Digital Threads | Sustainability
Is Your Supply Chain Management System Sustainable?
Is Your Supply Chain Management System Sustainable?Back
Creating a sustainable supply chain management process is hard. Sometimes it feels like you need precognition to make it work. How can you know that the systems you put in place now will support you in the future? How can you tell whether what you’re implementing today will be viable tomorrow?
With the rate at which technology advances, it’s easy to panic over whether you’re investing in the right software and systems, or whether those investments will be surpassed by something a year down the line.
We’ve talked a lot in the last couple of weeks about our hypothetical bakery. We looked at how they can achieve scalability in their supply chain management. We also talked about how the digital systems they implement need to have usability as a core value.
When our hypothetical baker needs to think about future proofing their business, the nuts and bolts of it are pretty simple. It’s not likely that there will be a bread making technological revolution in the next X years that will make any new equipment obsolete.
On the business side though, that may be the case. If our newly tech savvy baker decides to take the plunge and implement a digital system that gives them complete control over their physical world, how can they be sure that system won’t be outdated the week after they get it up and running?
Is SaaS more sustainable than COTS?
One of our most read pieces of writing is a brief article titled ‘SaaS vs COTS’. This, we think, speaks volumes. Even in today’s market where SaaS applications are commonplace, people are still trying to decide whether it’s beneficial to have service based applications rather than monolithic systems.
For the uninitiated, a SaaS (software as a service) application is one where you subscribe to an application that is hosted centrally by the applications developers. A COTS (commercial off-the-shelf) application is one where you buy a perpetual license and install it on your local machines.
In the time before high speed internet connections COTS ruled, and for good reason. The cloud was a pipedream and you needed your software running locally to make any use of it. The rise of SaaS has been steady but has only sped up alongside ever increasing connectivity speeds.
The reason SaaS applications are sustainable is down to how the business model works in the users favour. When purchasing a COTS solution, you are buying into a static vision. You get the most complete software available at the point of purchase. That might be fine at that moment but it’s already becoming outdated the minute you install it.
Why are SaaS applications sustainable?
With a well developed SaaS application, you have access to a system that evolves with the growing needs of its customers and one that matures as new technology is created and brought to market. Good SaaS developers and good SaaS platforms keep you at the cutting edge at all times.
They also tie into our previous article’s discussion on scalability. Being predominantly cloud native, SaaS applications have access to a level of scalability that COTS systems don’t.
Our hypothetical baker might see a nifty bit of software they can buy and install to help them manage growing demand. Not a bad choice at all until the growth becomes exponential. All of a sudden they’re looking at new locations they want to open and a business model that’s multiple times what they had before.
A COTS solution that might have fitted perfectly in a flourishing, single location business quickly becomes obsolete.
If our baker had found the right application, powered by the cloud, with limitless room for growth, they wouldn’t need to think about switching or upgrading at all. Their software would grow with them, enabling their expansion rather than limiting it.
How does ‘anything as a service’ factor in?
SaaS is one thing, but that’s not the only XaaS (anything as a service) option available. SaaS applications are just that, single applications living within a digital space managed and maintained by their developer. But why not think bigger?
Our hypothetical baker has made all the right choices. They’ve created a great product, hired the right people, marketed correctly, and invested in the right technologies. They’re not just opening new branches, they’re expanding worldwide now.
Their supply chain is no longer a linear and local entity, focused on a single location. In the early days, it was ingredients in, which became baked goods, which were sold to the customer. Easy as pie (or bread?).
Our newly multinational baker has finance offices in one location, training facilities in another, and production and manufacturing nodes all around the world. Not to mention a swathe of bakeries all around the world selling their product.
As an enterprise business and a multinational entity, they need to consider the sustainability of their systems now more than ever. Having the right digital systems in place to manage their business process is one thing, but what about their extended infrastructure?
Here comes IaaS (infrastructure as a service).
Their global network of locations produces massive amounts of data and requires digital systems to match. They could invest heavily in IT hardware and bespoke systems, but then we come back to the same problem we had with the SaaS vs COTS argument. Their brand new data centre will be top of the line today, but depreciating in value tomorrow.
With IaaS, they again can benefit from the power of the cloud and the dedication of independent experts. Maintaining onsite IT systems at scale will invariably come with substantial architectural debt. Systems can break and become costly to replace. And, as mentioned, you run the risk of finding your systems outmoded, unable to keep pace with your ambitions, and ultimately redundant.
We’re obviously passionate about digital solutions and we hope this peek into the sustainability of digital systems has been interesting. For our next article we’ll be tying everything together and taking a look at how affordability gets into the mix.
If you haven’t already heard, we’ll be at the European Supply Chain Management Summit this week discussing all of this stuff in great detail. Our own Martin Kelman will be sharing his expertise on digital threads. Make sure you don’t miss him, book your digital seat today!