3 Reasons How Legacy Technology is Hindering Supply Chain Systems

Summary

Global supply chain systems are still reliant on a patchwork of outdated technology that struggles to meet real-world demand fluctuations. From inventory data still being tracked by excel sheets to age-old proprietary data collection systems that are costly to upgrade, legacy technology can only do very little to challenge and resolve bottlenecks within supply chain systems. As a result, legacy systems can:

1) Create a culture of risk-aversion since any form of upgradation can lead to delays
2) Turn cybersecurity into a costly affair, as a company’s supply chain systems function on a patchwork of solutions and databases that come from different vendors
3) Take away the ability of organizations to use data proactively for implementing revolutionary changes

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A survey done by Reuters of 400 high level supply chain executives suggests that the COVID-19 pandemic disruptions signal an urgent need for companies to move beyond legacy systems and embrace digitalization.

In a perfect world, global supply chain systems would have seen technological advances that have transformed industries as diverse as consumer electronics and education. Unfortunately, this has not happened yet and supply chains are still reliant on a patchwork of outdated technology that struggles to meet real-world demand fluctuations.

From inventory data still being tracked by excel sheets to age-old proprietary data collection systems that are costly to upgrade, legacy technology can only do very little to challenge and resolve bottlenecks within supply chain systems. As a result, this divide impedes the ability of players within the supply chain ecosystem to create sustainable improvements in their processes and thrive meaningfully. But wait there’s more, 3 more reasons to be specific as to why legacy technologies can negatively impact your supply chain systems:

Legacy Systems Create a Culture of Risk-Aversion:

Supply chains are complex and subject to various reporting and compliance pressures. And when inherently core to business outcomes, it’s easy for organizations to become fearful. Upgradation can lead to delays which would inevitably result in organizations having a negative bottom line. Other concerns organizations may have include

  • What if modernizing systems takes more time than expected?
  • What if the migration process goes south?
  • What if modernization initiatives can lead to supply chain disruptions all across the board?

All of these are legitimate concerns, and businesses should and do weigh in on all of these considerations. So, it’s not surprising that staying invested in legacy systems becomes their default choice. But, sometimes, these considerations lead to a wait-and-watch attitude that carries on for an unreasonably long time which can result in organizations gradually declining to the point of no return.

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Legacy Systems Make Cybersecurity into a Costly Affair:

When a company’s supply chain systems function on a patchwork of solutions and databases from a range of vendors, security becomes a costly issue. Different vendors tend to release different changes at different times and it becomes quite a task for your IT department to identify and resolve conflicts that happen as a result.

Reducing the number of vendors and moving to an engineered stack of technologies can minimize cyber-security risks. If your supply chain journey is architected without taking the complexity of your IT systems into consideration, you will end up maximizing the number of security risks which in turn could prove fatal to your organization.

To be more specific, in the best-case scenario: these hindrances will result in a fractured supply chain ecosystem, which in turn affects business agility, product quality, and time to market.

And in the worst case, it could result in your organization permanently going out of business.

Legacy Systems Don’t Allow Organizations to Use Data Proactively:

Speed, value creation, and agile delivery are the primary focus of organizations and information is key to achieving this. However, organizations fail to make any headway in their supply chain processes due to inconsistent digitization, fragmented data silos, and the lack of a shared data management platform. For example, legacy technology can put production, inventory and transportation planners in a position where they lack access to relevant information at their fingertips thereby making them adopt a reactive approach to their business processes rather than a proactive one. This means that organizations will be forced to work with non-existent end-to-end supply chain visibility and outdated data which is not ideal for quick decision-making and implementing revolutionary changes to pre-existing supply chain processes.

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Ideal Next Steps

Your organization should not be left to the mercy of your legacy systems as doing so is a guaranteed death sentence. And with the global logistics logjam showing no signs of a slowdown and legacy technology gradually derailing supply chain processes, businesses should look towards tech partners for help. Want to learn more about how the right tech partner can help you replace your legacy technology and help tap into the full value your supply chain can offer? Talk to us today to learn more.

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