Purchase-to-pay cycle starts with purchase, logistics, inspection, production and pay. Supply chain management integrates all of these functions, keeping at the same time, the vendor-user role in a collaborative mode. In a collaborative environment, the role of supplier is not just restricted to supply materials, but to proactively manage inventory of the user and also a participatory in new product development.

SCM software allows supplier collaboration in all areas of life cycle of the product. Increased globalization and competition have necessitated the firm to concentrate on core competency and therefore modular production enables the firm to outsource certain activities in the production process to the suppliers. The suppliers move forward in the supply chain. The suppliers have a say in the design process and have access to the design documents.

An increased competition forces a firm to have more number of demand and sales forecasts. The higher the forecasts, the lesser the inventory and this information, when it flows along the chain, increases the efficiency of the system. The software allows for transparency by linking the system with that of the vendor