From cloud computing to cloud chains – the rise of SCAAS
Ever since Salesforce arrived on the scene nearly 20 years ago, the holy grail of business start-ups has been to emulate the model it essentially created: software as a service (SaaS). There is good reason for this model being so coveted, not only by start-ups but also by captains of industry across sectors where there have been countless efforts to replicate it. The SaaS model allows for amazing margins at scale and predictable annuity revenue streams. For customers, it lowers upfront costs and often leads to better service and product improvements over time. The question being, can the benefits of SaaS be transferred to the world of supply chain management?
Before we explore the answer let’s take a closer look at SaaS. Software as a service, SaaS, is today often used interchangeably with “cloud computing”, a business model in which customers pay to use software hosted on remote computers. According to Wikipedia, Software as a Service is “a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted and controlled.” SaaS may also be referred to as ‘On-Demand Software’.
Today, the most prevalent form of SaaS is customer relationship management software (CRM). Other core business functions across which SaaS has been popularised include office and messaging software, payroll processing software, CAD software, accounting software, content management software, and antivirus software. SaaS differs from traditional software platforms in that your data as a SaaS customer is transferred over a network (like the internet) to the SaaS provider. The application itself is not housed on your computer, but rather it is hosted elsewhere ‘in the cloud’.
SaaS in effect has its origins rooted in the 1960’s. Back then, computers were large and expensive, few small or medium-sized businesses could afford to invest in them, giving rise to the software as a service industry. In the 1960s, the model we know today as “cloud computing” or “SaaS” was simply referred to as a “time sharing system”. A system that involved multiple so called “dumb” terminals (keyboards and monitors without CPUs) that were networked to a mainframe. All applications and data had to reside on the mainframe. In effect, it was an early form of “the internet”, a way of connecting computers together. However, at the time this innovative system made it possible for small and medium-sized businesses, educational organizations, and government entities to access computer systems in a cost-effective way. The transfer of risk and burden of costs, including development, maintenance and infrastructure to a third party is at the heart of the SaaS model, one which has stood the test of time and proved to be incredibly beneficial to suppliers and customers alike. As with any great business operating model other industries, functions and organisations have sought to replicate the concept and in the logistics and supply chain sector this has given rise to “SCaaS” or Supply Chain as a Service.
At its core, SCaaS is a flexible and agile supply chain model that enables organisations to manage their supply chains without the risk of upfront investment in facilities, infrastructure or technology. As you are no doubt aware, there are already many companies providing outsourced services for various aspects of your supply chain. You can outsource your manufacturing, distribution, procurement, accounts payable, transportation management, systems and more. Meaning that essentially all your supply chain services from storage to transport logistics, picking and packing, delivery and inventory management, could be outsourced to an expert partner who handles all these supply chain logistics as a service.
The model the world is working toward will see SCaaS operating much like a ride-hailing service such as Uber. Ultimately, companies will be able to manage their supply chains via an App, or specific programme, and ‘call up’ particular supply chain services as and when they are needed. This enables far greater operating agility allowing for incredible flexibility, supply chain transparency as well as allowing companies to only pay for the services they use – think of it as A la Carte supply chain service or on demand logistics. Speaking of on demand and A la Carte services, if you’re interested in learning more about the current trends, theory and practices powering modern supply chain management, check out our full time Supply Chain management course offerings at https://imm.ac.za/academic-qualifications/qualification-supply-chain-export-management-qualifications/ or our Supply Chain management short course offerings at https://shortcourses.imm.ac.za/online_courses/supply-chain-export-management-short-courses/?gclid=undefined
From the service provider’s side, increasing demand for SCaaS means a more fluid approach. Costs can be saved by sharing loads and storage facilities between various customers, all contingent on need and capacity. At the end of the day, the operations will be determined by the expectations of the end-user. Businesses will demand that their SCaaS providers adapt to consumer demands, which is going to require a high degree of operating agility. Meaning SCaaS providers will have to work very closely with their customers to ensure that the end-user expectations are met or exceeded. In many ways, SCaaS will require logistics providers to become an integral part of their client’s operations, because close and harmonious working relationships will ultimately lead to the most efficient supply chains, and therefore the best customer service to the end-user.
Current fleet and supply chain companies will need to adapt quickly to keep pace with the burgeoning demand for SCaaS. Those of you who have been in the game for years should however already have implemented SCaaS models in various guises for many of your clients, either proactively or based on growing demand. If you haven’t ventured down this path, as with most things the best time to begin was yesterday, but today is better than tomorrow!
Supply Chain as a Service (SCaaS) culminates in better collaboration, improved quality control, and higher efficiency rates, shipping optimization, reductions in overhead costs, improved risk mitigation and superior cash flow. The advantage of moving to digital supply chain platforms would include: enhanced productivity, greater connectivity, lower cost, greater service, heightened flexibility and adaptability and better asset management.
In order to leverage all available technologies in the future companies will not have the expertise, resourcees, and funding to try to do this on their own. Only the largest companies may decide to retain these functions internally. Furthermore, failing to shift to a digital SCaaS model will result in a lack of competitiveness and financial viability.
Globally, companies are being forced, either due to financial, resources, timing or competitive reasons to outsource more of their Supply Chain activities – meaning the adoption of SCaaS is likely to increase exponentially over time. Consequently, there will likely be increasing opportunity for Supply Chain as a Service consulting firms and providers to become more integrated with their customer base in the provision of their offerings. If a client company needs to go to different outsourcing companies for every single aspect of their supply chain the management of numerous third-party organisations will become their biggest challenge. The age of integrated, full and A la Carte supply chain management is truly upon us – welcome to the age of the cloud chain.