To understand why small businesses should care about supply chain management software, you could read a bunch of analysts’ reports explaining the good that can come from automating the process of turning raw materials into finished goods and getting them to customers.

Or you could just talk to people such as James Van Dyke and Taylor Gordon.

Van Dyke is president of Electronics Assemblers Inc., a 60-person custom electronics manufacturer in Hood River, Ore., an hour’s drive east of Portland. Gordon is a supply chain analyst at Myers Container/CMS LLC, a 91-year-old Portland company that makes industrial steel drums and containers.

Listen to either long enough and it’s clear how important it is for a small company to manage its supply chain in the most efficient, cost-effective and collaborative way possible.

Big corporations have used supply chain management and enterprise resource planning (ERP) software, for years, as well as newer technologies such as radio frequency identification (RFID) chips. Not so small businesses, many of which still rely on paper and pencil or outdated software because upgrading would be too costly and time consuming.

Supply chain management that works

That’s changing, as more small businesses see the value in having a better window into their supply-chain process. In fact, according to a recent AMR Research survey of 336 U.S. and European companies, in 2008 mid-market companies will be “aggressive” in buying supply-chain management software, due to continued pressure to reduce manufacturing costs and to help customers reduce their own costs. Customers “expect their own suppliers, regardless of size, to comply with their demands, which more often than not require investment in supply chain technologies,” AMR Research analysts John Fontanella and Eric Klein write in the report.

Van Dyke’s business, Electronic Assemblers Inc., makes electromechanical and cable subassemblies for HP and other local high-tech companies. According to Van Dyke, supply chain management technology can be as basic as using Microsoft Windows programs. EAI relies on four -- Windows Explorer, Exchange, Internet Explorer and Excel - for everything from restricting access to proprietary customer documentation to handling purchase orders to scanning websites for deals on electronics components. “Without it we’d be nowhere,” he says.

The other part of EAI’s supply-chain management process is a material requirements planning (MRP) system called Alliance Manufacturing from Exact Software Americas. It tracks purchase orders, work orders, inventory levels and all other aspects of a manufacturing job. The software is expensive and it takes time to train people to use it. But it’s been worth every penny, Van Dyke says. “Ultimately where you end up is with a tool that allows you to treat materials planning like you treat your toaster. You don’t need to know how it works, you just use it to toast your toast,” he says.

Fixing what’s broken

Without good supply chain management, a company may lack access to vital information and the deficit can stop production from being as fast or efficient as possible. That’s the current situation at Myers Container/CMS, which has been limping along on paper-based systems and ERP software purchased in 1999 that wasn’t ever completely implemented, according to Gordon. “It’s not good enough to have the technology. If nobody’s using it, it won’t work,” he says.

When new owners acquired Myers in late 2007, they hired Gordon to bring the company’s supply chain into the 21st century. As part of that, Gordon is analyzing existing software to decide if it can be upgraded, or if the company would be better off going with something completely different. The hope is that by upgrading “it’s very likely we’ll see high cost savings,” Gordon says.

To learn more about supply-chain technology, Gordon joined the supply-chain management special interest group of an Oregon manufacturers’ consortium. He’s learning about innovations by visiting fellow special-interest group members’ factories to see the problems they’re facing first hand and to help brainstorm solutions.

SIDEBAR: Supply Chain Management Technology Resources

Some additional resources for learning about small and mid-sized business supply-chain management technology and practices include:

Supply-Chain Council -- This Washington, D.C., international non-profit publishes supply-chain standards and benchmarks used by more than 1,000 member companies of various sizes and industries.

Supply Chain Management Review -- The online version of this industry trade magazine has articles, white papers, newsletter, blogs, webcasts, message boards and links to other resources.

The Supply Chain Management Research Center -- The website for this research center housed at the University of Alabama’s Sam M. Walton College of Business has industry news, white papers and links to other resources. The center also sponsors an annual supply-chain management research conference.