Applications  Supply Chain Management 

Supply Chain Management—Overview

The history of SCM

Industry 4.0 and SCM
Today’s SCM is all about the customer
Supply chains and their need for agility
SCM and the cloud
Traceability, repudiation, and trust with blockchain
The future of SCM

What is SCM (Supply Chain Management)?

At the most fundamental level, supply chain management (SCM) is management of the flow of goods,
data, and finances related to a product or service, from the procurement of raw materials to the
delivery of the product at its final destination.

Although many people equate the supply chain with logistics, logistics is actually just one component
of the supply chain. Today’s digitally based SCM systems include material handling and software for all
parties involved in product or service creation, order fulfillment, and information tracking―such as
suppliers, manufacturers, wholesalers, transportation and logistics providers, and retailers.

Supply chain activities span procurement, product lifecycle management, supply chain planning
(including inventory planning and the maintenance of enterprise assets and production lines), logistics
(including transportation and fleet management), and order management. SCM can also extend to the
activities around global trade, such as the management of global suppliers and multinational
production processes.

Learn more about the best supply chain management software

The history of SCM

Supply chains have existed since ancient times, beginning with the very first product or service created
and sold. With the advent of industrialization, SCM became more sophisticated, allowing companies to
do a more efficient job of producing and delivering goods and services. For example, Henry Ford’s
standardization of automobile parts was a game-changer that allowed for the mass production of
goods to meet the demands of a growing customer base. Over time, incremental changes (such as the
invention of computers) have brought additional levels of sophistication to SCM systems. However, for
generations, SCM essentially remained a linear, siloed function that was managed by supply chain
specialists.

The internet, technology innovation, and the explosion of the demand-driven global economy has
changed all that. Today’s supply chain is no longer a linear entity. Rather, it’s a complex collection of
disparate networks that can be accessed 24 hours a day. At the center of these networks are
consumers expecting their orders to be fulfilled―when they want them, the way they want them.

We now live in a time of unprecedented

global business and trade, not to mention
continual technology innovation and rapidly
changing customer expectations. Today’s
best supply chain strategies call for a
demand-driven operating model that can
successfully bring people, processes, and
technology together around integrated
capabilities to deliver goods and services
with extraordinary speed and accuracy.
What is SCM (Supply Chain Management) Software? (1:47)

Though SCM has always been an enterprise

fundamental, the supply chain today is more vital than ever as a marker for business success.
Companies that can effectively manage their supply chain to adapt to today’s volatile and ever-
changing, technology-driven business environment are the ones that will survive and thrive.

Industry 4.0 and SCM

Today’s application of radical new technologies to manufacturing has been dubbed Industry 4.0, or the
“fourth industrial revolution.” In this latest iteration of industrialization, technologies such as AI,
machine learning, the Internet of Things, automation, and sensors are transforming the way
companies manufacture, maintain, and distribute new products and services. It can be said that
Industry 4.0 is built on the supply chain.

In Industry 4.0, the way enterprises apply technology to the supply chain is fundamentally different
from how they applied it in the past. For example, within the maintenance function, enterprises would
typically wait until a machine malfunctioned to fix it. Smart technology has changed that. We can now
predict failure before it happens, and then take steps to prevent it so that the supply chain can
continue uninterrupted. Today’s SCM is about using technology to make the supply chain―and the
enterprise―smarter.

Industry 4.0 SCM also provides a significant advantage over traditional SCM because it enables aligned
planning and execution while at the same time delivering substantial cost savings. For instance,
companies that operate under a “plan-to-produce” model—in which product production is linked as
closely as possible to customer demand—must create an accurate forecast. That involves juggling
numerous inputs to ensure that what is produced will meet market demand without exceeding it,
avoiding costly overstocks. Intelligent SCM solutions can help you meet customer demand and
financial objectives at the same time.

Intelligent SCM has other advantages, too. For instance, it can free up supply chain employees to
contribute to the business in ways that add more value. Better SCM systems that automate mundane
tasks can equip supply chain professionals with the tools they need to successfully deliver the
products and services the supply chain is designed around.

Today’s SCM is all about the customer

SCM has historically been about increasing efficiency and reducing costs. Although those needs
haven’t changed, what has changed is that the customer is now playing a front-and-center role in
setting SCM priorities. It’s been said that “customer experiences live and die in the supply chain.”

Customer loyalty is predicated on an enterprise being able to quickly and accurately fulfill customer
expectations. Raw materials, manufacturing, logistics, and trade and order management must all be
coordinated to get a given item to the customer within a reasonable timeframe. To accomplish this,
companies must look at their supply chains through their customers’ eyes. It’s not simply about getting
the order to the customer on time; it’s about doing everything at the right time—before, during, and
after order delivery.

Read the COO solutions for operations brochure (PDF)

Supply chains and their need for agility

Today’s supply chain is broad, deep, and continually evolving, which means that it must be agile to be
effective. In the past, supply chains met enterprise and customer needs through a beginning-to-end
model that was largely unaffected by change. Consumers now have multiple choices in how they
purchase products—in stores, online, and more. They’ve also come to expect increasing levels of
customization. An agile supply chain can deliver on those expectations.

Not only that, supply chain sourcing has become very fluid. For example, geopolitical and economic
developments can substantially impact the manufacturing supply chain. If a manufacturer needs
aluminum and can’t get it from one supplier due to a trade policy, that manufacturer must be able to
quickly pivot to source the aluminum elsewhere. The ability to rapidly reconfigure your supply chain is
essential to successfully addressing this type of scenario. Agility is crucial to achieving these types of
real-time reconfigurations.

Challenges in the supply chain extend beyond efficiency and cost management issues. Changing
circumstances can impact regulatory compliance as well. Your SCM system must be flexible enough to
mitigate all the impacts that are generated by changes in the supply chain, including changing and
varied regulatory requirements. An intelligent SCM system can help you be more efficient and reduce
costs while remaining compliant with a variety of ever-changing legal mandates.

Learn about intelligently automated, end-to-end processes for your global supply chain

SCM and the cloud

With today’s SCM parameters, the cloud is a natural ally, in part because cloud-based applications are
inherently more flexible and adaptable to change. It’s very difficult to adjust on-premises and custom-
coded applications in response to the fluctuating circumstances that regularly occur in today’s
enterprise environment, such as an unexpected sourcing issue. Cloud solutions are also inherently
architected to make better use of the technologies that are becoming pervasive in the Industry 4.0
model. Retrofitting your environment so these technologies can function on legacy applications is
both complicated and expensive.

Another significant benefit of integrating the cloud into your SCM system is that you can adopt
elements of cloud-based SCM depending on your specific business needs, without undertaking a full-
scale migration. Many companies find themselves with a short-term need to rationalize their move to
the cloud. The best SCM systems help you extract more value from your current assets and customize
your cloud integration to suit your SCM needs, both now and into the future.

Supply chain and manufacturing applications in the cloud (2:01)

Traceability, repudiation, and trust with blockchain

You need to know what’s taking place in every aspect of your supply chain at all times. Intelligent SCM
solutions give you that capability. When you’re considering SCM solutions, look for a system that uses
blockchain to make visibility and insight easy for you by building those capabilities right into the SCM
processes. This ensures traceability, repudiation, and trust throughout your supply network.

The food industry in particular stands to benefit greatly from this type of SCM. For example, it’s been
instrumental in helping LiDestri Food and Drink manage a very complex supply chain for increased
visibility, more accurate forecasting, and greater profitability while building deeper trust between the
company and its customers.

Today’s leading-edge SCM systems are end-to-end product suites that help businesses manage and
optimize their supply chains as one complete ecosystem. Because they are fully integrated cloud
technologies, these systems enable 100% visibility across the supply chain and scale up or down to
react to market reality. With a modern, demand-driven supply chain, you can meet the challenges of
increased customer expectations, shorter product lifecycles, and fluctuating demand.
 Learn more about blockchain applications

The future of SCM

The supply chain of the future is all about responsiveness and the customer experience― understood
and managed within a network rather than a linear model. Every node of the network must be attuned
and flexible to the needs of the consumer while also being capable of addressing factors such as
sourcing, trade policies, modes of shipment, and more.

Advanced technology will increasingly be used to improve transparency and visibility throughout this
network, as well as to further enable connectivity and SCM utilization. The entire SCM planning
function will become more intelligent to take consumer demands into account. The ability to adapt will
be a mandate.

In the past, supply chain planning has been a periodic business exercise. Heading into the future, it will
be continuous. Future SCM systems will also bring tighter alignment between planning and execution,
which is not a current state for most enterprises. The need for speed and accuracy in SCM is only
going to increase. Make sure your supply chain is ready for the future by supporting it with an
intelligent SCM system.

Addressing tomorrow’s supply chain needs today

From procurement, product lifecycle management, and supply chain planning to
logistics and order management, Oracle’s intelligent, cloud-based SCM solutions can
help you stay on the leading edge.

Request an SCM demo

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