What is Supply Chain as a Service?
Supply Chain as a Service (SCaaS) is a relatively new method of managing a supply chain in which all portions (or at least most) of the process are outsourced to and supported by a third-party company. The practice tends to benefit companies in numerous ways but also poses some significant challenges to companies who aren’t ready to jump in with both feet.
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.
How Can SCaaS Benefit Companies?
SCaaS offers numerous exciting possibilities to companies and can be effectively used by many different industries. Specifically, SCaaS can lead to decreased cost, increased company growth, and the ability to get the most out of the latest and greatest technology available.
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.
Increased Company Growth
Things change in a heartbeat when it comes to complex, interconnected, global supply systems. For this reason, utilizing a SCaaS model enables companies to rapidly fill openings in the market when they become available.
In the competitive world in which we find ourselves, we need to leverage every possible advantage we have at our disposal. SCaaS can help businesses increase in scale and adjust their company’s reach rapidly and efficiently as access to industry connections open up to the shipper via the third-party they are outsourcing to that has already spent the time establishing those connections.
Ability to Utilize the Latest Tech
The use of cloud-based software is an integral part of SCaaS operations. This technology fits seamlessly into a SCaaS model and allows businesses to have insight into all different parts of the supply chain.
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, which is included through a centralized dashboard in most cases.
The tools that become available to you through this partnership can often greatly reduce errors and improves efficiency to a remarkable degree, allowing companies to reap incredible financial benefits and have visibility throughout the entire supply chain including manufacturing, logistics, as well as all other parts of the process.
What are the Challenges in Implementing SCaaS?
Surprisingly, it’s not necessarily the technology itself that makes implementing SCaaS difficult. In fact, it is the apprehension to the idea of a full-scale tech platform taking on so much responsibility that many people often have 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 and all the apprehension becomes a bit more understandable.
Let’s take a look at why this is and how to overcome them…
Change is Always Hard
The reason why people don’t adopt the latest technology usually has little to do with 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.
Giving Up the Reigns is Uncomfortable
If you’ve been in control of all parts of your supply chain management, you may not want to let go of said power. This is not necessarily because you are power-hungry, but you may place great value on having a sense of control and ownership over when and how things are done.
Switching to a SCaaS system will certainly be different, but you will no longer need to devote as much time to your supply chain management, and can instead focus on streamlining other areas of your business.
Everyone’s an Expert
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, as these outsourced companies are using the best technology and the most knowledgeable professionals in the field to support the supply chain.
Where Does SCaaS Stand in 2021?
By most estimates, moving toward a SCaaS model is an essential step for businesses to take. While the challenges with the system are many, the benefits are significant and are consistent with the direction in which technology and supply chains are headed in general.
Visibility is key, and supply chain systems are far too complex for most 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.
Moving forward, businesses should take a deep breath and accept that a SCaaS model is one of the best changes they can make to improve their business practices in 2021 and beyond. By leveraging cloud-based technology and using the top supply chain practices in the field, many companies are enjoying the rich rewards of SCaaS.