Supply chain management
What is supply chain management?
Supply chain management (SCM) is the work of planning, buying, making, moving and returning goods so that a customer gets what was promised at a cost the business can bear. That is the short answer. The rest of this page is the same discipline written out as what it measures — every figure with the arithmetic that produces it, and the part of SIAARU that computes it against your own records.
Every formula below is the one SIAARU actually prints beside the number it produces. None of them is an illustration.
The definition, without the jargon
What supply chain management actually is.
A supply chain is every step between a raw material and a customer holding the finished thing. Managing it means deciding, repeatedly and under uncertainty, how much to make, what to buy, when to buy it, where to hold it, and how to move it — then finding out which of those decisions was wrong before it becomes expensive.
The five processes are standard vocabulary and worth using because a buyer already knows them: plan (what demand will be, and what to hold against it), source (who supplies it, on what terms, and whether they keep them), make (what gets produced where, against finite capacity), deliver (getting it there on the promised date, in full), and return (what comes back, and why). Each has its own measures, and each is below with them.
The reason it needs software rather than a spreadsheet is not complexity — it is provenance. A supply chain decision costs money, is made weekly, and is argued about months later. A number nobody can trace is a number everybody can dispute, which is why every figure in SIAARU carries the arithmetic that produced it.
The category
What SCM software is, and what it is not.
What it is.
SCM software reads the transactions a business already records — purchase orders, goods receipts, stock movements, sales orders, shipments, invoices — and turns them into decisions: what to order, what to chase, what to move, what to write off. The measurement is the product. The screens are how a person acts on it.
What it is not.
It is not an ERP. An ERP is the system of record where the transaction is created; SCM software reads that record and decides from it. SIAARU connects read-only to SAP, Oracle, Dynamics, Tally and Zoho, and writes nothing back into them — how that works is a page of its own.
Plan
What demand will be, and what to hold against it.
| Measure | How it is computed | Where |
|---|---|---|
| Forecast accuracy | 100 − WMAPE, where WMAPE = Σ|actual − forecast| ÷ Σ|actual| × 100 | Forecast |
| Forecast bias | Σ(forecast − actual) ÷ Σ actual × 100. Positive is over-forecasting, which builds excess; negative is under-forecasting, which risks a stockout. They are different faults and a single accuracy figure hides which you have. | Forecast |
| Safety stock | SS = z √(PI·σd² + d̄²·σLT²) — the cover that absorbs variability in both demand and lead time, at a stated service level z. A lead time treated as a constant is the commonest error in this arithmetic and it under-protects every line. | StockOpt AI |
| Days inventory outstanding | Average inventory ÷ COGS × days in the period | Control Tower |
| Inventory turnover | COGS ÷ average inventory | Control Tower |
| Excess and obsolete | Stock above what the demand and lead time support, aged into buckets and valued — separated from stock that is merely slow, because the two need different decisions. | DeadStock AI |
Source
Who supplies it, and whether they keep their word.
| Measure | How it is computed | Where |
|---|---|---|
| Supplier OTIF | Receipts on or before the date the supplier confirmed, not the date you asked for. Scoring against a request they never accepted manufactures a failure that is yours. | SupplierGuard |
| Lead time variability | The spread of realised order-to-receipt times, not the average. A supplier who is twice as variable needs twice the safety stock at the same service level. | SupplierGuard |
| Purchase price variance | (Price paid − standard or contract price) × quantity received | Control Tower |
| Days payable outstanding | Average payables ÷ purchases × days in the period | Receivables & Payables |
| Three-way match | Purchase order against goods receipt against supplier invoice, with the tolerance stated on the page rather than buried, because every verdict is relative to it. | Goods Receipt |
Make
What gets produced where.
| Measure | How it is computed | Where |
|---|---|---|
| Capacity allocation | Demand placed across plants at the lowest unit cost that fits the capacity somebody stated. Contested capacity goes to the larger demand first, and the plan says so. | Production Planner |
| Stock valuation | FIFO or weighted average — and the answer depends on which, so the method is printed on the page with the movement-by-movement walk that reached it. | Stock Valuation |
| Batch release | Every batch judged against its inspection plan, with the missing tests named. A Certificate of Analysis is generated only for a batch that was actually released. | Quality |
Deliver
On the promised date, in full.
OTIF — on time in full — is the measure most often quoted and least often useful, because it is two measures added together. On-time is usually a planning or transport problem; in-full is usually stock or quality. They need different fixes, and a single percentage hides which one you have. SIAARU reports them separately, by value, and then decomposes the gap into named causes.
| Measure | How it is computed | Where |
|---|---|---|
| On time, in full | Delivered lines meeting both the promised date and the ordered quantity, weighted by value. A line with no promised date is counted as unassessable rather than folded into either bucket, because putting it in one would move the figure itself. | Delivery Waterfall |
| The OTIF gap, by cause | Each cause a share of the value promised, so the causes and the achieved figure sum to a hundred. What no record explains is reported as unexplained, in full — a waterfall that accounts for everything has started guessing. | Delivery Waterfall |
| Landed cost | Freight, duty, clearing, port and detention spread across the lines of a shipment, each by a stated basis, so the components sum to the charges actually recorded. | LandedCost AI |
| Demurrage and detention | Two clocks, worked separately: demurrage for the box in the port, detention for the box in your yard, from your own free days and day rates. | Free calculator |
| Freight invoice audit | Invoiced against the contracted rate for that lane on that date. No rate card for the lane means no verdict, rather than a wrong one. | FreightAudit AI |
The money
What the supply chain is costing you.
| Measure | How it is computed | Where |
|---|---|---|
| Days sales outstanding | Average receivables ÷ credit sales × days in the period | Receivables & Payables |
| Cash conversion cycle | DIO + DSO − DPO. The days between paying for a material and being paid for what it became — the single number that says whether the supply chain funds itself. | Receivables & Payables |
| Supply-chain working capital | Inventory + receivables − payables. Cash, investments and accruals are excluded, because they are not what the supply chain moves. | Control Tower |
| Export obligation exposure | Duty saved × the share of the obligation still undischarged, with interest from the day the period ended. | DutyGuard |
Questions people actually ask
The short answers, in order.
What is supply chain management?
The planning and control of everything between a raw material and a delivered product: forecasting demand, buying materials, scheduling production, holding stock, moving goods and handling returns — so that the promise made to a customer is kept at a cost the business can carry.
What does SCM stand for?
Supply chain management. In software the same three letters occasionally mean software configuration management, which is an unrelated discipline; on this site SCM always means the supply chain.
What is SCM software?
Software that reads a company's own transactions and turns them into supply chain decisions — what to order, chase, move or write off — with the measures that say whether the last decision worked. It reads the ERP; it is not one.
What is OTIF, and why split it?
On time in full: the share of delivery lines that met both the promised date and the ordered quantity. It is worth splitting because late is usually planning or transport and short is usually stock or quality — different causes, different fixes, and one percentage hides which one you have.
How is safety stock calculated?
SS = z √(PI·σd² + d̄²·σLT²): a service-level factor z applied to the combined variability of demand and of lead time over the protection interval. Treating lead time as a constant — the common shortcut — under-protects every line whose supplier is inconsistent.
What is the cash conversion cycle?
DIO + DSO − DPO: days of inventory held, plus days customers take to pay, less days you take to pay suppliers. It is the clearest single measure of whether the supply chain funds itself or has to be funded.
Does SIAARU replace our ERP?
No. It connects read-only, reconciles what it reads, and measures it. Transactions stay where they are created. How it compares to a spreadsheet, a BI dashboard and the ERP's own reports is written out honestly, including when not to buy it.
Where to go next
The measures, on your own data.
Every measure above is a module you can hold on its own or as part of a flow. The module list states what each one produces, a worked example and the price; the platform is how the data gets there; and the free tools compute six of these without an account or an email address.