Some e-commerce and manufacturing companies do not handle all aspects of their supply chain. Instead, many businesses choose to outsource it to third-party logistics companies (3PLs) that can perform a wider range of specific tasks, such as fulfillment, warehousing, or transportation services. Supply chain as a service, or SCaaS, is when businesses hire these outsourced companies who utilize cloud technology in their logistics services.
SCaaS is similar to software as a service (SaaS) in many ways. SCaaS allows companies to evaluate their current supply chain management and decide which areas could be improved by outsourcing it to logistics companies. Many logistics service partners can offer end-to-end infrastructure and technology geared to provide cost savings and increase operational growth for businesses.
With cloud-based technology advancing, SCaaS may involve the use of a single logistical solutions provider or multiple providers. The outsourced provider may also manage the entire supply chain process on behalf of the company, with their virtual team working with the company to streamline and improve all areas from procurement to product storage to distribution. Other logistics providers may offer specific services such as inventory management, shipping, or reverse logistics.
SCAAS ROLE IN LOGISTICS
Businesses of all sizes and stages of operations may find benefits when using SCaaS in their supply chain management strategies. Whether it is at the beginning of the supply chain or at the end, SCaaS has a significant role to play, including:
- Raw materials procurement: Manufacturers procuring raw materials may have multiple suppliers from global locations. SCaaS allows companies to understand regulatory restrictions for shipments, possible raw materials delays, and supplier transparency so manufacturers may decide on the right procurement procedures to obtain shipments on time.
- Manufacturing management: Companies working with manufacturers need to understand production processes such as product lead times, inventory amounts, and transportation capabilities. SCaaS offers visibility into the manufacturing process for better supply chain management, so companies have the right number of products at the right times to fill orders.
- Warehouse and distribution management: Once manufacturers send out products, many SCaaS providers offer inventory management solutions such as warehouse services as well as inventory receiving and shipping capabilities. Also, 3PLs can ensure inventory is distributed to the right locations based on customer demand so that warehouse and distribution centers can hold the appropriate amount of stock ready for orders.
- Fulfillment and transportation: Based on the supply chain setup, a company may require order fulfillment, product delivery, or product return services. SCaaS can oversee everything from pick & pack work to the logistical strategies so that products are received in the fastest time and safest manner possible. A SCaaS provider may also handle reverse logistics services when a product is returned to the retailer or manufacturer from the customer due to damage or other issues.
BENEFITS OF SCAAS
- Access to the latest technology: SCaaS relies on many cloud-based applications and solutions to streamline supply chain processes. A company gains access to this technology from the 3PL and can use it in a variety of ways, such as tracking warehouse inventory, monitoring shipments, and generating reports.
- Scalability: Since every business is at a different stage of its supply chain operations, SCaaS offers enhanced scalability solutions. A 3PL may tailor its service solutions to work with the existing supply chain operations, then offer additional services when required or scale back services if a business decides to handle part of its supply chain internally.
- Cost-effective solutions: By utilizing SCaaS, companies can outsource work to capable 3PLs who have the workers and teams to effectively operate the supply chain. A company does not have to hire these workers or oversee these operations internally, which otherwise might raise their operational costs outside of established budgets
If your company is considering SCaaS for its supply chain, it’s important to make sure it can integrate with your existing processes. The most important aspect to consider is understanding how your supply chain functions. Gaining deeper visibility and transparency into your management operations should allow you to know exactly where SCaaS could offer the most benefits.
Applying SCaaS to the wrong area could cause a company to overlook serious issues that may be occurring in other places in the supply chain. For example, SCaaS may offer cost savings for fulfillment and distribution, yet if a company’s internal procurement team is working with the wrong suppliers, the potential cost savings may be wiped out due to too many returns. So, a company may want to investigate applying SCaaS toward their procurement tasks to reduce product returns.
Once you understand where SCaaS can be applied, you can look into using the accessible technology with your internal network services. Evaluate the software and platforms offered by the 3PL and how they might integrate with existing applications within your company. Decide whether upgrading the company’s existing applications could offer increased operational benefits to provide greater levels of competitiveness. Then, train employees on the use of accessible technology.
Lastly, establish open and honest communication with the 3PL who is overseeing the outsourced work. Figure out who is the point of contact that will manage all concerns and complaints. You want to ensure that you can reach your point of contact if you have issues or questions.
WHAT IS THE FUTURE OF SCAAS?
SCaaS and 3PL outsourcing services continue to advance due to technology and the need for deeper levels of visibility and accountability with supply chain operations. The future of SCaaS will rely of versatility and adaptability, which should spur increased demand from small to medium-sized enterprises. A 3PL may also offer a range of bundled services, giving companies an opportunity to find additional cost savings based on the current and future needs of their operations.
INNOVATIVE SOLUTIONS FROM WSI
WSI offers logistics services to companies of all sizes across various industries. Our innovative solutions take into account a customer’s current operational capabilities as we utilize technologies to overcome inventory management and transportation hurdles to streamline their supply chains.
Our services include warehousing and distribution, fulfillment, global transportation, reverse logistics, and contract services. By providing integrated 3PL solutions, your company can gain greater levels of inventory and transportation management services to make your supply chain more competitive in your market segment. To learn more about our logistical solutions, contact WSI today.