Describe supply chain management capabilities and features
Supply chain management (SCM) is an integral part of any product-based business. SCM allows you to plan, control, and execute the flow of goods and services and encompasses everything from product development to production and sales.
Supply Chain Management uses a well-organized modular approach to support and coordinate these activities. Supply Chain Management includes the following features:
Asset management
Asset management is an advanced module for managing assets and maintenance jobs in Supply Chain Management. Asset management integrates seamlessly with modules in other finance and operations apps. Asset management enables you to efficiently manage and service many types of equipment, such as machines, production equipment, and vehicles. Asset management supports solutions across numerous industries.
For example, suppose that you're a factory supervisor responsible for planning, optimizing, executing, and tracking the maintenance activity of the machinery. You need to ensure that the machinery is operational with minimal downtime. The Asset management module of Supply Chain Management provides different models of asset management, as follows:
In reactive maintenance, the repair work order is initiated when a request or complaint is prompted because of an unexpected malfunction.
Preventive maintenance is a discipline involving planned maintenance jobs, for example, regular service, calibration, and inspections. You can create maintenance plans and set them up for assets and functional locations to configure preventive maintenance. Preventive maintenance has two categories, Fixed and Predictive, as depicted in the following maintenance model diagram.
Scheduled maintenance: Scheduled maintenance is preventive maintenance, where scheduled calendar entries are generated for maintenance of assets based on the maintenance plans, regardless of the condition of the assets.
Condition-based maintenance: In condition-based maintenance, the health of an asset is continuously monitored based on different parameters to assess the maintenance need. The maintenance is performed to ensure a health-check before a problem occurs.
Cognitive maintenance: In cognitive maintenance, actions may be taken autonomously to ensure maximum utilization and efficiency of the asset. It's possible to automatically schedule the maintenance based on operational health and logistics.
Cost management
Cost management lets you work with the valuation and accounting of raw materials, semi-finished goods, finished goods, and work-in-progress assets. It's the process of defining, managing, and reporting inventory accounting and manufacturing accounting.
In Supply Chain Management, you can define cost policies in different areas like predetermined cost and indirect cost. This capability helps to achieve integration with general ledger. The cost management module enables you to create different cost objects, like standard cost and planned cost. These cost objects along with item sales or purchase price comprise the cost of a product. If manufacturing, raw material cost and resource cost are also rolled up into the product cost in the standard calculation.
Let us consider that you work in the accounts department of a manufacturing company. You need to analyze the cost and valuation of a product. To calculate the cost of the finished good, you need to consider the cost roll-up of all the production elements and deduce the final cost of the product. You need to do the inventory valuation based on the costing methods, such as standard, first in, first out (FIFO), last in, first out (LIFO), and weighted average. The Cost management module of Supply Chain Management helps you configure all these functionalities. You can access Inventory accounting and Manufacturing accounting from the Cost administration and Cost analysis workspaces. These workspaces provide a comprehensive overview of the status, key performance indicators (KPIs), and detection of deviation. The Power BI content for cost management provides managerial insight into inventory and work-in-progress (WIP) inventory and how cost flows through them by category over time.
To learn more about costing methods, you can refer to the “Explore costing methods” unit in the “Explore warehouse and inventory capabilities” module.
Inventory management
Inventory management performs tasks to manage the movement of the inventory, which includes:
Inbound operations
Outbound operations
Quality assurance
Inventory activities
Inventory control
The preceding inventory operations involve the following detailed inventory processes:
Inbound operations have a process named item arrival overview. This process provides an overview of all expected incoming items.
The major transaction of outbound operations is the output order, which comprises several subprocesses including outbound process, reserve inventory quantities, and reserve the same batch for a sales order. Output orders are used to link sales order lines and transfer order lines with the outbound picking processes that use picking lists. Outbound operations also involve inventory reservation, which can be automatic or batch centric. The reserved inventory can't be withdrawn from the warehouse for other existing orders.
Quality management processes help guarantee a high level of product quality in your supply chain. These processes also help optimize supply chain processes and increase customer satisfaction. Quality management can help you manage turnaround times when you're dealing with nonconforming products, regardless of point of origin of those products. Quality management processes have subprocesses like enable quality management, nonconformance management, quarantine order, and inventory blocking.
Inventory activities comprise different inventory journals for transfer, movement, counting, and adjustments. They consist of inventory location, status, and stock availability. Inventory activities cover consignment replenishment, item and raw material tracing in the production environment, and managing tracking dimensions.
Inventory controls mostly cover processes like inventory adjustments and close. These controls give us the option to recalculate the inventory. Inventory controls include processes like cost structure and price calculation definitions.
Suppose that you manage the inventory of a manufacturing unit. You receive goods from vendors, ship finished products to customers, ensure the quality of inbound items, transfer items between warehouses, and ensure the control of inventory items. You can use the processes of the Inventory management module to perform these activities.
Sensor data intelligence
Sensor data intelligence enables organizations to drive business processes in Supply Chain Management, based on Internet of Things (IoT) signals from machines and equipment on the production floor. With Sensor Data Intelligence, IoT signals can be integrated with data in Supply Chain Management using Azure resources to produce actionable insights.
In a manufacturing environment, there are several critical scenarios that you need to track digitally as they often require actions. Sensor data intelligence provides such capabilities. The following are a few scenarios:
Asset downtime: The system integrates the Asset management module to generate a maintenance downtime record if asset downtime is detected by the lack of signals received within a given threshold from a specific equipment. You need to configure your machine to the sensor so that the sensor periodically sends signals when the machine is operating. The sensor stops sending signals when the machine isn't operational.
Asset maintenance: To minimize the maintenance cost and extend the asset life, the system can improve the maintenance plans based on sensor readings of critical control points for machine assets. The sensor data creates counter records, which track the use of the equipment and are used as input to generate the maintenance schedule.
Machine status: You use sensor data to monitor the availability of your equipment. You can set up a sensor that sends a signal once output is produced from a production job. The application captures scenarios when no signal is received within a specified interval and sends corresponding machine status notification to the respective dashboard.
Product quality: You can set up a sensor to measure the quality of a batch of products manufactured on the shop floor. For the finished product, a measurement is defined as the quality standard. If actual figures fall beyond the defined threshold, notification is sent to the respective dashboard.
Production delay: If production throughput falls below a specific threshold value, a signal is sent to the respective system. The application measures the amount of time that the production order is scheduled to run in comparison with the finished goods output.
Master planning
Master planning allows companies to plan and calculate the future need for raw materials with capacity to meet company goals. Master planning requires extensive configuration in the item coverage area, where you can define the replenishment rules. You can also define the time fences based on which master planning process is run. The inventory on-hand and warehouses are also considered as input of the master planning process. Master planning has the existing sales order, purchase orders, production orders, and transfer orders as the input to the system. Based on the preceding transactions, master planning calculates requirements and generates planned orders. The following diagram depicts different input and output components of master planning.
For example, suppose that you're a production supervisor. You need to process a requisition of materials required on the production floor. The Master planning module creates the planned orders for you based on the sales orders created and the replenishment models in place. This process also considers the capacity planning for the resources involved in the production process and generates the planned production order based on the master planning parameter setup.
Procurement and sourcing
Procurement and sourcing cover all the steps from identifying a need for product and services through procuring the product, receipt, invoicing, and processing of payment with vendors. You can configure procurement processes for specific business needs by defining purchasing policies and workflows. Purchase requisitions and request for quotations are two important processes that are managed in procurement and sourcing.
Consider that you're a purchase manager. Based on the purchase requisitions from various departments, you need to place the purchase orders with the appropriate vendors. The purchase requirements can be initiated from the purchase requisition after workflow approval. Master planning can also generate the purchase requirements based on the requirements generated from the production floor. Managing the bids from multiple vendors may also come under your job responsibilities. You can streamline this process through the Procurement and sourcing module. This module helps you to configure all the purchase order–related components, such as charges, delivery details, and payment setups.
Product information management
Product information is the backbone of supply chain applications across all industries. It works with a shared product definition, categorization, and identifiers across all legal entities, and specific configurations of a product, to fit into the business processes.
Product information in Supply Chain Management stores product-related data that can be used in various business processes. You may be a sales executive who needs sales price and sales discount information, which is stored in this module. A purchase manager can find purchase price and discount information for each product. An inventory and warehouse manager can find parameter data for each product, related to measurements, packaging, shipping, tracking, and storing. These parameters drive inventory and warehouse operations. You can also store engineering parameters such as bill of materials (BOM) and routing configurations in the Product information management module.
Production control
Production processes include control of the various stages of production orders, batch orders, and Kanbans, from order creation to closing of the financial period. There are three major manufacturing processes: Discrete, Process, and Lean. Supply Chain Management describes all of them with the required subprocesses and other manufacturing components.
In the Production control module, you can configure the production processes based on the products to be manufactured. You can also keep track of resource availability and production phases using defined processes. The resources can track their job cards, which roll up to the overall production status that provides a comprehensive overview to stakeholders.
Sales and marketing
Sales and marketing cover the original sales initiative, future follow-up action, and added sales. You use the sales functionality to create quotations, up-sell, and cross-sell to new and existing customers, create sales orders, and create sales invoices for customers.
If you're part of a sales organization, you need to convert prospects to customers and raise and manage the sales orders. You also need to apply discounts based on different criteria to your customers. The Sales and marketing module provides this functionality. If you're a sales executive, you need to plan for commissions and set delivery and payment terms with customers. The Sales and marketing module also provides this functionality.
Service management
Service management describes service agreements and service subscriptions, how to manage service orders and customer inquiries, and how to manage and analyze the delivery of services to customers.
You're an Operations Manager responsible for managing the regular service activities in the plant, including repair and maintenance of electrical units, video surveillance systems, and network systems. Using the Service management module, you can create service agreements for the ongoing service requirements. You can also track work descriptions against the service agreements.
Transportation management
Transportation management lets you use your company’s transportation and identify vendor and routing solutions for inbound and outbound orders.
You coordinate transportation for goods to be delivered to customers or received from vendors. This module helps you to identify the transportation vendors and routing options for inbound and outgoing orders, as well as the lowest price and quickest method of delivering goods.
Warehouse management
The Warehouse management system in Supply Chain Management gives you flexible ways to define your warehouse layout to meet changing needs, so you can optimize warehouse efficiency. This system enables you to manage warehouse processes in the manufacturing, distribution, and retail organizations. The warehouse management system is fully integrated with other operations in Supply Chain Management that includes transportation, manufacturing, quality control, purchase, and sales.
Warehouse management has a robust wizard-based location configuration tool. You can define location type, location profile, and location format, which help in creating the layout of a warehouse.
There are several templatized inbound and outbound operations associated to a warehouse based on transaction type. You need to configure all these templates to have seamless warehouse transactions using the warehouse mobile application.
Suppose that you're a warehouse manager. You need to manage the movement of goods in the warehouse with a location-wide tracking system for all the items available in the warehouse. You also need to manage the outbound and inbound inventory movement, which can originate from production, purchase, sales, or transfer between warehouses. The Warehouse management module provides you with a user-friendly mobile application for the warehouse transactions along with integrated analytical reporting and flexible label printing and scanning functionality to run your daily operations.
Engineering change management
Engineering change management incorporates processes to ensure minimal disruption to products, quality standards, waste reduction, and overall cost effectiveness. It brings structure and discipline to the product management process that includes a creation, review, and change approval mechanisms. It enables products to be defined, released, and revised in a controlled manner that supports the standard workflow of finance and operations apps. Through product versions and engineering change management, you can document, assess the impact of, and apply engineering changes throughout the lifecycle of a product.
Consider that you work in a manufacturing organization. You need a Supply Chain Management application that controls and manages product versions and release. In the Engineering change management module, you can have versions of a product with engineering information, such as drawings, product status, route information, attributes, and BOM structures. You can also use this module to replace a BOM component of a finished good and change its version to address an error in the manufacturing process.
Landed cost
The Landed cost module helps businesses streamline inbound shipping operations by giving users complete financial and logistical control over imported freight, from the manufacturer to the warehouse.
Landed cost provides accurate and timely cost estimates for overhead landed costs. It also provides increased financial and logistical visibility into the extended supply chain. Additionally, it helps reduce the administration of costing and costing errors.
Suppose that you're overseeing and managing inbound shipping operations. You have international vendors with long lead times. You have inbound transportation costs and other associated charges. This module helps you to calculate the landed cost, which is defined as the total cost associated with the shipment of the goods to the destination. It includes shipping, other duties, taxes, and fees such as insurance, storage charge, regulatory fees, and handling fees.
When you integrate all the modules mentioned, Supply Chain Management can build an adaptable supply chain process that automatically reacts to challenges by using real-time visibility, agile planning, and business continuity.