Companies that offer software-as-a-service (SaaS) consist of multiple components that work in unison. Since the market is competitive and there are more than 30,000 SaaS companies, every concept or tool that gives them a competitive edge is highly demanded.
However, few of them are as effective and applicable as understanding SaaS through the lens of supply chain management. The term “supply chain” is often associated with transportation and logistics, yet it’s just as present in the SaaS industry.
This article will explain the concept of SSC and present strategies for optimizing your SaaS business. You’re likely already paying attention to the business aspects we’ve laid out as components of SSC, but we’ll help you understand them in the grand scheme of SSC.
What is a supply chain?
As the word “chain” implies, the supply chain is a connection between various business aspects. In a traditional sense, the supply chain creates a network between suppliers, individuals, resources, activities, warehouses, and technologies so that the customer can receive a product.
This network starts with suppliers who provide the raw resources or components to the manufacturers. The finished goods are then stored in warehouses, waiting to be transported directly to retailers or customers.
Part of the supply chain also involves handling returns or other problems that can arise along the way. However, don’t let us fool you. Even if this process can be described in a couple of paragraphs, it can last for months and involve hundreds of people and dozens of businesses.
Supply chain management is a common practice of maintaining a watchful eye on all of the mentioned processes and adapting them adequately. This process consists of three important parts:
- Strategy
- Planning
- Operation
Along the way, the supply chains often face significant problems, from material sourcing to unsatisfied customers. For example, the manufacturer can produce faulty products or fail to meet quotas, while transportation arrives late because of extreme weather conditions.
Supply chain for services
A service supply chain (SSC) consists of multiple components that, when optimized, can help companies and managers improve their operations. The goal of supply chain management in SaaS is to:
- Coordinate these different components
- Minimize setbacks and bottlenecks
- Deliver the best product possible
Of course, SSC doesn’t have problems that regular supply chains do, such as inventory management, returns, faulty products, and late transport. However, it faces some similar problems, like meeting customer demands and providing a finished product, or in other words, quality service.
SaaS is cloud-based software, so companies must ensure that their product is available and accessible to users. The activities that would fall under each SaaS supply chain component differ from company to company.
A no-code SaaS that caters to novice developers and an HR tool won’t have much in common. But you can understand them and divide them into multiple SSC components in the same way. Similarly, SSC covers a SaaS product’s whole lifecycle, which applies to both examples.
Components of a service supply chain
In the same manner that the supply chain in logistics consists of different components, we can apply the same principles to SSC. To make it a bit easier to understand, we’ll compare it to the components that make up the traditional supply chain.
Service design and development
The first step in the SSC includes processes associated with perfecting the idea of your service.
It also includes understanding the customer’s desires and designing services that will meet those desires. This correlates with the processes of getting materials and manufacturing the products.
Depending on the nature of your company, you should either organize your current workforce to achieve the initial design and development goals or find new hires who will help you with that.
A UX designer is responsible for making the software super easy to use so that it provides a positive user experience. This process also requires researching competitors’ products and conducting customer surveys to understand how to design the best possible service.
Development of the SaaS includes programming all the features and functionalities of the SaaS and making it functional.
Service delivery
Although it might seem to correlate with the transportation stage (in the traditional supply chain), service delivery is actually quite different.
Service delivery is the process of finding and leveraging the proper infrastructure for your SaaS.
Cloud services are subscription-based, so it’s crucial to understand how much it will cost to run your application. Why? The delivery of the service must ensure that it’s reliable and available to the users without any setbacks.
Service support
Traditional supply chains pay serious attention to refunding and returning products if customers aren’t satisfied. This process is a bit smoother since SaaS companies don’t physically ship anything.
However, SaaS companies face a different uphill battle. They must ensure that they provide their customers with the necessary customer support and knowledgebase, which will ensure a worry-free average user experience.
Problems in this component can lead to customer dissatisfaction and potentially lower reputation in the long run. Effective service support is built on understanding customer sentiment and addressing issues promptly. Social listening tools can help monitor customer feedback in real time.
Service management
The service management component is used interchangeably with SaaS management, which is the process of managing the whole chain.
A supply chain manager is the person responsible for handling all the different components and ensuring that they work in unison. They address any bottlenecks and, once observed, make proper decisions to remove them.
Think of service management as the middle part of this concept, which handles all other components.
Strategies to optimize the supply chain for SaaS
Now that we’ve covered all the different components of supply chain processes let’s review the methods of optimizing them.
Depending on your structure, industry, and overall budget, you should carefully choose which strategies best suit your situation.
Streamlined communication
The current job landscape includes a significant number of remote and hybrid jobs. While some companies still work in the office, a portion of their processes function remotely or are outsourced to companies that work remotely.
Remote or not, companies must ensure that communication between individuals and departments operates flawlessly.
Integrating apps for employees plays a crucial role in streamlined communications, ensuring that all team members are connected and informed in real-time, which enhances overall efficiency and productivity.
With various communication tools offering features such as video calls, document sharing, and time tracking, ensuring that your SaaS company functions flawlessly has never been easier.
Remote workers
The rise of remote work has brought a lot of opportunities for businesses. Now, businesses can tap into incredible worldwide talent and hire them with fewer expenses than ever. However, hiring these talents can be challenging.
That’s where partnering with an employer of record (EOR) service could really pay off. An EOR has people on the ground who know the lay of the land, so they can handle all those headaches for you.
Do you need to staff a new operations team in Singapore? They’ve got you covered. Do vendor contracts have you scratching your head? Leave it to them.
With an EOR taking care of those tedious details, you’re free to focus on the big-picture stuff that really matters for your SaaS. Just be sure to do your homework and pick an EOR partner with a solid reputation — you don’t want to jump out of the frying pan into the fire.
Automation and Artificial Intelligence
Artificial intelligence is still a developing field, and many downsides need to be fixed before we see widespread adoption. However, it’s still quite popular and helpful in ensuring that SaaS businesses operate without breaking a sweat.
Starting from the service design and development up to management and support, you can automate a significant portion of manual tasks. This way, you’re minimizing the chances of manual errors and streamlining processes.
Furthermore, this allows employees to focus on more important tasks rather than the tedious, repetitive ones that AI can handle.
Optimizing the supply chain is essential for your SaaS business
Many companies use the latest and proven technology to optimize their business processes. However, supply chain management can help your business in future decision-making, new business ventures, and hiring and development.
Where companies make the mistake is that they use tools to optimize their processes yet neglect their services. No amount of fancy new project management software can outwork a poor service.
Yet, the supply chain management for SaaS businesses focuses on the whole lifecycle of the service, starting from the initial steps. Whether you’re a startup or a company with some experience under its belt, this concept will help you improve various aspects of your company, starting with the most important one: the service itself.
Invest in improving your supply chain operations and your bottom line won’t regret it.
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