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The product flow includes the movement of goods from a supplier
to a customer, as well as any customer returns or service needs.
The information flow involves transmitting orders and updating
the status of delivery. The financial flow consists of credit
terms, payment schedules, and consignment and title ownership
arrangements.
There are two main types of SCM software: planning applications
and execution applications. Planning applications use advanced
algorithms to determine the best way to fill an order. Execution
applications
track
the physical status of goods, the management of
materials, and financial information involving all
parties.
Some SCM applications are based on open data models that support
the sharing of data both inside and outside the enterprise (this
is called the extended enterprise, and includes key suppliers,
manufacturers, and end customers of a specific company). This
shared data may reside in diverse database systems, or data
warehouses, at several different sites and companies.
By sharing this data "upstream" (with a company's suppliers) and
"downstream" (with a company's clients), SCM applications have
the potential to improve the time-to-market of products, reduce
costs, and allow all parties in the supply chain to better
manage current resources and plan for future needs.
Increasing numbers of companies are turning to Web sites and
Web-based applications as part of the SCM solution. A number of
major Web sites offer e-procurement marketplaces where
manufacturers can trade and even make auction bids with
suppliers.
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