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Accelerate Supply Chain Management Software Implementation by Learning From Buyers With Experience

Accelerate Supply Chain Management Software Implementation by Learning From Buyers With Experience

By: Ashish Upadhyay on June 24, 2024
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Managing supply chain operations is often deemed a complex task. Supply chain managers have to predict customer demand to prevent overstocking and stockouts, ensure timely delivery of quality materials, and optimize routes and transportation modes to minimize costs. Investing in a supply chain management tool will help you simplify these processes and offer automation, visibility, and analytics to optimize efficiency and enhance decision-making. 

To make an informed software purchase, you should understand your supply chain's specific needs, the required features, typical pricing models, and potential hurdles in the selection process.

Each year, Software Advice’s advisors speak with thousands of software buyers evaluating new supply chain management software for their businesses. We've mined those conversations to provide insights that will help small businesses understand the budget requirements, feature needs, and pain points of current users to finalize the best tool for their needs.

Key insights

  • Software buyers from the supply chain management industry prioritize warehouse management functionality during purchase, while those using the software currently consider inventory management the top priority in supply chain management software.

  • Most businesses either rely on third-party software and manual methods for their day-to-day supply chain management practices or do not have any system in place.

  • Switching to supply chain management software is driven by the need for efficiency, functional sufficiency, and new business opportunities.

  • The top five industries investing in supply chain management software allocate between $114 and $173 per user per month, with an overall buyer average of $156 per user per month.

Prospective buyers and current users prioritize different features

To gain insights into user preferences, we analyzed thousands of supply chain management software reviews available on Software Advice to identify the features that the software's users consider most critical for their daily work. Interestingly, our findings revealed a discrepancy between the priorities of supply chain management software buyers and users.

  • Thirty-five percent of current software users rate inventory management as the most essential feature in supply chain management software, compared to buyers who are primarily looking for warehouse management functionality in a supply chain management tool.

  • These findings indicate that businesses already using supply chain management software find immense value in inventory management functionality. This feature enables supply chain specialists to track inventory movement across various supply chain stages, from procurement to production to distribution. 

  • Warehouse management, on the other hand, allows businesses to organize inventory within the warehouse by defining storage locations, aisles, shelves, and bins. This enables efficient storage and retrieval of inventory items based on their physical locations.

Pro tip

Evaluate the software's capabilities for collaboration with suppliers, partners, and other stakeholders in your supply chain network. Features such as supplier portals, real-time communication tools, and collaborative planning functionalities can enhance visibility, coordination, and agility across the supply chain.

Current pain points for supply chain management software buyers

When our advisors asked buyers what methods they were currently using to handle their day-to-day supply chain management operations, here's what they found:

  • Forty-six percent of buyers use third-party CRM software to track inventory items and products. Some also use a document management tool to store invoices and bills related to the shipment of goods and products. 

  • Thirty percent of buyers rely on manual methods, such as spreadsheets or a pen-and-paper approach, to keep track of inventory items and observe movements in the supply chain procurement process. 

These discussions shed light on businesses' real-life challenges with their existing methods. These included inefficiency (50%), limited functionality (27%), and new business opportunities (11%).

  • Inefficiency: Manual methods require a lot of manpower, resources, and time for processes such as drop-shipping and inventory management. Additionally, a lack of real-time visibility makes it challenging to track inventory levels, monitor order status, and identify bottlenecks or issues in the supply chain promptly. 

  • Lack of technology and limited functionality: Without access to modern technology and integrated systems, businesses may struggle to capture, analyze, and share data across the supply chain. This limited data visibility makes it challenging to track inventory levels, monitor performance metrics, and make informed decisions in real time.

  • New business opportunities: Manual processes are often time-consuming and labor-intensive, which makes them difficult to manage as businesses grow. Without automation, businesses struggle to handle large volumes of orders, inventory, and transactions. This limits their ability to expand into new markets or serve a growing customer base effectively.

Reasons for switching to a dedicated supply chain management system

Compared to the existing methods used by professionals, a dedicated supply chain management software solution offers the following benefits:

  • Process automation: Supply chain management software automates repetitive tasks such as order processing, inventory management, and demand forecasting, reducing the need for manual intervention and improving operational efficiency. 

  • Real-time visibility: Unlike manual processes, which rely on static spreadsheets or paper-based records, supply chain management software provides real-time visibility into inventory levels, order status, and shipment tracking, enabling businesses to make informed decisions quickly.

  • Data accuracy: Manual processes are prone to errors such as typos, omissions, and inaccuracies, leading to discrepancies in inventory records and order fulfillment errors. Supply chain management software ensures data accuracy through automated data capture, validation, and synchronization across systems.

  • Streamlined collaboration: Supply chain management software facilitates collaboration and communication among supply chain partners through integrated communication channels, document sharing, and workflow automation, improving coordination and efficiency.

Pro tip

Choose software that offers mobile applications or responsive web interfaces to enable access to critical supply chain information anytime. This can be particularly beneficial for FMCGs or retail businesses.

Average budget for supply chain management software buyers across industries

The budget for purchasing supply chain management software varies from industry to industry based on factors such as the number of users, deployment model, customization level, and the required features and functionality.

However, the average budget across industries for purchasing supply chain management software was approximately $156 per user per month. 

The chart below highlights the average buyer budget per month for the top five industries interested in supply chain management software.

Average budget for supply chain management software by industry

Use cases for supply chain management software

Based on our advisors’ interactions, these are the top five industries using a supply chain management tool for different use cases:

  • Third-party logistics service providers use supply chain management software to optimize delivery routes, considering various factors, including traffic conditions, delivery windows, and vehicle capacities. This ensures timely delivery to customers, efficient transportation of goods, minimized fuel consumption, and reduced transportation costs. Additionally, the software can help 3PL providers accurately forecast demand for transportation and warehousing services. 

  • Food and beverage companies can use supply chain management software to ensure compliance with temperature-sensitive requirements for food and beverage products. The tool can help monitor and control temperature conditions throughout the supply chain, including temperature monitoring during transportation, storage, and distribution. This minimizes the risk of spoilage and ensures product quality and safety. Additionally, in the event of a product recall or quality issue, the software enables companies to quickly trace affected products back to their source, identify impacted batches, and communicate with stakeholders to mitigate risks and maintain consumer trust.

  • Building materials and construction firms use supply chain management software to optimize inventory levels for raw materials, components, and finished products. The software enables firms to minimize excess inventory, reduce holding costs, and ensure the timely availability of materials for construction projects by analyzing demand forecasts, project schedules, and supplier lead times.

  • Consumer packaged goods (CPG) businesses can use supply chain management software to forecast product demand accurately. The software enables CPG companies to optimize production schedules, inventory levels, and distribution strategies, analyze historical sales data, market trends, and promotional activities, and efficiently meet customer demand.

  • Non-durable goods businesses use supply chain management software to implement vendor-managed inventory (VMI) programs with key suppliers. The software facilitates automated inventory replenishment, demand forecasting, and performance monitoring, enabling businesses to improve supply chain collaboration, reduce inventory holding costs, and ensure product availability.

Looking for more resources?

Click here to check out our supply chain management software directory, FrontRunners Report, and Buyers Guide, and compare hundreds of products.


Methodology

Software buyers analysis methodology

Findings are based on data from conversations that Software Advice’s advisor team has daily with software buyers seeking guidance on purchase decisions. The data used to create this report is based on interactions with small-to-midsize businesses seeking supply chain management tools. For this report, we analyzed approximately 1,500+ phone interactions from April 27, 2023, to April 28, 2024.

The findings of this report represent buyers who contacted Software Advice and may not be indicative of the market as a whole. Data points are rounded to the nearest whole number.