Role of SAAS in SCM, Article Writing Example

Executive Summary

Before the Internet came into the spotlight; the Supply Chain Management or SCM proved to be effective but very expensive. But the trending of the internet suddenly changed the business world significantly. Services through the internet offered cheap, and real time attributes, along with its highly efficient communication feature. The internet presented almost endless number of possibilities and potential. Companies and businesses in every scale took advantage of the technology’s practicality by interconnecting their supply chain with other supply chains of other firms or suppliers and customers together in a single network. This feat became more popular during the 2008 recession, where businesses quickly reacted by cutting their cost by reducing employees’ technology budgets and integrating this technology in their supply chain.

Software-as-a-service (SaaS) is a Cloud-based software application that can be accessed over the Internet by charging the users for a subscription fee. The service proved to be cost-effective, faster and more reliable than traditional ways. This greatly benefits those companies and managements of small and medium scale businesses who previously could not afford traditional SCM software that were seemingly made specifically for large scale enterprises. These small and medium scale enterprises can now easily utilize features and collaborate with their suppliers and stakeholders to perform more accurately and efficiently in delivery forecasts and excess inventory build-ups which, during the preceding years, only large enterprises could afford. The fast advancement and improvement of technology presented a huge amount of possibilities for the enterprises. This factor became one of the main driving forces in the development of new software technologies and innovations that takes advantage of the potentials the current and future technologies can offer. Software as a Service can be considered as one of the most valuable innovation in the history of facilitating the Supply Chain Management field. The features and solutions it offers complements greatly to the needs of SCM especially communication and collaboration to partners and other supply chain firms even across the globe. The real-time feature of the software also proved to be very important to keep partners updated.

Despite the advantages and disadvantages of the SaaS as SCM software, the technology is not yet fully developed. The technology will, no doubt, continue to improve to support demanding innovative solutions. The software is indeed recommended to companies and businesses, who cannot afford SCM software at their current scale, who need to organize their supply chain methods and. The SaaS-SCM integration still holds vast potential which cannot be ignored by companies and the software developers in these times and in the near future.

Introduction

Technology, since the beginning of age, provides appropriate solutions that meet the people’s unending demands and expectations. These technological shifts and advancements arise because of the huge markets aspiring for more affordable and less complex solutions. The requirement of such innovations increases very rapidly especially the time the internet was made popular for mass usage. This allowed people to freely interact and communicate in a global scale easily.

Supply chain management or SCM is a major asset, especially on multinational companies and corporations. As time progresses, this field also required technological advancement to ease up the process and save significant amount of time and resources. One of the products of this advancement was called the Software as a Service or more commonly known as SaaS. SaaS was introduced some time ago but due to the young and newly optimized technology it utilizes, it still holds so much potential besides the features it offers today. This report will further elaborate the roles and functions of the integration of SaaS to SCM for the improvement of companies’ productivity and where does this young technology, with seemingly vast potential, take us in the future.

Background conceptual information, definitions, characteristics and example

A supply chain is a system of organizations, firms, people, technology, tasks, resources and information involved in delivering a product or service from the supplier to the consumer. Porter (1985) classifies a supply chain as an interconnected network of independent companies or firms’ value chains that are involved in the production of particular products and services. This group or network of value chains primarily targets the customers’ satisfaction; unlike the traditional value chain which mainly aims at increasing a firm’s profit margin (McGee, 1987). Supply chain fundamentally is a behavioral structural design in which any market-oriented organization gets involved and therefore is an architecture that needs to be improved, refined and restructured depending on the organization’s needs.

Supply chain management or simply SCM is the supervision and organization of a system of interconnected and related businesses and supply chains involved in the provisioning of products and services required by the clients and the customers (Harland, 1996). SCM is the oversight of all the movements and storing of raw materials, inventory, and the finished products from the production stage until the consumption of the products by the consumers. It can be advantageous to effectively reduce the project’s inventory and cost. For the supply chain manager to be more efficient and accurate in their work, several solutions had been utilized and recognized to aid the managers for their task. One of these solutions is the integration of the concept into the latest technology to increase the effectiveness of the supply chain manager. The technology is called the Software-as-a-service or simply SaaS.

Software-as-a-service (SaaS) is a Cloud-based software application that can be accessed over the Internet by charging the users for a subscription fee (Software as a Service (SaaS), 2010). It offers the managers of different related firms the ability to connect and give all parties in the supply chain to easily interact, offering value added, low-cost, and real-time Web based solutions through just the user’s web browser. For these reasons, the supply chain management field became an early user of SaaS (Monkmeyer, 2011) because of the field’s obvious need for communication. The software also takes advantage against other traditional software by easing deployment and by not needing additional installation of software since it only uses a web browser, therefore attracting the firms employing the supply chain management by its lesser cost against traditional ways in interacting with the organization’s network in different places.

The PR Newswire article (2004, Para. 1) mentioned that “The companies cited in the brief experienced cost reduction in lower costs for connectivity and supply chain software, as well as reductions in inventory and greater efficiency in logistics management.“ SCM and SaaS can work well together by utilizing the power of the current technology in managing supply chains, the management may expect a significant profit from the cost reduction that this combination may offer.

With the real time open data exchange between trading partners and supply chains that the software offers, information can be shared more easily to improve the product planning and delivery. The integration of SaaS to SCM can be a foundation for better manufacturing, providing the companies more effective control of inventories across its supply chain (Go Lean with Integrated SaaS, 2007). Though the concept of the supply chain management and its benefits has been available for years, utilizing those profits has been very tricky and expensive. The development and introduction of the integration of SaaS to the supply chain management provides more affordable means for partners to share information in real time, hence making the production more efficient and productive.

Information on the importance of the chosen topic

Inaccurate, incomplete and untimely data are the worst result that could be achieved in almost every product deployment. It greatly affects and impacts a company’s capacity to compete in today’s market. The quality of data or product is critical in any supplier-customer relationship. Companies, most of the time, ignore this problem resulting in wasted resources such as time and money. According to an article by John Moore and Adrian Gonzales (2002), they projected two possible solutions to this problem. The first one is to invest internal resources to establish and maintain a communication infrastructure and data quality management program and the outsourcing of the responsibility of a hosted network provider that provides the appropriate infrastructure as well as the data quality management services. Good investment in technology can greatly help in diminishing costs allocated by the company in supply chain management.

Years ago, before the Internet became popular; the supply chain software developer’s main goal was to create software that can make a company’s supply chain run smoothly. The developer’s ambition was limited to just enhance the supply chain managers’ ability to foresee the demand from customers’ aspirations and make the processes of the supply chains and other interrelated firms operate more efficiently and productively. But the sudden popularity of the World Wide Web offered cheap, universal and real time attributes, along with its simple, unanimously accepted communication feature. The internet has presented an almost endless number of possibilities and potential. The companies took advantage of the technology by connecting their supply chain with other supply chains of other firms or suppliers and customers together in a single network.

The rapid growth of Global complexity further drives companies into utilizing newer and latest technology; the Cloud computing technology. When the global economy experienced a recession 2008, most of the multinational companies quickly reacted by cutting their costs by reducing employee’s technology budgets (Wharton University, 2011). They’ve realized that instead of monitoring their supply chains manually, they decided to oversee them by subscribing into SaaS services. The service, according to the article in Wharton University (2011), proved to be cost-effective since it is faster and more reliable than traditional ways of monitoring their supply streamline. This greatly benefits those companies and managements that previously could not afford extensive SCM software which still operate and relies on low-end and limited technology budget.

The rapid advancement of technology optimizes the costs and possibilities for everyone involved. According to Thomas Wailgum (2010), this became one of the main driving force and reason for the trending of the business-to-business commerce transactions; the connection and interaction between different companies who do business together in a single network, and the development of new software technologies and innovations that takes advantage of the potentials the availability of the internet may offer. These feats are already implemented in most companies that share some information and data with their supply chain partners.

How this topic interacts and facilitates the supply chain

Understanding the buyer–seller interaction in different parts of the supply chain originated from several decades ago when the conventional marketing mix paradigm started having issues and being challenged. The expansion of the service sector and the association of database infrastructure allowed companies to target clients and customers more efficiently (Fernie, 1998). According to an article authored by Dapiran and Hogarth Scott for the International Journal of Retail & Distribution Management (2003), the power and effectiveness in the supply chain can be defined and achieved operationally as the ability of one unit in the chain to control the decision of another unit. Meaning that, for the company to achieve such a power in the supply chain, the organization should form a strategy or an organizational plan on how well their operations should perform to achieve high efficiency.

The rapid worldwide growth in business increased the Supply chain’s complexity, costs, and the need to rapidly respond to supply chain partners forced the companies across industries to formulate and consider new methods to efficiently deploy and modify the solutions for the supply chain management. The Software as a Service or SaaS is a software that fascinated the attention of manufacturers and managers who wish to benefit from its specific functionalities that facilitates their supply chain management duties. One of the main reasons for the manufacturer’s interest in SaaS is the need for real time applications that can aid in planning tasks and activities of highly complex and fragmented supply chains (SaaS for SCM, 2006). SaaS is also a key in effective deployment that has the enormous potential to allow companies approach a significant reduction of cost (Boyd, Martin, and Casey, 2008).

The introduction and the sudden popularity of the World Wide Web or internet showed the great potential of making the supply chain communicate and operate more efficiently possible. SaaS created a social enterprise for Supplier Collaboration. All stakeholders could share content, contribute, and update each other regarding concerns and issues. According to Flanagan (2012), collaboration is an important factor of making a better and more productive business decision. SaaS applications made it possible for suppliers to work and collaborate together easily.

According to Monkmeyer (2011), since the SaaS solutions became popular, the industry has greatly improved its effectiveness and efficiency due to the innate features and qualities of this software. SaaS allows companies to run a single resource of software rather than the traditional standalone software that has to be installed on each of the organization’s computers, making it more cost efficient and easy to manage.

The core advantages of the Software as a Service implementation for a company is listed by Nick Matyas in an article (2009). According to him, SaaS generally saves money by not requiring a large capital, eliminating software installations, updates and maintenance, and by reducing IT staffing and technology expenditures. Matyas (2009) also emphasized the main benefits that the software can offer such as real-time global supply chain information, statistics and performance feeds, mobility (since it can be used or accessed anywhere with a laptop or other desktops), and saving deployment time for the entire company, because even if its resources is scattered across the globe, they can acquire the software without physically installing anything. It can also encourage the coordination between supply chain partners, customers, suppliers and logistic providers and controlling confidentiality and security of the information you don’t want to leak to other competing firms at the same time since it improves the network and security by utilizing the built-in global security to defend against hackers, viruses and malicious threats. The optimization of the internet also benefits the flexibility of the SaaS’ features and scalability depending on what the organization needs.

Discussions on implications and future directions

Based on the articles and research materials that were compiled in this paper, one could actually see clearly the significant change of what the technology can do to improve an already existing system. The utilization of the World Wide Web became a very important stepping stone in the improvement of how the world works. Software as a Service is indeed can be considered as one of the most valuable innovations in the history of facilitating the Supply Chain Management field. The features and solutions it offers complements greatly to the needs of SCM especially communication and collaboration with partners and other supply chain firms even across the globe. The real-time feature of the software also proved to be very, very important to keep partners updated immediately about different subject matter regarding the collaborated projects such as schedules, information, problems and issues so that the involved party may take care of it immediately before it goes out of hand.

However, despite these advantages, one can argue that it holds certain limitations which are also caused by the technology itself. One disadvantage that I noticed is that the SCM may rely so much on this technology that if it fails, it would require a hard and thorough process to fix the problem. Cloud Computing is fairly not new to the technology scene but it is also still not perfect. The organization or the company, who rely so much on this technology, may experience lags in their work if the internet or the service went down or disconnected. SaaS’ system downtime, like any other unavailable web sites, may render the software completely useless and can cause the process of the company to stop on its tracks. Surely, it’s not that often that a company or a service provided in the World Wide Web experience a downtime or disconnection, but this is a very plausible risk in relying on this technology (Schaeffer, n.d.).

According to Rick Nucci (2009) in contradiction to an article comparing the cost of SaaS against other SCM software, SaaS proved to be less costly because it is subscription based. Generally, a SaaS solution that has an almost the similar feature and very comparable competitive service offering will be priced around the same as the traditional SCM software would cost but the integration and deployment would definitely cost less. Therefore, cost alone cannot determine whether an organization should purchase the service or stick to legacy software. One must also see other factors outside cost such as the functionality, deployment speed, and the organization’s needs (The Economy of SaaS, 2009)

Conclusion

Perhaps, the most significant role of the SaaS to the SCM is the affordability of a quality software solution to meet organizations of every scale’s needs. The technology offers a more reliable and efficient approach in overlooking and managing their supply chains with lesser cost compared to most of alternatives (The Economy of SaaS, 2009). Despite the pros and cons of the SCM software, the technology is not young but still not too old. According to Flanagan (2012), the technology will continue to improve to support demanding innovative solutions. The software is indeed recommended for companies, especially those on the small and medium sized businesses, who need to organize their supply chain methods and strategies but cannot afford expensive SCM software for their company.

Though, it has flaws and setbacks, it is largely compensated by the many advantages and gains that the company may take advantage to fully optimize their resources more efficiently. The SaaS-SCM integration still holds vast potential which cannot be ignored by companies and the software developers as well.

References

Boyd, A., Martin, K. and Casey, D. (2008). The Secret SaaS: On-Demand Supply Chain Management. Retrieved 2012, from http://www.aberdeen.com/Aberdeen-Library/5370/RA-supply-chain-management.aspx

Dapiran, G. and Scott, H. (2003). Are cooperation and trust being confused with power? An analysis of food retailing in Australia and the UK. International Journal of Retail & Distribution Management , 256-257.

Fernie, J. (1998). In Logistics and Retail Management. London: Kogan page.

Flanagan, M. (2012, April). SaaS Levels the Playing Field for Supply Chain. Retrieved 2012, from http://morefromless.com/category/supply-chain-management-software-as-a-service/

Go Lean with Integrated SaaS. (2007). IT Solutions , 10.

Harland, C. (1996). Supply Chain Management, Purchasing and Supply Management, Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics. In Blackwell Encyclopedic Dictionary of Operations Management. UK: Blackwell.

Moore, J. and Gonzales, A. (2002). Data quality management: The supply chain cornerstone. Chemical Engineering Progress , 29.

Matyas, N. (2009). Supply Chain Management – Software-as-a-Service. Retrieved 2012, from http://ezinearticles.com/?Supply-Chain-Management—Software-as-a-Service&id=1966443

McGee, J. &. (1987). Retail Strategies in the UK. Chichester: John Wiley & Sons.

Monkmeyer, J. (2011). SaaS, “The Cloud” & 3PLs. Supply & Demand Chain Executive .

Nucci, R. (2009). When Debating “The Economics of SaaS,” Lets Not Use Fuzzy Math. Retrieved 2012 from http://blogs.boomi.com/bod/2009/07/when-debating-the-economics-of-saas-lets-not-use-fuzzy-math.html

Porter, M. (1985). Competitive Advantage. New Yoirk: Free Press.

(2004). PR Newswire. New York: PR Newswire Association LLC.

SaaS for SCM. (2006, April). Retrieved 2012, from http://www.crm-reviews.com/saas-for-scm/

Schaeffer, C. (n.d.). The Risks and Rewards of Software as a Service CRM. Retrieved 2012, from http://www.crmsearch.com/saas-risks-rewards.php

Software as a Service (SaaS). (2010). Retrieved 2012, from Cloud Taxonomy. OpenCrowd.: http://cloudtaxonomy.opencrowd.com/taxonomy/software-as-a-service/

Supply-chain Management: Growing Global Complexity Drives Companies into the ‘Cloud’. (2011). Retrieved 2012, from Wharton University: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2669

The Economics of SaaS. (2009). Retrieved 2012, from Businessweek: http://www.businessweek.com/managing/content/jun2009/ca20090626_643842.htm

Wailgum, T. (2010). Supply Chain Management Definition and Solutions. Retrieved 2012, from http://www.cio.com/article/40940/Supply_Chain_Management_Definition_and_Solutions