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Supply chain software 101

In this expert tip, learn about the history of supply chain software and how it's evolved.

The first systems identified as supply chain software emerged in the 1990s from the developers of so-called advanced planning systems (APS). Initial products from this group of developers focused on plant-floor scheduling systems using finite scheduling logic, wherein production schedules were adjusted by the software to avoid overloading machines and work centers. Prior to this time, computers and software simply didn't have the horsepower to tackle this challenge successfully.

David TurbideDavid Turbide

In the early 1990s, workstation computers -- and, later, high-end Windows servers -- became fast enough and software calculation engines powerful enough to handle sophisticated math, rules-based logic, heuristics, optimization and other advanced techniques. After conquering the challenges of plant floor finite scheduling, the developers widened their horizons to simultaneous material and resource planning for the plant and, eventually, the tradeoffs of supply-demand logistics -- sources, transportation alternatives, lot sizes and lead times, warehouses, and more. This was in contrast to the traditional material requirements planning, or MRP, approach of planning material first, then checking resource availability with capacity requirements planning, or CRP.

Modern supply chain software

Today, we think of supply chain systems as software to plan and manage the logistics of supply. Many variations are available, from comprehensive and broad suites to the deep functionality of best-of-breed point solutions. Planning systems focus on sales and operations planning, or S&OP, demand management, inventory, and transportation or logistics planning. Execution systems address warehouse management and transportation management. Additionally, there are systems and facilities that focus on visibility and what's known as supply chain event management (SCEM) -- automated management systems that monitor activities and either revise certain plans and information or alert responsible functions when certain events occur.

The American Production and Inventory Control Society (APICS) uses the term APS to identify supply chain systems whose job is primarily one of coordinating among plants and warehouses. Warehouse management, transportation management and SCEM are included as additional supply chain technologies.

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Recently, the term control tower has been used to describe the central monitoring and control of the supply chain through integrated visibility, monitoring and management systems. It remains to be seen whether this term will gain acceptance and become a defining concept for the evolution of supply chain software. The term does serve as a reminder that all of these systems are focused on providing a platform for managing a vast, distributed network of facilities, inventory, people and equipment that must be coordinated, monitored and controlled to deliver the right products and materials to the right places, in the right quantities and at the right time to satisfy the needs of customers, distributors and manufacturers. It's a big job and far too complex to plan and manage without all this technology.

Supply chain software's continued evolution

Supply chain software is approaching 20 years of existence, but is continuing to evolve in what has become an active and competitive market. As global business evolves, the need for efficient and agile supply chains becomes more of a necessity than ever before. A growing recognition of supply chain risk has added another layer of complexity to supply chain plans and execution. Supply chain software developers are leveraging location-based services such as the Global Positioning System, auto-ID technologies such as radio frequency identification, the ubiquitous communications capabilities of cloud computing cell technology and the Internet of Things -- the proliferation of connected devices -- to expand the range of visibility and control that supply chain managers need.

The good news is that these technologies are available and will continue to get better as the need and the underlying technologies grow. The bad news: Whatever you implement today is likely to be rapidly overshadowed by new and far more capable systems before you know it. This, of course, is driven by the realities of business. Companies and supply chains are continually looking for ways to be faster, more agile and more reliable while reducing costs, inventory and lead times. Supply chain systems are an enabler that supports that fleeting, but oh-so-important competitive edge.

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