B2B Payments

The Build-Versus-Buy Conundrum In Supply Chain Digitization

Organizations embracing digitization have an important decision to make before they ever invest in a technology: Should they purchase out-of-the-box solutions or build their own?

Historically, this has only been a conundrum for the largest of enterprises, which could not only afford to invest in sophisticated, automated back-office solutions, but had the resources to develop proprietary platforms custom-built for their specific needs. In the evolution of enterprise digitization, however, FinTech firms stepped in to democratize agile technologies for small businesses (SMBs), as well as introduce platforms that can be easily integrated into SMB back offices right out of the box.

While the build-versus-buy challenge has seemingly been solved, David Brault, product marketing manager of enterprise low-code app development platform Mendix, said out-of-the-box can be too good to be true.

“Since prepackaged solutions try to satisfy the largest possible market, they are rarely a 100 percent fit for every company,” he recently told PYMNTS. “This means there are a lot of changes and hidden costs that will happen post-purchase.”

The initial purchase of a third-party solution may be a more affordable route, but the costs associated with customizing that tool, and integrating it in the way an organization requires, mean that the ultimate cost — both financial and procedural — may actually be greater than anticipated, and perhaps even greater than it would have been to design a custom tool.

Supply Chain Management Apps

Strategic supply chain management is one area of the enterprise that has become interconnected throughout more areas of the back office, and throughout organizations’ own external business partners. As a result, said Brault, prebuilt solutions cannot always adequately address the complexities of businesses’ unique supply chain management needs.

There are, indeed, a few characteristics of supply chain management solutions that most businesses require today.

For one, visibility is “critical” to any enterprise app, particularly in supply chain management, he noted, with businesses in need of “real-time access to package, truck and driver location, warehouse information” and more. Mobility is another crucial component, with value-added mobile device features and technologies — including barcode and QR scanners — essential to ensuring accuracy of real-time data.

Brault also pointed to the demand for enterprise apps that provide a “multi-experience.”

“Companies need to provide customer engagements that make it easier to do business across a number of different touchpoints that are optimized for each interaction,” he said. “Not only digital interactions, but face-to-face interactions.”

Finally, theses apps must meet the demand for “always-on” solutions. That means these mobile-friendly tools need to work in the field and on the road throughout the supply chain, regardless of dodgy or lost internet connections.

It’s all about ensuring that the supply chain data collected can be automatically sorted and analyzed to optimize processes. Yet, the complexities of a modern supply chain mean that no two organizations are alike in their requirements with regards to what data they need, from where and for what purpose.

Strengthening The Weakest Link

Low-code platforms are able to address most of the burdens of cost and complexity in the development of proprietary enterprise apps, noted Brault. Artificial intelligence has seen its role in supply chain management solutions grow, as businesses need more sophisticated technologies to optimize trade and delivery routes, monitor vehicle diagnostics and beyond.

Enterprise app development can also enable customization in the end-user experience, which is of increasing importance for businesses today, said Brault. For many businesses, those end users are delivery personnel, truck drivers, warehouse staff and more.

However, supply chain optimization is also about strengthening relationships between buyers, suppliers, logistics providers, financiers and other players along the supply chain. Therefore, proprietary tools that are created must be able to address the needs of more than one target user. This can be a tricky hurdle, particularly considering that organizations in a single supply chain are typically at various stages in their own digitization journeys.

“This is a challenge felt by many organizations, because digital transformation is only as good as its weakest link, which can sometimes be a supplier’s outdated systems and manual processes,” Brault said.

This opens up an opportunity for organizations to embrace the build-not-buy avenue to enterprise apps, especially when businesses are seeking to optimize their supply chains through stronger supplier relationships. They can develop web- and mobile-based platforms tailored to their vendor needs, like order processing and delivery management.

Of course, building custom apps — for supply chain management and otherwise — isn’t for everyone: SMBs continue to lack the resources to make significant inroads in their digitization efforts, with many not needing the kind of customization that proprietary tools offer.

Still, as Brault noted, the strategy can be a cost-effective way for organizations to meet the rising burden of complex supply chains as they seek visibility, data and deeper vendor relationships.

“Digital transformation is more than streamlining internal processes and eliminating their paper-based processes,” he said.

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