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Supply Chain as a Service (SCaaS) is a relatively new method for managing a supply chain. With this strategy, portions of the process are outsourced to and supported by a third-party. The practice tends to benefit companies in numerous ways but also poses some significant challenges.
By leveraging cloud-based technology and using the top supply chain practices in the field, many companies are enjoying the rich rewards of SCaaS. Let’s take a look at the specific benefits of the model, as well as some challenges with implementation. At the end of this article, we’ll tie it all together and discuss what the future of SCaaS looks like in 2021 and beyond.
SCaaS offers numerous exciting possibilities to companies and can be effectively used by many different industries. Specifically, by leveraging SCaaS, companies can oftentimes create a decrease in the cost of operations and increase company growth all while remaining competitive.
Businesses that have implemented a SCaaS or Redwood's LPaaS (Logistics Platform as a Service) model have seen a significant reduction in costs in many different areas.
By effectively utilizing SCaaS, companies can enjoy the benefit of not having to keep as many full-time employees on hand. Instead, they can rely on supply chain professionals only when they are needed and thus reduce their staffing costs by an appreciable degree.
Things change in a heartbeat when it comes to complex, interconnected, global supply chains. For this reason, utilizing a SCaaS model enables companies to rapidly fill openings in the market when they become available.
In the competitive supply chain industry, we need to leverage every advantage we have available. SCaaS can help businesses scale up and adjust their company’s reach rapidly and efficiently. This is due to access to industry connections the shipper gains via the third-party. The third-party they are outsourcing to has already spent the time establishing those connections.
The use of cloud-based software is an integral part of SCaaS operations. This technology fits seamlessly into a SCaaS model and allows businesses better visibility.
Similar to having the ability to leverage the third-party company's connections for your own supply chain, SCaaS allows you the use of their tech platforms as well. This is usually accessible via a centralized dashboard.
The tools that become available to you through this partnership can often greatly reduce errors and improves efficiency to a remarkable degree. This alone allows companies to reap incredible financial benefits and visibility throughout the entire supply chain.
Surprisingly, it’s not necessarily the technology itself that makes implementing SCaaS difficult. It's the apprehension to the idea of a tech platform taking on so much responsibility that poses the greatest challenge. Add to that the fact that you are outsourcing quite a few critical components of your business to another party. When viewed all together the apprehension becomes a bit more understandable.
Let's take a look at why this is and how to overcome them...
People who don’t adopt the latest tech rarely base it on the belief that the tech won’t help in the way it claims. Rather, it’s because people would rather just stick with “the way it’s always been done”.
Routine is comfortable, change is not. Even when a new system is proven to work beyond a reasonable doubt, many businesses are still resistant to change. This has always been and will always be one of the biggest challenges when it comes to the use of new systems and technology.
If you’ve been the one in control of your supply chain management, you may not want to let go of the reigns. This is not necessarily because you are power-hungry and it is actually fairly normal. This happens to most people who place value on having control over when and how their business runs.
Switching to a SCaaS system will certainly be different, no doubt about it. However, you will no longer need to devote as much time to your supply chain management tasks, and can instead focus on streamlining other areas of your business.
Some companies don’t want to switch to an outsourced SCaaS model simply because they believe they do the job better than anyone else can.
While in some cases this may be true, more often than not this is a costly oversight. These outsourced companies generally employ the best technology and the most knowledgeable professionals in the field.
By most estimates, moving toward a SCaaS model is an essential step for businesses to take. While there may be a few challenges, the benefits are significant and are consistent with the direction in which technology and supply chains are headed.
Supply chain visibility is key in the global market. However, most supply chain systems are rather complex. Sometimes so much so that it is near impossible for some businesses to do everything on their own. Just as more supply chains have ditched linear supply chain models in favor of newer, more flexible systems, companies need to adopt more accommodating systems such as SCaaS before it’s too late.