4 Top Supply Chain Software Solutions for Small Business Owners

Supply chain Issues affecting small business owners

Supply chains exist to facilitate the movement of products from a starting point to the ending point. For most companies in 2022, the pandemic and inflation rates have created disruptions across their entire supply chain, creating significant negative impacts on their business.

While large corporations mitigate supply chain issues by purchasing cargo ships and monopolizing ports, small businesses are left to find other ways to navigate the supply chain in 2022.

According to a survey by CNBC in late 2021, 58% of small business owners have reported supply chain disruptions and 75% experienced inflated costs due to supply chain disruption.

While the crisis in the economy and supply chain disruptions will not likely be resolved in the near future, small business owners can continue to achieve growth and profitability by utilizing supply chain management solutions.

Supply chain solutions for small businesses

What is SCM software?

Supply chain management (SCM) software allows businesses to monitor and enhance the internal supply chain processes that are required to meet the demands of consumers. SCM software helps businesses with the design, development, and delivery of goods and services.

Supply chain software solutions also help businesses advertise to new customers, communicate with existing customers, and achieve a competitive advantage in their industry.

The functions that businesses commonly outsource make up the five functions of SCM.

Purchasing is the first function and includes procuring resources, including raw materials, that are required to manufacture goods.

The second function of supply chain management is operations, which includes planning and forecasting, inventory management, production, and shipping.

Logistics describes the function that coordinates the storage and transportation of goods, ensuring that products arrive without disruption.

Resource management is the function of SCM where resources, including people, are allocated to execute orders.

The function that occurs next in SCM, is information workflows, where data and information relating to logistics are exchanged between internal and external partners.

SCM software efficiently facilitates all or some of the five functions of the supply chain for businesses.

What are the benefits of SCM?

SCM software helps small business owners operate while maximizing productivity. Benefits of SCM include cost savings, improved distribution, and better information flow.

Cost savings

SCM provides small business owners with the tools to identify and reduce costs by analyzing supply chain processes to find errors or inefficiencies.

Having a clear picture of what isn’t working allows the business to improve those processes and save money in the future. SCM tools can also enable businesses to reduce overhead costs with better expense management.

SCM software manages raw materials and inventory and allows business leaders to reduce those that are negatively impacting profits. Profits are increased when unnecessary inventory is eliminated, or specific materials are transitioned to “on-demand” supplies.

Improved distribution

SCM software also helps small business owners improve the distribution process of their products. The software can give real-time insight into the availability of supplies and shippers, improving distribution efficiency from providers to consumers.

A comprehensive analysis of which products are readily available allows business owners to minimize the potential of unexpectedly running out of materials or products.

SCM also contributes to that efficiency by bringing attention to areas that consistently cause delays from distribution centers, allowing product deliveries to be on-time.

Better information flow

Supplier management and customer interaction are necessary to increase sales, and a good supply chain management software can create real-time communication between you and your vendors and customers. This can increase sales by reducing missed opportunities and satisfying customers.

SCM software can also be used by customers so that they can instantly access information about their pending orders and shipments. And you can securely store your customers’ contact information on most platforms, minimizing the risk of a security breach.

What are the types of SCM software?

There are many different types of SCM software, including packages that have multiple functions, and programs that focus on just one aspect of a comprehensive supply chain.

Understanding the different types of supply chain management software is the first step for business owners in deciding which kind is right for their small business.

Order processing platforms

Efficiently processing orders is at the core of successful product fulfillment. Order processing software saves time by automating sales order processing, order fulfillment, and customer billing. Comprehensive order processing software reduces errors, increases the visibility of orders, and manages product returns while eliminating the use of manual purchase orders and invoicing. Ultimately, these solutions allow businesses to digitize the entire order process.

Inventory management

The best SCM software solutions include inventory management and give small businesses the tools to streamline production processes with forecasting, planning, warehousing, and scheduling tools. By analyzing your projected supply chain demand, it can help you mitigate disruptions in the supply chain.

Shipment optimization

In general, SCM software allows businesses to track shipments worldwide across multiple types of carriers. The more advanced shipping optimization tools provide operators with real-time updates throughout the entire shipping process to enhance risk management. Customized software can be implemented depending on visibility needs and shipping distances.

Choosing the right SCM for small business

Supply chain management software is intended to maximize efficiency, but implementing the right software for a business requires planning and research. There are great resources available online for business owners interested in learning more about how SCM tools affect their company, like those offered by the Association for Supply Chain Management (ASCM).

Some small business owners are able to meet SCM needs with a single enterprise resource planning (ERP) system, and others find cost-effective solutions with specialized SCM tools.

Small business owners can expedite the decision-making process when shopping for the right SCM software by examining the individual business needs of their company.

Supply chain planning tools target customers with different capacities and scheduling needs. Identifying critical features in SCM software begins by outlining the scope of your business, your target market or customer, project management needs, and the operations of industry competitors.

You may also want to look for areas that could be improved in your business, like sustainability, communication, or profit, to help you choose software that can shore up your weaknesses.

What is the cost of SCM software?

The cost to implement a supply chain software solution varies depending on the software selected and the needs of your business.

Business owners face important decisions when it comes to financials and knowing when it’s time to invest additional capital. When calculating the cost of SCM software, small business owners need to factor in the return on investment as well as some of the following contributors:

Will the software help the organization meet growth projection goals?
Can the SCM help reduce costs of storing raw materials?
Which business processes require more attention?
Will the software increase sales and enable the business to improve customer retention rates?

Evaluating the needs of your business and the cost of SCM software leaves many small business owners in the position to consider external financing options. Upgrading current SCM or ERP systems, or rolling out entirely new software platforms can be achieved through a number of different financing options, including a business line of credit or term loan.

Bottom Line

Supply chain issues are impacting small business owners worldwide. While resulting disruptions and delays may not be avoidable, there are steps business owners can take to minimize negative impacts on their companies. Utilizing SCM software is a great start for small businesses that wish to maximize efficiency with demand forecasting, warehouse management, and real-time visibility.