Daily Archives: November 16, 2011

Can SaaS Solutions Improve Supply Chain Network Quality?

A recent article over on Supply & Demand Chain Executive on a holistic view of quality described the four steps to applying a cloud-based solution to establish a quality supply network. In this post, we’ll review the four steps presented and then discuss whether or not SaaS (Software as a Service), because “cloud” is undefined and irrelevant, can really improve your network quality.

The author is correct in that a number of trends (including a greater reliance on component suppliers, outsourcing of subassemblies and offshore manufacturing) are dramatically changing the supply base and challenging the ability of brand owners to manage their supply chains and ensure quality. And the author is also correct when he states that access to data is unpredictable across the supply chain and this is a problem. If all you get is a number of reports that are incomplete, inconsistent formats after the fact, that’s just not good enough — especially if you need to interpret the data in real time to take effective, corrective, actions.

And he’s also right in that, when outsourcing (to far-flung locales), intermittent inspections are not enough. A quality trend analysis, built from the continuous monitoring of quality, is required. However, retesting after you get a delivery does nothing to insure quality of supply — it only prevents defects from reaching the consumer. And if this results in a stock out six weeks before Christmas, this could be devastating.

That’s why a quality supply network, which insures quality before product leaves the manufacturer, is required. According to the author, this is achieved by:

  1. Capturing the Data
    Extract as much data as you can from suppliers’ manufacturing execution systems and/or spreadsheets into a common format.
  2. Uploading the Data
    Aggregate, synchronize, and retain the data on common servers where the supplier and brand owner have secure access.
  3. Analyzing the Data
    to gain insight into quality issues and trends (in real-time)
  4. Gathering Insight from the Data
    by way of an intelligent, multidimensional pattern recognition tool that identifies the data clusters where anomalies and issues are

And, at least according to the author, the best way to do this is a cloud-based solution because manufacturers do not need to make significant IT investments to build a quality network and you can quickly bring alternate manufacturers online and monitor their product quality, ensuring the results you need and minimizing the impact to delivery schedules.

This is true, but he is making / implying a couple of incorrect assumptions.

  • Cloud offers no advantages over SaaS
    and, furthermore, you don’t even need to have a true SaaS application or have it externally hosted! You could have a traditional web-based solution in your data centre. As long as suppliers can easily upload their data or provide you web access to their data feeds, it doesn’t matter if it’s cloud, SaaS, or just web-enabled. As long as everyone who needs the data can get it when, and how, they need it, problem solved.
  • You don’t need a multidimensional pattern recognition tool.
    All you need is a good data analysis tool and a smart analyst — because no tool will ever be smarter than the analyst driving it. As long as she can build the cubes she needs, create the appropriate multi-dimensional reports, and capture trends — she’ll spot the issues.

In short, SaaS doesn’t improve supply network quality — real-time data sharing and analysis improves supply network quality. A SaaS solution can enable this, but it’s not always necessary and not a complete solution in and of itself (as you will always need a smart brand owner and smart analyst driving the solution).