Last year Software Advice helped nearly 2,000 small and midsize business (SMB) leaders who were looking to implement new software to improve their supply chain processes. These interactions give us considerable insight to the ever-evolving needs and major pain points in supply chain management (SCM).
With Gartner reporting growth in the SCM software market by nearly 14 percent in 2017, software tools are in demand to help alleviate pain points, but buyers need to know the market before purchasing.
We analyzed 200 inquiries from 2018 to help you understand the buyer landscape and how you can improve your business’s operations with a new SCM software tool.
Here’s what we’ll cover:
- Inventory tracking was both the top challenge for SMBs and the most wanted feature in SCM software.
- The top pain points directly correlate with the functionality most requested.
- Each of the operational challenges are compounding factors, increasing the friction felt across SMBs’ supply chain management processes.
Supply Chain Management Challenges
Poor Inventory Tracking
Knowing when an item arrives, is stored, picked, shipped and received are touch points where SMBs are experiencing their biggest challenges. Whether they’re using manual methods or a system that just isn’t cutting it, supply chain professionals are finding they need better inventory tracking.
Real-time inventory insight is increasingly important because businesses always need to know the availability of products across multiple mediums. For example, if you run a coffee shop, you wouldn’t want a customer to pay for 20 bags of coffee online while a customer in the store is physically buying the same allocated stock.
Manual Method Errors
Nearly half of companies state they use manual methods to track inventory. Aside from the increased risk of human errors, manual entry and data management can take up 100 percent of a full-time employee’s time on the job.
This should no longer be viewed as “just the cost of business” in the age where technology can manage data much more quickly and accurately than a human.
- Excel doesn’t support counting stock by scanning barcodes. No one wants to be in the store after hours, counting each item and putting a checkmark next to the list printed out from the Excel file of current inventory. Add the task of then updating that Excel spreadsheet back at their desk based on all those check marks and you’ve got an incredible risk of human error.
- Only one person can use the file at a time. Excel is an incredibly powerful tool for personal use. But as a business system, it falls short. Check out this Forbes article to learn more about the disadvantages of Excel as a business tool.
- Workflows aren’t automatically started based on data entered in a spreadsheet. As a result, the handoff to the next person is easy to miss or ignore.
Too often SMBs are overspending on inefficient practices—such as the above example of an employee doing manual cycle counting—and making costly errors in the process. Poor inventory tracking and manual method errors are all interconnected.
With a lack of workflows being the third biggest challenge, it makes sense that it’s also the third most popular request from an SCM tool, as we’ll show further below. The right SCM tool can provide automated workflows, such as managing the flow of an invoice from creation to approval to paid.
Another benefit from workflows in an SCM solution is the historical and audit data you can gather. You can track exactly who approved what invoice and at what time.
Each of the discussed pain points in this article are exacerbated by growth. Your warehouse manager will get very testy if his quarterly job of counting each item in inventory doubles but he still only has a pen and paper. So it makes complete sense that companies evaluating SCM software state growth as a driver for the change.
Knowing what’s shipping out is just as important as knowing what’s coming in. Approving and tracking purchase orders can be a costly task without the support of a software tool. From mixed up PO numbers to a lack of accountability, manual methods for procurement are holding your business back.
In Tungsten Network’s 2017 The State of Procure to Pay Friction report, it found that companies waste an average 125 hours a week on procurement tasks such as processing non-paper POs, handling supplier inquiries about unpaid invoices and managing approvals. While your business may not be experiencing a loss at this rate, it’s not immune to these issues.
Needed SCM Software Functionality
The good news here is the top requested capabilities directly correlate with the top pain points. SCM software can help improve supply chain management, and the professionals who’ve contacted us recognize that manual methods are holding back operational efficiency.
Procurement concerns and poor inventory tracking are both improved when the right SCM solution is implemented with functionality such as:
- Automated workflows for invoice and purchase order processing
- Barcode scanning instead of manual entry for pick, pack and shipping
- Status tracking of orders during shipment
It’s interesting to see that fleet management or dock scheduling didn’t rank, given that 3PLs are the largest demographic group included at 40 percent. We predict this will change as the trucking industry is seeing significant revenue growth, as reported by the American Trucking Association.
Buyer Report Demographics
Buyers of SCM software have small user bases with nearly 80 percent expecting only 10 or fewer employees to be in the system. Numbers like that can lead a business to underestimate the importance of updated software, but this is a mistake. Those two to 10 users can be the difference between meeting or missing sales numbers.
3PLs dominated our buyer report, coming in at over 40 percent of all inquiries. Food and beverage holds 8 percent of the market, while “other durable goods” hold just over 5 percent. Other durable goods includes businesses that sells appliances, office supplies etc. Health care and building materials both tie for fourth largest segment with 4 percent of the market each.
OK, so now you know the buyer landscape for SCM tools. But what about the actual software out there? Check out reviews straight from other SMBs here.
Our advisor team speaks with thousands of buyers who contact Software Advice. For this report, we analyzed a randomly selected 200 phone interactions with small to midsize businesses between January 2018 and December 2018.
These findings exclusively represent those buyers who contacted Software Advice for guidance on supply chain management software selection, and may not be indicative of the market as a whole. Chart values are rounded down to the nearest whole number.
Have a question about this report? Email me at firstname.lastname@example.org.