Supply Chain Management Software: Why Measuring ROI Matters for Business Growth

Every investment that businesses make should lead to a measurable return. There is always the question: how much money will I spend, and how much will I earn in return? You can answer this by measuring ROI in supply chain management software, as ROI helps determine whether the technology investment is truly delivering its value.

When it comes to supply chain management (SCM) software, calculating ROI helps determine whether your investment drives efficiency, reduces costs, and delivers real financial value. But for you to effectively measure ROI, you need to establish clear goals, define the right metrics, and track performance consistently.

In this article, we will explore the following: why ROI matters for SCM software and what role it plays in supply chain management. We will also help you understand how this metric works, how to calculate it, and, most importantly, help you accurately measure the ROI of your SCM software investment.

If you’re running an eCommerce, D2C, or B2B retail business, it’s one thing to adopt a supply chain management (SCM) system, but measuring its true value is even more important. At EIZ, we know that every dollar spent needs to prove ROI and fast.

What is Supply Chain Management?

Supply Chain Management (SCM) is the process of planning, coordinating, and overseeing the flow of goods, information, and finances as they move from the point of origin such as raw material suppliers to the final customer.

In simpler terms, it’s how businesses manage the entire lifecycle of a product, from sourcing materials, manufacturing, warehousing, and inventory, to order fulfillment and delivery.

What is Supply Chain Management Software?

Modern businesses use SCM software to automate, track, and optimize these processes. Software supply chain management (SCM) refers to digital platforms that are tools designed to manage the flow of goods, information, and finances as products move from supplier to customer. 

It allows real-time visibility into inventory, automates workflows like pick-pack-ship, and integrates with platforms like Shopify, Xero, or 3PLs to streamline operations, something EIZ systems like Lofko and ShipMarvel are purpose-built to do.

What is ROI in Supply Chain Management Software?

ROI helps you answer questions like whether the money you spent on supply chain improvements generates enough value in return. It basically refers to the financial value or benefit a business gains from investing in its supply chain systems, tools, or strategies, compared to the total cost of those investments. 

Through the help of calculating ROI in supply chain management, it helps companies prioritize investment, improve efficiency, and enhance overall supply chain performance. Additionally, it helps justify technology investments like EIZ’s Lofko or ShipMarvel and it measures the efficiency and value of your supply chain operations. 

The easiest way to calculate ROI is through this formula,

ROI = Net Benefit / Investment × 100

In this formula, net benefits are typically revenues generated from sales, while the investment are the expenses made. But if we’re talking about measuring ROI on a supply chain management software investment, you can go with this formula:

ROI = (Total Savings + Additional Income − Total Investment) / Total Investment

Here, the total savings are the annual cost reductions like labor, error corrections, and lost sales. The additional income refers to revenue increases due to better order fulfillment, reduced delays, or new capabilities. While, all costs for implementation, licensing, training, maintenance, and support make up the total investment.

ROI Measurement Framework for SCM Software

To measure ROI effectively for SCM software, you need a structured framework because, when it comes to cost, you need to think about the various costs like inventory, storage, logistics, waste, labour, admin, financial, equipment, and software costs.

Through an ROI framework, this helps ensure you’re not just crunching numbers but also aligning your investment with clear business goals. A strong ROI framework typically includes the following steps:

1. Set Clear Objectives: Before adapting any new technology, you need to define what success looks like for you since it gives you a clear vision of what you want to achieve. For example, do you want to reduce order processing time by 50%, or eliminate 90% of shipping errors. By setting clear objectives, you can align your technology adoption with your business strategy and track your progress over time.
2. Establish Baseline Metrics: It’s important to collect key performance indicators (KPIs) such as current labor costs, error rates, and lost sales due to delays before implementing SCM software. Today, digital transformation in supply chains often includes AI-powered SCM tools that enhance decision-making and automate tasks. According to McKinsey, AI investments are accelerating since around 92% of companies plan to increase AI spending in the next three years, targeting productivity growth potential estimated at $4.4 trillion, highlighting the urgency of tracking efficiency gains and ROI from smart supply chain technologies.
3. Calculate your total cost of ownership (TCO): Once you identify your objectives, select your software, and establish the metrics, you need to estimate the total cost of ownership and the benefits of it. This is not only limited to common benefits like the direct benefits of financial gains like increased revenue or reduced costs, but also includes indirect benefits, such as improved quality, flexibility, or customer satisfaction
4. Track Post-Implementation Metrics: Monitor improvements in key areas after using the software. Through regularly monitoring and tracking the collected data and comparing the actual results against the established goals and KPIs help you identify whether you are earning or not and through this you can adjust strategies as needed to maximize ROIZ. As much as possible, harness the power of analytics to monitor KPIs and gain actionable insights, and use these insights to continuously optimize supply chain operations.

Why Measuring ROI in Supply Chain Management Software Matters

Investing in SCM software isn’t just about going digital, it’s about making every dollar work harder. ROI matters because it tells you whether your supply chain software is actually delivering measurable value to your business. This isn’t just another line on your budget, it’s a strategic asset that can deliver important benefits. Here’s what ROI delivers:

1. Justifiable Investment: ROI helps you prove that those costs result in long-term savings or revenue gains, whether through labor reduction, faster order processing, or fewer fulfillment errors.
2. Quantifying Benefits: High ROI means your software is helping you do more with less. It also helps identify tangible financial gains like reducing costly inventory errors and labor, minimizing delays and returns, and mostly improving delivery speed and accuracy.
3. Reduces Waste and Costs: SCM software with a strong ROI eliminates redundant tasks, automates operations, and frees up your team for higher-value work because of its transparent KPIs and faster logistics.
4. Improves Customer Experience: The best thing about SCM software is it helps reduce errors, speed up shipping, and provide real-time updates, which ultimately boost customer satisfaction. A smoother supply chain directly leads to better reviews, repeat customers, and more referrals.
5. Supports Scalable Growth: As your business grows, so do supply chain complexities. ROI tells you whether your software can scale with your business without a spike in costs. Systems like EIZ’s Lofko or ShipMarvel are designed to grow alongside you, maintaining efficiency as volumes rise.

All of these advantages can lead to increased self-esteem within the team because who wouldn’t like to work in a successful company where projects run smoothly? And if you’re looking for one, this aligns well with how EIZ’s Lofko and ShipMarvel operate; modular, measurable, and transparent across eCommerce operations.

Common Mistakes When Measuring ROI in Supply Chain Software

Even with the right tools in place, businesses often miscalculate or misinterpret ROI due to these common mistakes:

1. Ignoring Total Costs and Benefits:

Many organizations underestimate the full investment by overlooking hidden expenses like training, maintenance, and integration costs. Similarly, failing to capture indirect gains such as improved customer satisfaction or supplier relationships leads to undervaluing ROI.

2. Confusing Cash Flow with Revenue or Profit:

ROI calculations must be based on actual cash flow rather than just revenue or profit figures, as billed amounts or delivered goods may not immediately translate into cash. It’s also important not to lose focus on indirect factors.

While it’s easy to fixate on direct savings like revenue gains or reduced labor costs, SCM software also impacts indirect areas such as customer satisfaction, employee productivity, and long-term scalability. Ignoring these elements can significantly undervalue your ROI.

3. Overlooking Implementation and Maintenance Costs

ROI becomes inaccurate if you don’t factor in all investment costs. Many companies underestimate the full cost of ownership including onboarding, training, support, and updates. These often significantly increase total investment and can skew ROI calculations if omitted. 

4. Measuring Too Soon

ROI takes time, it’s not a one click and boom there’s your ROI. Measuring ROI too early can result in misleading conclusions, especially before full adoption or workflow optimization has occurred, and worst case scenario, is it risks overlooking long-term gains and continuous improvement. 

5. Not Aligning Metrics with Business Goals

Tracking irrelevant or generic KPIs dilutes the value of ROI analysis. Also, if your ROI metrics don’t align with your strategic goals, such as reducing delivery time or improving order accuracy, you risk tracking “vanity metrics” that don’t reflect real impact. Because again, ROI should be based on clear, strategic objectives that tie directly to your company’s performance goals and risk tolerance. 

Pro Tips to Maximize Your Supply Chain Management Software ROI

Let’s also talk about some tips for you to maximize your SCM software, once your SCM software is in place, here’s how to make the most of your investment:

1. Train Your Team Effectively

Proper onboarding your staff ensures your team uses the software to its full potential, reducing hourtimes, minimizing human errors, improves adoption, and unlocks all available features.

2. Set Clear Business-Aligned KPIs

Choose metrics that reflect your strategic priorities before implementation, such as logistics cost reductions, supplier performance improvements, or customer satisfaction rates.

3. Automate Where Possible

Leverage automation features like order routing, pick-pack-ship workflows, inventory syncing, and shipment notifications to reduce manual workload and speed up operations.

4. Integrate with Your Ecosystem

Connect your SCM software with tools like Shopify, Xero, or 3PL partners to centralize data and eliminate silos between departments.

5. Track KPIs Continuously

Set up regular reporting to monitor ROI-linked metrics such as fulfillment time, inventory turnover, cost per order, or error rates, and identify areas for improvement.

6. Use Analytics to Drive Improvements

Use dashboards and analytics platforms integrated with your SCM software for real-time visibility into KPIs and early issue identification. Additionally, make sure to monitor trends, generate actionable insights, and optimize processes continuously. Let your data guide smarter decisions.

7. Revisit Your Goals Quarterly

ROI isn’t static. Review your objectives and metrics regularly to ensure your SCM software continues to align with your evolving business needs.

Are You Ready to Maximize Your ROI?

Maximizing ROI from your Supply Chain Management software requires diligent planning, measurement, and continuous optimization. Don’t let hidden costs, premature analysis, or misaligned metrics undermine your investment.

With a trusted partner like EIZ, you can confidently navigate the complexities of supply chain management (SCM), SCM software, and ROI. If you’re serious about making your supply chain investment count, EIZ is here to help.

Our platforms, Lofko and ShipMarvel, offer automated, scalable, and transparent solutions that simplify workflows, speed up fulfillment, and deliver measurable results in real-world operations.

Talk to our team today and start your journey on how EIZ can help you turn process efficiency into measurable growth.