Virtual Supply Chain

Supply Chain as a Service: The Promise of a Virtual Supply Chain

Cloud computing allows companies to reduce their upfront capital expenditures on servers while simultaneously delivering ongoing flexible computing power, server management, maintenance and replacement. Innovative companies such as Rackspace offer a plethora of IT solutions across multiple cloud providers to effectively support and manage applications from website hosting to email.

Similarly, Supply Chain as a Service offers companies a new flexible service model to attain virtual economies of scale day one without all the upfront investment in people, processes, and equipment. Supply Chain as a Service is an innovative new approach to supply chain that allows companies to generate a 4-5x return on investment by partnering with one service partner to support all or part of their supply chain needs including procurement, production control, manufacturing, quality, warehousing, and logistics. Companies that leverage Supply Chain as a Service realize lower and variable cost structures, leverage proven technology and systems, and attain instant scalability.

Challenges

Commercializing a product is challenging whether you are a startup or established company and the accelerating speed of product innovation required across industries is staggering.

A growing group of leading-edge companies are reevaluating their business models and partnering with industry functional operations leaders in manufacturing, procurement, production control, quality, warehousing, and logistics to bring their products to market. Unfortunately, these varied and disconnected functional approaches can quickly become overwhelming and unwieldy for many companies.

Growing companies need more flexible resources and processes that are much different than larger established companies. The ability to flex resources, adapt quickly, and focus on specific supply chain disciplines are all requirements for world-class supply chain management. In order to remain competitive, growing businesses will need to partner with end to end supply chain solutions providers in order to gain the cost structure, technology and systems, and scale of their larger competitors.

What is Supply Chain as a Service?

Supply Chain as a Service is a virtual supply chain team enabled by cloud software that supports all or part of a company’s supply chain operations. A virtual Supply Chain as a Service team partners with a company’s existing team to execute procurement, production control, manufacturing, quality, warehousing, and logistics projects or daily operations.

Supply chain functional experts at third-party service partners are leveraged based on a company’s unique needs, scaling with companies as they grow. Companies can utilize previously unattainable blends of professional skillsets and experience levels as needed during complex projects instead of recruiting and onboarding one specialized staff member.

Supply Chain as a Service offers companies end-to-end supply chain management services from strategy to product delivery freeing up valuable company time to focus on customers and new product development. The ability to leverage world-class supply chain people and services puts growing companies on a level playing field with larger competitors.

Solutions

1.  Realize Lower & Variable Cost Structure

Supply Chain as a Service offers companies a lower and variable cost structure creating a commercial competitive advantage. Experienced talent is scarce and companies are finding that Supply Chain as a Service provides low-cost access to talent with direct experience solving specific problems.

Companies are acquiring access to more senior talent at a lower cost than hiring a full time resource by utilizing Supply Chain as a Service part time combinations of senior and junior resources that equate to one full time resource. Companies are reducing their staffing costs by 50% by utilizing Supply Chain as a Service to support periodic spikes in supply chain need.Supply Chain need spikes from strategic projects such as supply base building for a new plant are well suited for Supply Chain as a Service.

Companies that leverage Supply Chain as a Service can quickly improve their competitive commercial position by utilizing a lower and variable cost structure.

2.  Leverage Proven Technology & Systems

SAE recognized Supply Chain as a Service as the most disruptive technology innovation at the 2016 SAE World Congress for its demonstrated results in the automotive industry.

New software technologies have allowed Supply Chain as a Service to support end to end supply chain operations, better bridging gaps in business process outsourcing offerings that focus on tactical functions within supply chain; Supply Chain as a Service’s integrated cloud software and skilled people combination has led to new program launch timeline reductions of 33% on average.

Supply Chain as a Service systems reduce operational execution risk, and create smooth transitions from idea to customer delivery. Our experience has demonstrated bill of material costs can be reduced by 15% on average when established systems for supplier quoting and sourcing are utilized. Companies today are realizing immense value by tapping into the established proven technology and systems that Supply Chain as a Service offers.

3.  Attain Instant Scalability

Global markets can shift quickly, so the ability to tap into an external team to quickly expand will position a company to take advantage of market openings. Utilizing periodic incremental support to backfill and augment your internal supply chain team can reduce employee turnover, improve job satisfaction, and enhance results.

Program launch risk is reduced 25% by gaining instant and ongoing external people bandwidth. Experienced supply chain professionals can leverage established supplier relationships to double supplier engagement to improve commercial results.

Technical commodity expertise increases product speed to market and allows Supply Chain as a Service teams to contribute to the ongoing technical product enhancement. Supply Chain as a Service also provides companies with instant scalability by tapping into external supply chain talent as needed to expand quicker.

Conclusion

Leading companies adopting Supply Chain as a Service for part or all of their supply chain operational needs quickly develop a competitive advantage over their competition. As with cloud computing, Supply Chain as a Service drastically rewrites the business rules of engagement, creating lower and variable cost structure opportunities for early adopters. Supply Chain as a Service also allows companies to focus on their core strengths while leveraging proven technology and systems to efficiently bring products to customers.

Today, companies are able to instantly scale up and down by implementing Supply Chain as a Service, and without the ramp-up, ongoing operational costs, or hiring of permanent staff. Companies who adopt Supply Chain as a Service realize lower and variable cost structures, leverage proven technology and systems, and attain instant scalability that provides a completive advantage in both the short and long term.

-William