Howdy, Partner: The Future of Supply Chain Technology

Written By
Derek Szopa

Leveling up

Digital technology seems to be evolving at warp speed, and while all industries arguably stand to benefit from an upgrade, those especially well-placed to take advantage of the innovation are ones where data and automation are key, such as retail and shipping. Gartner’s 2021 CIO Agenda survey found that a whopping 68% of surveyed CIOs from organizations across a variety of sectors reported planning to increase digital funding for innovation in 2021.

With so much happening, it’s hard to keep up. Investment opportunities seem endless. What is just this year’s digital trend versus the next big revolution? How do you most efficiently incorporate this new technology? And how do you ensure your investment adapts to your business needs next year and the year after that, pushing you forward, not holding you back?

Once merely buzzwords floating around boardrooms, technologies like artificial intelligence (AI), robotics, or automation have finally matured from novel ideas to integral, professional-grade solutions. The 2019 McKinsey AI survey demonstrated a 25% year over year increase in the use of AI among surveyed companies across industries, and, not only did the majority of respondents report profit in the applied areas, 44% even declared reduced overall costs as a result of the technology. In the world of robotics and automation equipment production, VC investment has topped an astounding $1 billion over the last 5 years. No longer a gamble, some of these options sound like a great place to start when considering an upgrade.

Choosing the smartest way forward

Once committed to taking a new digital plunge – congratulations! – the question becomes how to make it happen. Accenture outlines three different strategies for bringing onboard technology like AI, each with its own advantages and challenges depending on a company’s goals: building, acquiring, or partnering.

Some organizations may consider building their own team and technical capability. This labor and time-intensive option allows for the customization and control ideal in company-defining projects that rely on specific capabilities, but it risks siloing resources where the investment becomes a burden. When innovation changes course yet again, their new addition becomes an inflexible liability. In 2013, MD Anderson Cancer Center set out to build its own technology to leverage IBM’s Watson’s capabilities, but four years and $64 million later, the project was put on hold indefinitely thanks to a long list of unforeseen challenges and delays.

Other companies might take a shortcut and acquire a specialized company with just the right service to incorporate into their organization; less work than building the capability from the ground up, but initial expense as well as integration friction may lead to issues down the road, not to mention a similar commitment risk as with the build-it-yourself option. These services are often startups and still working on getting their own kinks straightened out. Bringing them into a more established company might result in a culture clash. According to Forbes, over 70% of acquisitions fail to achieve their forecasted business goals, the primary culprit being poor integration resulting from competing cultures.

A third option involves partnering with a third-party service provider. It may sound counter-intuitive when what you really want is to have unique, perfectly tailored capabilities that give you the edge over the competition. Surely, partnering with a third-party service means off-the-shelf options your competitors already have, right? Wrong.

The right partner can help you identify and solve problems to efficiently get your business ahead today, while keeping an eye towards flexibility to meet your needs tomorrow. Driven to provide the best service to you and your customers, the right partner will integrate seamlessly with your existing functionality, growing their own capabilities at the speed of innovation, while your business profits. Services and cost are negotiable and commitment flexible, meaning your partnership is ready to change when your business goals do.

The CloudSort model is built on this kind of partnership, offering the right balance of data expertise, flexible integration, and customer focus for any retail or shipping business.

A model example of teamwork

Strong service partnerships aren’t just ideal for smaller businesses trying to keep their budgets in check – even big players prefer the flexibility and teamwork found in working  with third party services.

In May, FedEx and Microsoft announced a groundbreaking new partnership that perfectly illustrates how a business benefits from a 3rd party service to quickly and efficiently scale their capabilities. FedEx’s implementation of Microsoft’s Azure cloud service will enable the logistics giant access to better tracking visibility and shipping predictions, giving them an edge over the competition with technology that would have been expensive to build themselves, not to mention cumbersome to maintain.

Contracting a service enables FedEx to bring in the expertise of a world-class business such as Microsoft, the likes of which they couldn’t dream of building or buying. A quick and flexible integration means they’re ready to bring their solution to market faster. And, while we wish them the best in their new relationship, if things don’t go as planned, separation is as easy as a contract change.