What is Supply Chain Management Software?

What is supply chain management software?

Supply chain management software is a comprehensive solution designed to enhance visibility, coordination, and control of all activities involved in the supply chain process. It provides a centralized platform that enables businesses to manage procurement, inventory, logistics, demand planning, order fulfillment, and other related operations efficiently. By automating and integrating these critical functions, organizations can achieve higher operational efficiency, reduce costs, mitigate risks, and enhance customer satisfaction.

Primary benefits of supply chain management software

While each system may vary, generally speaking there’s a suite of benefits that are standard to supply chain management software in general. These include:

  • Enhanced visibility: Supply chain management software offers real-time visibility into various aspects of the supply chain so businesses can track inventory levels, monitor order statuses, and identify bottlenecks or delays. This visibility helps in making informed decisions and responding quickly to market demands.
  • Increased efficiency: By automating manual tasks and streamlining processes, supply chain management software eliminates time-consuming and error-prone activities. This efficiency boost translates into reduced lead times, improved order accuracy, optimized inventory levels, and enhanced resource utilization.
  • Cost reduction: Effective supply chain management software helps organizations minimize costs by optimizing inventory levels, improving demand forecasting, and reducing the need for expedited shipping or excess inventory. It also enables better supplier management and negotiation, leading to potential cost savings.
  • Risk mitigation: Supply chain disruptions can have a significant impact on business operations; supply chain management software enables businesses to identify and mitigate potential risks by monitoring supplier performance, managing demand fluctuations, and implementing contingency plans.

Graph explaining four main benefits of supply chain management software.

Primary modules of supply chain management software

Supply chain management software typically comprises several interconnected modules, including:

  • Demand planning: This module helps forecast demand accurately by considering factors like historical data, market trends, and sales forecasts. It assists in aligning production, procurement, and inventory management with anticipated demand.
  • Inventory management: This module optimizes inventory levels by tracking stock movements, managing reorder points, and providing insights into inventory turnover. It enables businesses to minimize stockouts, reduce carrying costs, and streamline replenishment processes.
  • Warehouse management: This module facilitates efficient management of warehouse operations, including receiving, put-away, picking, packing, and shipping. It enables organizations to improve order fulfillment, reduce errors, and enhance overall warehouse productivity.
  • Supplier relationship management (SRM): The SRM module focuses on managing supplier relationships, performance, and collaboration. It helps evaluate suppliers, negotiate contracts, monitor deliveries, and ensure timely communication throughout the procurement process.

Open source vs. proprietary supply chain management software

When considering supply chain management software, businesses have the option to choose between open source and proprietary solutions. Each software type offers distinct advantages and considerations based on the specific requirements and preferences of each organization.

Open source supply chain management software

Open source software is software with source code that can be modified by developers and their teams without the restrictions of recurring license fees or vendor lock-in. Open source supply chain management software provides several notable benefits, namely:

  • Flexibility: Open source software allows businesses to have greater control over the functionality and customization of their supply chain management solution because the availability of source code enables developers to modify and extend the software to meet specific business needs. This flexibility is particularly advantageous for organizations that have unique supply chain processes or require tailored workflows.
  • Customization options: With open source software, businesses can customize the software's features, user interface, and integrations to align with their specific supply chain requirements and growth projections. This ability to tailor the software to their unique business processes can lead to improved operational efficiency and better alignment with organizational goals.
  • Cost savings: Open source supply chain management software eliminates recurring licensing fees, which can free up an org’s tech budget for other things. 
  • Community support and collaboration: Open source software benefits from an active community of developers and users who continuously contribute to its development, provide support, and share best practices. This community-driven ecosystem fosters collaboration, knowledge sharing, and continuous improvement of the software, ensuring ongoing updates and enhancements.

Proprietary supply chain management software

Proprietary supply chain management software, on the other hand, offers its own set of advantages:

  • Vendor support and training: Proprietary software vendors typically provide dedicated support services, including technical assistance, training, and software updates which can be beneficial, especially for organizations that require extensive onboarding, ongoing guidance, and troubleshooting.
  • Convenience: Since proprietary options are typically ready-to-go, they can provide a very convenient option for businesses that don’t require anything beyond what already comes with their off the shelf solution.
  • Pre-packaged solution: Proprietary software is usually pre-packaged and ready for deployment, providing organizations with a potentially faster implementation process. This can be advantageous for businesses that prefer a turnkey solution without the need for extensive customization or development efforts.

Graph comparing open source and proprietary software.

Apache OFBiz™ SCM software

Apache OFBiz™ is an open source ERP solution that includes a robust supply chain management module. As an open source software, Apache OFBiz™ offers a range of features and flexibility that make it a popular choice for businesses looking for a cost effective and customizable supply chain management software solution.

Key features of Apache OFBiz™ SCM:

  • Procurement management: Apache OFBiz™ SCM allows businesses to manage their procurement process efficiently. It enables users to create purchase orders, manage supplier contracts, track supplier performance, and streamline the entire procurement lifecycle.

  • Inventory control: With Apache OFBiz™ SCM, businesses can maintain optimal inventory levels, reduce carrying costs, and prevent stockouts. The software provides inventory visibility, tracks stock movements, manages warehouses, and supports various inventory valuation methods.
  • Order fulfillment: The order fulfillment module in Apache OFBiz™ SCM enables businesses to efficiently process customer orders. It includes features such as order management, order tracking, packing, and shipping. By automating these processes, businesses can enhance order accuracy, improve customer satisfaction, and reduce fulfillment cycle times.
  • Logistics and distribution: Apache OFBiz™ SCM supports logistics and distribution activities, including managing shipping carriers, tracking shipments, and optimizing transportation routes. This functionality ensures timely delivery, improves supply chain visibility, and reduces transportation costs.
  • Demand planning and forecasting: The demand planning module helps businesses accurately forecast demand based on historical data, market trends, and sales forecasts. It enables organizations to align production, procurement, and inventory management with anticipated demand, improving overall supply chain efficiency.

Benefits of Apache OFBiz™ SCM:

  • Customization: Since it’s an open source solution, Apache OFBiz™ SCM offers extensive customization options. Businesses can tailor the software to their specific needs, modify workflows, and integrate with other systems, allowing for a more personalized and seamless supply chain management experience.
  • Cost-effectiveness: As an open source software, Apache OFBiz™ SCM eliminates recurring licensing fees associated with proprietary solutions. This makes it an attractive option for businesses seeking a cost-effective supply chain management software solution without compromising on functionality.
  • Community support: Apache OFBiz™ has an active community of developers and users who contribute to its ongoing development and support. This community-driven ecosystem ensures continuous improvement, regular updates, and the availability of resources and expertise.
  • Scalability: Apache OFBiz™ SCM is designed to handle small to large-scale supply chain operations. The software can adapt to growing business needs, accommodate increasing transaction volumes, and scale with the organization's growth.

Graph describing eight features of Apache OFBiz supply chain management software. These features are: procurement, inventory, order fulfillment, logistics, demand planning, customization, scale, and community.

How to determine if you need supply chain management software

To assess whether your business could benefit from supply chain management software, consider the following factors:

  • Growing Complexity: If your supply chain operations are becoming more intricate, involving multiple locations, suppliers, and products, this type of software can help you maintain control and optimize your processes.
  • Inefficiencies and Errors: Are you experiencing frequent stockouts, delays, or inaccuracies in order fulfillment? Supply chain management software can streamline operations and minimize errors.
  • Lack of Visibility: If you struggle to gain real-time insights into inventory levels, order statuses, or supplier performance, supply chain management software can provide the visibility needed for better decision-making.

How to choose a supply chain management solution for your business

When selecting supply chain management software, keep the following considerations in mind:

  • Functional Fit: Evaluate the software's features and modules to ensure they align with your specific supply chain requirements.
  • Scalability: Consider your future growth plans and choose software that can accommodate increasing transaction volumes and complexities.
  • Integration Capabilities: Assess the software's compatibility with existing systems like ERP, CRM, and e-commerce platforms to ensure smooth data flow across your organization.
  • Support: Consider the level of support offered by the software vendor or service provider, including training, implementation assistance, and ongoing technical support.

Graph with tips for what to consider and what questions to ask when looking for supply chain management software.


Supply chain management software plays a pivotal role in optimizing operations, reducing costs, and enhancing customer satisfaction. Whether you opt for open source or proprietary software, it’s crucial to assess your business needs, evaluate available options, and choose a solution that aligns with your specific requirements. By implementing the right supply chain management software, you can gain a competitive edge in today's dynamic business environment and achieve sustainable growth.

DATE: Aug 17, 2023
AUTHOR: HotWax Systems