A supply management system is a shared IT tool used to track material orders and their locations in a network of companies. It’s commonly used in manufacturing, such as the automotive industry, and is essential for planning production levels and just-in-time delivery arrangements. The system is updated with real-time information and can be updated through file upload or integrated internet-based software. Effective implementation and maintenance are a joint responsibility between trading partners and the primary company.
A supply management system is a shared IT tool used to track all material orders and their locations. Also known as a supply chain management system (SCMS), this system is actually a network of companies that share information related to their aspect of the product manufacturing cycle. The most common place to find a supply management system is in the manufacturing sector.
A commonly cited example of a supply management system is the automotive industry. It is common practice for a large company to subcontract vehicle-specific parts or modules to independent companies. Every company is equipped with the technology needed to participate in the supply management system. This system is updated with stock levels, work in progress, finished goods and goods in transit. This information is only available to other companies affected by the form created by the other companies.
Access to this real-time information is essential for planning production levels, staffing and just-in-time delivery arrangements. Overall coordination is the responsibility of the automotive manufacturing company. These companies typically have a staff department dedicated to supply management. If a part is not available for installation, the entire production line must stop. This is very expensive, both in terms of staff time and dollar costs.
The effective implementation and maintenance of the supply management system is a joint responsibility, shared between the trading partners and the primary company. Supply contracts are often negotiated with incentives for performance, minimized downtime and maintaining ideal inventory levels. It is in both parties’ interest to ensure that the system is up to date and accurate.
There are several methods used to update this type of system. The most common method is file upload. The supplier produces a flat file from the inventory management system and provides the relevant information to the customer on a daily basis. The customer must have a method to pick up the file and update the supply management system. This process is usually automated, to avoid unnecessary delays and reduce the chances of error.
Other industries use integrated Internet-based software. The software is installed in each vendor’s organization and can usually be integrated with existing inventory management systems. Programs are written or used to automatically populate customer software with pertinent information. Access is based on each company’s role in the production process. This method allows all suppliers and the customer to check a system for the current status of a variety of parts.
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