depending on the solution you choose, these tools may also help manage the day-to-day operations within your warehouses. Solutions provide a wide array of warehouse management capabilities as broad or specific as your company requires. Some solutions provide advanced supply chain planning tools, allowing users to handle complex logistics related to receiving, product tracking, cycle counting, route planning and more.

Moreover, warehouse management tools help manage the kitting and bundling process as well as multiple warehouse locations. This is especially helpful when you need to bundle multiple products that are kept at different warehouses.

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5. Specialized Freight Handling

In addition to various shipping features, tools can also incorporate different types of industry-specific freight handling functionality. For example, the evolution of cold chain logistics and new regulations concerning perishable goods has changed compliance standards. To handle this, some platforms have integrated technology that can verify that those goods were kept at the proper temperature right up to the last mile of delivery. This tool is also offered by vendors as a standalone product but can be neatly integrated with a larger solution.

If you ship goods in this industry, it’s imperative you implement this tool. Maintaining product quality across the supply chain will help you reduce costs associated with perished goods. This includes the cost of a recall, item disposal, legal response and more. For example, think about Chipotle’s E. coli outbreak in 2015. Stock prices still fell throughout as late as 2018, with customer reviews worse than they were during the initial outbreak. Further, a whopping 37% of customers report eating at Chipotle less often due to issues surrounding food safety.

6. Bid and Spend

Sourcing and procurement are a major part of supply chain operations for many businesses. Therefore, tools that support these activities should be a top priority as well. Sophisticated tools for supply chain management can help you dig down and take a granular look at what you’re spending on each item that you take in and send out during production. Bid and spend tools also automate much of the procurement process, reducing errors and resources spent. For instance, top systems can automate the entire procure-to-pay process.

Bid and Spend

These tools can also assist you in evaluating bids from different suppliers by helping you spot opportunities for improvement. Many of today’s systems incorporate automated spend analysis to help users better understand their overall procurement processes and come up with ways to improve them. For procurement teams with many members, these tools allow procurement officers to set limits for employees by creating approval processes and spending limits.

7. Supplier Management

Tying in strongly with bid and spend tools, supplier management is a must-have when it comes to procurement. Along with assistive features for cost issues, supply chain management tools can also help businesses get a better understanding of how they relate to their suppliers. These tools show the history of a business partnership and how it affects the supply chain. Using supplier performance analysis, users can see how any given supplier has contributed to a business model.

With the ability to continually assess your partners’ contributions, decision makers can act more confidently to change or otherwise manage supplier relationships. Furthermore, supplier management tools often offer a workspace to perform bids, auctions and negotiations for more centralized procurement.

8. Demand Forecasting

Using analytics, today’s supply chain tools are capable of processing huge amounts of data in a fraction of the time it would take a team of analysts. Not only does analytics provide insight into past practices, but it can also create forecasts to predict future demand.

Demand Forecasting

Based on past trends, supply chain forecasting tools help you anticipate your customers’ demand. This provides the essential information to make crucial decisions regarding production planning, labor management and supplier relationships in order to meet this demand. Without forecasts, you risk stock shortages during periods of intense demand. On the other hand, when demand is unexpectedly low, you risk running high carrying costs you could’ve avoided otherwise.

These forecasts are often communicated via dashboard reporting. For more on dashboards and reporting, see the next section.

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9. Analytics and Reports

In addition to analyzing consumer demand and your suppliers’ performance, this type of supply chain analytics tool performs analyses of your data from the entire supply chain. Analysis tools allow users full visibility not just into the physical location of inventory, but also into the health and performance of the company. Analytics can provide insight into the company as a whole or into individual sectors. Demand forecasts give visibility into the popularity of certain items, whereas warehouse analysis might tell you the most efficient way to store and move that product. This also allows users to analyze order processing which can uncover the source of delays and errors. Additionally, users can analyze transportation and logistical processes.

Analytics and Reports

This helps decision makers understand how well carriers are performing along with patterns of delay and error. All of this visibility gives users the means to improve their processes while retiring less useful methods.

Analytics must be conveyed in the form of a report. Different solutions may offer different reporting methods, including tables, charts, dashboards and more. Dashboards are one of the most common methods, as they offer quick information as soon as a user logs into the system. Supply chain dashboard tools can be configured to show the most relevant key performance indicators (KPIs) as determined by the user.

10. Collaboration Portals

In addition to providing a hub for procurement, modern supply chain monitoring tools also allow companies and their suppliers to collaborate in other ways through a designated portal. Supply chain portals can eliminate several collaboration challenges including communication issues, bottlenecks in requisition and order, and other issues.

Collaboration Portals

Using portals, all parties may have access to production progress, order forecasts, product specifications, purchase orders, shipment history, schedules and more. Collaborating directly on certain documents eliminates the need for continuous emailing back and forth to get the right information and the errors commonly associated with this form of communication. Collaboration portals support full supply chain visibility, allowing both companies and their suppliers to stay up-to-date.

11. Security Features

There’s another element among supply chain tools that’s focused squarely on security. Data theft can cause you to lose your position in the market as well as damage your relationships with suppliers. For instance, if your demand forecasts were stolen, your competitors would then have insight into the interests and preferences of your customers. This would enable other companies more effectively to sell to your market, reducing your profit. If financial data is stolen, you may lose the trust of the parties affected such as consumers or business partners.

In order to prevent these security failures, implementing defensive features is a must. Most vendors today offer security assurances to let their clients know what efforts have been made to safeguard their information. These might include avoiding third-party vendors with low security standards, forbidding backdoor creation, aggressive patch management and response procedures in the case of a breach.

There are also security measures your company can take in order to further protect your data. For example, dashboard reporting can be restricted based on the user to ensure only approved personnel have access to certain company data. Many solutions also allow a system administrator to set file permissions. Further, you can integrate biometric devices to provide further accountability.

12. Transportation and Logistics

In order to achieve a complete solution, you need to have some sort of transportation management. Transportation and logistics tools help users manage the movement of inventory and materials from one location to the next. With a solution equipped with transportation management, users can plan multi-stop trips, consolidate shipments to maximize space and plan for less than load (LTL) shipping.

Transportation Management

In addition to planning transportation, these features help users address issues as they arise. Through inventory tracking, individuals can see when inventory is slowing down and intervene to find the cause. There are also collaborative options within transportation modules which enable all supply chain players to manage the shipping process.

13. Compliance and Auditing

Consumers, now more than ever, want their products to be well-made, safe and ethical. Thankfully, today’s tools give users the means to adhere to both environmental and ethical regulations with ease. For instance, some solutions allow users to closely inspect suppliers to ensure minerals obtained are conflict-free.

Auditing tools make it easier for your business to remain transparent during third-party investigations. These inclusions may collect and store data related to relevant policies and regulations.

We’ve got the top tools nailed down, but it’s worth mentioning that supply chains come in different types with their own management styles.

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Different Types of Supply Chains

Supply chains are the lifeblood of countless industries across the globe, and they each require different strategies to make them work. There are numerous methods and models that businesses subscribe to, but here are some of the most popular types of supply chains:

1. Continuous Replenishment

This type of supply chain is fairly straightforward, if not a bit risky. This method continually replenishes inventory, but requires tight coordination with suppliers, integration between your production and orderings processes, peerless demand forecasting and a constant flow of real-time information.

However, if one of these cogs in your supply chain machine is off you could be looking at costly damage control. If your demand information is off you could suddenly be the proud owner of a bunch of inventory with no place to go. If consistently replenishing your inventory involves numerous shipments the costs associated with this method could be too much to even consider.

2. Build-to-Order

This type of supply chain focuses on the construction of an order as soon as it is placed by the consumer or client. Dell was the first to push this strategy with their customizable PC’s that are put together and shipped as soon as the client decides on their specifications.

A dependable flow of common pieces is necessary to make this work, however. In Dell’s case, they need to have all of their computer components available and ready to be brought together as soon as they are needed. No one wants to put together a brand new PC only to see that their order is delayed for days or weeks while one particular part is ordered.

3. Channel Assembly

This type of supply chain involves constant coordination with third-party logistics (3PL) partners and builds a product piece-by-piece as it travels down your distribution channels. As an order parts come together across the different channels of a supply chain, they are gathered up and shipped together by your 3PL partner.

So, instead of receiving your computer monitor first, your keyboard a day or two later and then finally the PC itself nothing would ship before all the parts are ready to go.

4. Integrated Make-To-Stock

This type of supply chain focuses on tracking real-time customer demand, ensuring that the production process restocks finished goods inventory. With real-time demand information, you can create and improve production plans and schedules for your organization. Further, these production plans and schedules can be supported by input material through this system’s integration with the procurement process.

This method maintains timely and accurate coordination of supply with multiple distribution channels to fulfill demands. There is a constant flow of information about demand, storage capacity, inventory, transportation scheduling and more through information systems.

There are numerous other methods and strategies that go into making the various types of supply chain function at maximum efficiency. Here are a few other examples of successful supply chain models:

  • Agile: This method is perfect for businesses that deal in niche items that rise and fall with demand. The agile method is perfect for oscillating between high-demand and off periods where there isn’t much shipping going on.
  • Efficient: Supply chains in aggressively competitive markets have to rely on efficiency to give them an edge on other businesses in their space. The efficient method focuses on end-to-end support for smooth distribution at high volume.
  • Fast: Have popular items with short life cycles? The fast method focuses on moving numerous popular products out quickly before their temporary demand fades.
  • Continuous Flow: This method is suitable for businesses that require high demand stability. It can benefit industries that manufacture similar goods with minimal variation. It provides regular information flow and product cadence, making it ideal for commodity manufacturing.
  • Flexible: The flexible supply chain focuses on meeting high demand peaks and managing extended periods of low demand. It is highly adaptable with the capacity to reconfigure internal manufacturing processes.
  • Custom Configured: This method is a combination of agile and continuous flow supply chains that provides custom configurations during assembly and production. It is suitable for businesses that require products with multiple and potentially unlimited configurations.

These models may get your supply chain headed down the path to success, but we also need to consider the overall management strategies that keep them running.

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Different Types of Supply Chain Management

You may have a winning supply chain model in place with all of the best tools on the market, but without a proper management strategy in place you’re bound to hit an expensive snag before too long. Much like the tools and types of supply chains, there is no method that can solve the issues of every industry.

Before jumping on a particular strategy be sure to speak to your logistics partners to find out the best way to approach streamlining your supply chain management. In the meantime, take a look at a few of the following methods of supply chain management.

1. Materials Logistics Management

You’re probably going to need physical goods to create the products that your customers demand. Materials logistics management (MLM) takes care of everything from planning, sourcing, procuring, building and distributing of materials with the help of 3PL partners.

Bringing in a 3PL partner isn’t absolutely necessary, but they often have connections and partnerships with other companies that can help them cut costs.

2. Transaction Cost Analysis

This method may come off sounding complicated, but the short version is that this helps supply chains ensure that their supplies were bought at a low price and their final products are sold high. By accessing historical data, TCA can determine when to purchase goods at the lowest prices to prepare for an upcoming influx in demand.

Basically, transaction cost analysis leverages market data to determine when products should be purchased to properly stock up at low cost before selling off when demand reaches its zenith.

3. Material Requirements Planning

Holding onto unnecessary components or goods can get expensive quickly, especially if your business has multiple warehouses in the mix. Material requirements planning ( MRP) discovers the minimum amount of required inventory needed to keep up production without taking up excess space.

This type of planning takes independent and dependent demand into account as well, or more simply, the demand for finished goods or component parts. Cutting down on warehouse space is a great way to reduce the costs of keeping your supply chain running smoothly.

Here are a few more methods:

  • Network Perspectives: Supply chains succeed with the help of third-party partnerships. By utilizing current network connections, this method identifies potential networking opportunities the business hasn’t capitalized on yet.
  • Total Quality Management: If your supply chain has multiple underperforming areas, total quality management can help you straighten them out. If end-to-end optimization is your goal, TQM identifies flagging areas for managers to strengthen.
  • Requirements Chain Management: Countless supply chains rely on the expertise of 3PL partners to properly deploy and manage their supply chains. This method has your business and your 3PL partner sit down to hammer out the specific requirements of your supply chain.
  • Customer Relations Management: 3PL partners can leverage customer data to better position your supply chain to attract new customers and retain return clients. Good customer service optics are invaluable and can give you the edge over a competitor.
  • Channel Coordination: The companies that manage supply chains for multiple businesses require regular coordination. Channel coordination realigns channels to meet the demands and objectives of numerous customers, reducing overall costs and saving time. It is mostly used for inventory management and ordering.
  • Theory of Constraints: If a constraint is limiting supply potential or production potential, the theory of constraints can provide an appropriate solution to mitigate the detected constraint. 3PL partners can implement its best practices to resolve their issues.
  • Supply Chain Roadmap: This method maps out your entire system through in-depth research and analysis. It takes multiple variables into account and helps determine how your supply chain should run from the very beginning. It mostly emphasizes alignment, managing risk, value addition and metrics.

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Now You Know the Tools and Strategies, so What’s Next?

Think about how these supply chain management tools could empower your operations in the digital age. If what you’re imagining is where you’d like to see your company in the near future, it’s high time you invested in a solution. In order to select a system with the tools your business needs most, you’ll have to create a list of requirements.

If you need help getting started, be sure to check out our supply chain management requirements template. Use it to create a checklist of features you can send to stakeholders for feedback. Careful consideration of your business needs among all parties will ensure you get the right tools to support your operations.

What supply chain management tools are most critical to your business operations? Are there any related techniques you can’t perform without these tools? Let us know by leaving a comment below!

Pooja Verma13 Essential Types of Supply Chain Management Tools

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Join the conversation
  • RANJANI KUMARI - September 10, 2018 reply

    Please give few information regarding “SCM Trends, Technologies,Talents , Tools and Techniques for 2020’s”

    Kim O'Shaughnessy - November 8, 2018 reply

    Hi Ranjani! We just posted our SCM Trends of 2019 article to our blog. You can find it here: https://selecthub.com/supply-chain-management/supply-chain-management-future-trends/

    Craig - November 29, 2018 reply

    I also think its important to network in supply chain management so you may stay on top the latest trends such as Council of Supply Chain Management Professionals

  • Arpita - January 7, 2019 reply

    Great checklist shared. Mobile Device Management Solution can be added to this, as one of the important tools to manage and secure mobile devices deployed by supply chain management enterprises.

  • Naveen - April 18, 2019 reply

    There is one more known leader in Supply Chain Management Software called Harrington Group. Maybe do a review on them.

    Hunter Lowe - April 18, 2019 reply

    Thank you for the response! We’ll pass your suggestion on to our research team for an in-depth review!

  • Harrison Graham - April 29, 2019 reply

    I work for a large domestic brewery, and we utilize cold chain. We currently determine whether we ship dry vs. reefer based on a temp model, but I was looking for suggestions regarding software specializing in cold chain in order to utilize more dry shipments to drive freight costs down. Thank you in advance for any suggestions!

    Hunter Lowe - April 29, 2019 reply

    Thanks for the reply, Harrison! Our Community Managers can help guide you to a solution that should fit your requirements. You can contact them via email here – [email protected] or by phone here – 877.692.2896

  • Nick - June 17, 2019 reply

    Nice article on supply chain technology tools. Found an interesting article on reducing chargebacks in this blog.

  • Amit - October 4, 2019 reply

    Nice article. Thanks for sharing.

    Hunter Lowe - October 4, 2019 reply

    Happy you liked the post, Amit! Thanks for the reply!

  • Tanko ABUDU - October 25, 2019 reply

    Great piece of knowledge.
    I’m still a student and hopefully to join the working group soon

    Hunter Lowe - October 25, 2019 reply

    I’m glad you enjoyed the article, thanks for reading!

  • Madhumita Samanta - February 6, 2020 reply

    Happen to get the article today, very useful and got the new knowledge and refreshed the old ones. Thank you for sharing.

    Hunter Lowe - February 10, 2020 reply

    Thanks, Madhumita!
    I’m glad you enjoyed the post, thank you for the comment!

  • Axidio - April 13, 2020 reply

    Good Article! It is worth reading.

    Hunter Lowe - April 20, 2020 reply

    Thanks for the comment! Glad the article was helpful!

  • Kristofer Van Wagner - July 29, 2020 reply

    My dad is looking for industrial item suppliers. I will inform my dad to look for a supplier who uses technology to keep track of their items. It makes sense to do so as it ensures everything is organized.
    https://www.clpressercompany.com/

  • Canix - September 9, 2020 reply

    I appreciate your skills and style in elaborating on the topic. It bound the reader for long. I have liked everything that I have read in the article so far. Nice content.
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    Hunter Lowe - September 9, 2020 reply

    Thanks for the reply, happy the article was informative!

  • Md.Mahmudur Rahman - September 11, 2020 reply

    Dear Pooja Madam
    Peace be upon you.
    Really excellent . Very clear informative article.
    Thanks

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