Skip to content

New Supply Chain Technology: The Real Cost of Inaction of Implementing SCM Tech?

There is plenty of new supply chain technology on the block. The cloud, the Internet of Things, warehouse management systems (WMSs), warehouse execution systems (WESs), transportation management systems (TMSs), software-as-a-service (SaaS), platform-as-a-service (PaaS) and many more. These systems are leveraging the power of the connectivity to create a better, faster and more efficient supply chain. As a result, supply chain management (SCM) tech can help your business grow into new markets, improve profit margins and access untapped resources, including new markets.
Now, you might be tempted to stick with your existing status quo, but what happens if your system fails? Can you handle the costs, or if not, what will happen to your business? The cost of inaction of implementing this SCM tech might be more severe than you realize, and you need to understand where these costs will arise.

1. Trouble Keeping up With Competitors

For starters, your competition is already using the newest SCM tech. Look no further than Amazon, Walmart and the other Big Box chains. They are continuing to unveil new technologies and processes that could easily make your customers ditch your company in a proverbial heartbeat. In fact, Walmart has created a vending machine for customers to pick up online orders in as little as 18 seconds, reports Click2Houston, and the retail giant has plans for installing more in the future. Clearly, you need to embrace new SCM tech.

2. Lack of Access to New and Emerging Markets

Another game-charger in SCM tech is the ability to access new and emerging markets. While most markets that were defined as emerging in the past few years have matured, they have also grown accustomed to getting products in time frames that are only possible through new SCM tech. In other words, Amazon did it again. They have leveraged new supply chain technology to speed product cycles in new, emerging markets, so you cannot afford to waste time using outdated systems any longer.

3. Inefficient Processes Decrease Profit Margins

Next, inefficient processes that occur from using outdated SCM tech result in decreased profit margins. This may occur as picking is inefficient, workers do not have a clear understanding of warehouse layout and other issues arise. In addition, you may be using more utilities in one area of your warehouse or retail establishment that are absolutely necessary, and your overhead costs may be soaring. Paired with possible double billing by carriers and vendors, you could be hemorrhaging money. Instead, you could leverage new SCM tech to watch your processes and activities automatically, saving you money along the way.

4. Existing Systems Will Become Obsolescent

Another major issue is the simple evolution of technology. As new supply chain technology is unveiled, older tech will become obsolescent. Look no further than the VCR. Once it was a staple of households; how it is an antique. In fact, servicing a VCR is almost impossible due to lack of parts and knowledgeable technicians. The same thing will happen as SCM tech evolves.

5. Cloud-Based Systems May Cost Less Than Maintaining Legacy Systems

Cloud-based systems are gradually replacing terminal- or location-based legacy systems for SCM. Furthermore, adoption rates will only climb as the initial cost of investment into cloud-based platforms decreases. In other words, the cost of adoption and implementing new SCM tech may be less than maintaining your existing systems, reports guest blogger, Greg Braun via Cerasis. In addition, a sudden bout of downtime in your system could cost significantly more than an initial investment. For example, you may be forced to pay an extensive IT repair bill, and you will still lose customers.

With All The New Supply Chain Technology, Let’s Put It All Together

That’s not all the possible problems that could result from inaction in implementing new SCM technologies. You could lose C-level support in your supply chain, and your customers could become your greatest enemies on social media due to disruptions. This sentiment is echoed by Morgan Hass, explaining how bimodal supply chains are becoming the new standard in global trade, requiring new SCM tech as well. Rather than leaving your business open to chance and massive risk due to inaction, you need to embrace modern SCM tech in your supply chain now.