Trends in Supply Chain Technology: How SMEs Can Change the Future of Supply Chain Management Through Software Innovation

By Dan Jeppson
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  Understanding and solving supply chain management issues is one of the most difficult (and important) issues faced by many small to medium-sized enterprises (SMEs). The struggle comes from competing based on customer’s special, competing with internationally sourced companies, and problems that come from supply chain availability issues. Traditional manual methods and outdated software (like older ERP systems or more basic small business tools such as QuickBooks or Excel) often fall short in addressing these modern issues. Modern cloud technology and flexible ERP solutions (like Acumatica) allow SMEs to proactively streamline supply chain management issues.

  ”Supply Chain” simply means anything that affects the ability of your business to get your goods or services into use by your end customer.  The supply chain typically describes interface points with businesses or individuals outside of your organization.  Supply chain management includes tools and concepts that are useful for optimizing the flow of revenue-producing activity and reducing costs.  Some of the most common parts of a supply chain management strategy or system include:

1. Demand Forecasting:

• Accuracy: Understanding customers’ future buying behavior will drive many business functional decisions (purchasing, hiring, scheduling, etc.).
• Data: Precise forecasting requires comprehensive data–without modern tools or an IT wizard, it is difficult for the average small business to compete effectively.

2. Inventory Management:

• Balancing Inventory: Holding inventory is expensive, and it is also expensive to not have enough to meet customer or manufacturing demand.  Too much is bad, and so is too little.
• Storage and Warehousing Costs: Regardless of the warehousing philosophy (self-managed or 3PL), storage management can become a bloated cost.

3. Supplier Reliability:

• Dependence on Few Suppliers: When SMEs rely heavily on a small number of suppliers they become vulnerable to disruptions in vendor business cycles.
• Supplier Quality: Since customers’ product quality is a byproduct of suppliers’ product quality, vendor variations and problems can quickly become customers problems.

4. Logistical Complexities:

• Shipping Costs: Especially for complex shipping scenarios (like international importing), high (and hidden) transportation and delivery costs effectively reduce profitability of individual product lines and overall margins.
• Transportation Reliability: Delays and inefficiencies in transportation can lead to missed deadlines, which means dissatisfied customers and frustrated customer service employees.  These less cost-oriented variables are often more damaging than short-term financial losses.

5. Cost Management:

• Operational Costs: Understanding COGS (Cost of Goods Sold) is crucial to be able to effectively (and profitably) compete.  Customer pricing based on bad COGS information can mean sabotaged sales opportunities or (worse) unprofitable product lines.
• Technology Investment: The cost of adopting new technologies for supply chain management can be prohibitive for SMEs–especially with the wrong technology, implementation team, or strategy.

6. Integration of Systems:

• Disparate Systems: SMEs often use multiple (often manual) systems for tracking different business functions (examples include finance, inventory and warehouse management, and customer service/order processing), leading to inefficiencies and data/operation silos.
• Technology Adaptation: Integrating new systems with existing ones is usually challenging and resource-intensive. Internal knowledge is often insufficient to effectively implement new solutions without assistance.

7. Supply Chain Visibility:

• Lack of Transparency: Limited visibility into the supply chain operations outside of the organization (vendors, customers, shipping carriers, etc.) makes it difficult to identify and address issues promptly.
• Real-Time Information: Accessing real-time data for better decision-making is often a struggle for SMEs because the internal systems are inefficient, but also because the internal tools don’t effectively communicate with entities outside (vendors, customers, shipping carriers, etc.).

8. Compliance and Regulations:

• Regulatory Changes: For international shipments, Hazmat, SDS, taxation, or other industry-specific regulatory situations, change management without proper systems creates headaches.
• Documentation: Regulatory requirements usually require specific technical documentation. Older technologies often struggle to automate these needs and can cause issues with local and federal governments entities.

9. Customer Expectations:

• Rising Expectations: Modern IT tools have created a competitive environment–customers expect faster delivery times and higher levels of service because of this competition. Modern customers expect high-tech and soft-touch experiences when ordering and receiving products.
• Customization: Meeting the demand for customized products and services adds another layer of complexity to supply chain management. Manual processing makes this difficult to scale for most businesses.

1. Complexity in Demand Forecasting:

  Predicting customer demand accurately is crucial. To avoid increased costs or lost sales, SMEs need to balance inventory levels to avoid BOTH overstocking AND stockout situations.

2. Global Supply Chain Disruptions:

  Small disruptions in the shipping or commodity supply networks can cause immediate chaos.  Any natural disaster, political instability, or a pandemic can have unpredictable effects on raw material availability or shipping carrier costs. Without tools and systems in place to understand ALL the effective variables in play in any given situation, it is very difficult for purchasers and demand planners to make good decisions.

3. Integration Issues:

  Separate systems are normal for small businesses, especially when using simplified accounting systems (like QuickBooks) as a hub.  Many external vendor, ecommerce, payment portals, and other systems end up being islands of information that become reaction sources that only get attention when it is demanded.

4. Cost Management:

  SMEs are particularly sensitive to customer moods and vendor price fluctuations. Profitability (competitive pricing) and sales are often sensitive areas that rely on accurate costs to make the best decisions. Older (and basic) ERP tools to understand all the necessary data often do not exist for SMEs.

5. Visibility and Transparency:

  Communication with and visibility into customer, vendor, and logistics partners (shippers/carriers) is frustrating without modern tools. Competition is fierce, and companies are scrambling to automate these areas–the internet is facilitating most of this. SMEs that aren’t adopting the latest technologies will fall behind.

1. Real-Time Data and Analytics

  Modern cloud-based ERP softwares attempt to provide SMEs with real-time data and advanced analytics–Dashboards, KPI’s, and Action Lists have become effective and popular tools for operations to have visibility into transactional and planning states of the business. These kinds of tools enable businesses to visualize supply chain variables more accurately and make better data-driven decisions. Real-time visibility into inventory levels, sales trends, and supply chain performance helps companies stay agile and responsive to market changes.

2. Scalability and Flexibility

  Unlike traditional ERP systems that can be rigid and costly to upgrade (especially with on-premise implementations), cloud-based systems like Acumatica offer scalable solutions that can work for any stage of businesses. This allows SMEs to grow and adapt their supply chain operations without significant disruptions or investments in new software.

3. Enhanced Integration

  Most integration partners using Internet technologies have built API touchpoints that allow seamlessly integrations with other business applications. These include e-commerce platforms, CRM systems, EDI, and even integrations with Microsoft Office. These integrations reduces manual data entry (increased efficiency), minimizes errors (reduced costs and increased customer happiness), and creates a unified view of the business.

4. Cost Efficiency

  Cloud ERP solutions (like Acumatica) are typically more cost-effective than traditional on-premise systems–for software licenses, hardware costs, and IT support costs. With the right subscription-based model and user licensing paradigm, businesses can avoid large upfront and growth costs. This makes advanced ERP capabilities accessible to SMEs with limited budgets.  (And as the business grows, the software can grow with it.)

5. Improved Visibility and Transparency

  One of the standout features a modern ERP system (like Acumatica) should have is its ability to provide full visibility across the entire supply chain. This will include using machine learning (AI and rules engines) to generate real-time dashboards and customizable reports to offer insights into every aspect of the supply chain. This customizable/trainable transparency enables businesses to compete and strategically do business better.

  It’s taken a few years for Cloud Computing to become “normal”.  There are lots of reasons for this, but resistance to changes in pricing models (subscription vs purchase/maintenance) and technology rollout (on-premise software vs cloud/distributed), and security concerns fuel the resistance to change.  Cloud computing has seen its resistance fading in recent years.

  Increased efficiency, better decision-making, enhanced flexibility, and significant cost savings are the main drivers for transitioning from outdated ERP systems or basic accounting tools like QuickBooks to a modern cloud-based solution (like Acumatica).