Supply Chain Technology: Weighing the Build or Buy Decision?

English - Ngày đăng : 08:15, 10/10/2024

(VLR) In the digital age, supply chain organizations face the challenge of not only optimizing processes but also carefully weighing whether to build in-house technology solutions or purchase them externally. Managing a supply chain effectively requires a blend of technology strategy and long-term vision. How can businesses make the right choice between "building" or "buying" technology while optimizing resources and meeting growth demands?

Managing a supply chain effectively requires a blend of technology strategy and long-term vision

The Importance of Technical and Product Leadership

A key factor in the success of supply chain organizations is having a high-quality technical and product leadership team. In recent years, many traditional logistics companies have recruited veteran leaders from tech giants like Amazon and Google. These experts bring new perspectives on developing scalable technology platforms while building systems that can adapt and grow with the business.

Skilled technical leaders not only attract talent from their personal networks but also build a company culture focused on customers and products. They create clear career development paths for employees, foster high performance, and lay the foundation for long-term business growth. A strong leadership team can shape transactional infrastructure, data systems, and artificial intelligence (AI)—core elements that help supply chain companies achieve superior efficiency.

The Key to Innovation

Leading consumer technology brands like Apple, Google, and Amazon have one thing in common: they grow by focusing on products, continuously delivering breakthrough solutions that delight customers. For supply chain companies, adopting a product-driven mindset not only improves operational efficiency but also enhances the employee experience.

A quality supply chain software solution must be easy to use, enabling employees to complete tasks smoothly without being hindered by outdated tools like Excel spreadsheets or complex applications. Placing users at the center, exploring their needs, and building products that align with operational workflows is the first step in creating a product-driven culture.

How can businesses make the right choice between "building" or "buying" technology while optimizing resources and meeting growth demands?

Building or Buying Technology Solutions?

For supply chain organizations, deciding whether to build or buy technology solutions is a complex challenge. Fortune 500 companies, including major retailers and transportation providers, are increasingly investing in building in-house technology teams. Developing in-house technology not only allows businesses to deploy solutions faster but also saves long-term costs, particularly when considering maintenance, professional services, annual licenses, and upgrades.

In-house technology development should be prioritized for solutions that serve core business processes, such as AI-powered routing systems or dynamic pricing platforms. Commoditized solutions like customer support systems or ticket management software can be purchased from external vendors, allowing businesses to focus resources on higher-value projects.

Choosing the Right Vendors: A Strategic Decision

As technology evolves, businesses have numerous vendor options for every use case. However, selecting the right vendor requires a deep understanding of company needs, identifying core use cases, and considering specific budgetary and operational constraints.

An effective selection process typically begins by engaging three to five vendors, evaluating their product roadmaps, technical capabilities, and strategic vision. Afterward, businesses can conduct trials with select vendors to assess their real-world performance. The evaluation committee should include representatives from operations, engineering, product, and legal departments to ensure diverse needs are fully reflected.

Building a Win-Win Relationship with Vendors

When investing in critical systems like a warehouse management system (WMS) or a fulfillment management system, businesses need to maintain a long-term relationship with their vendors. A sound strategy is to develop a strategic partnership that not only helps businesses maximize the value of the platform but also encourages vendors to continuously improve products and solve emerging issues.

Establishing regular meetings between leadership from both sides is the best way to discuss shared goals, platform improvements, and contract renewals. Providing timely feedback on both positives and negatives ensures a strong and sustainable partnership.

In the digital age, supply chain organizations face the challenge of not only optimizing processes but also carefully weighing whether to build in-house technology solutions or purchase them externally

Fostering Innovation and Developing Core Technology

To drive innovation, executives must empower their teams to build a flexible, customer-focused culture. Businesses can organize creative programs, such as hackathons, to give teams the opportunity to find solutions to unsolved challenges. Additionally, allocating an annual budget for training and personal development helps elevate employee skills, further enhancing the company’s ability to develop core technology.

Deciding whether to build or buy supply chain technology solutions is not a simple choice. It requires careful consideration of factors such as cost, resources, time, and long-term vision. However, with the right strategy, businesses can not only optimize their operations but also enhance their competitiveness in a dynamic market. Instead of viewing technology as just a support tool, supply chain organizations should see it as the core foundation for driving sustainable growth.

By Phong Le