Storm Warning: The Risk of Outdated Systems
Holiday travel is notoriously messy and unpredictable. There’s a reason entire blockbuster films center on getting home for the holidays. This previous holiday season included a particularly nasty holiday travel debacle, with Southwest Airlines cancelling over 16,700 flights.
Southwest originally wrote this off as a winter storm. But when other airlines were pushing flights through, Southwest remained grounded. The issue escalated, with luggage transported across the nation and left unclaimed in airports across America and rumors of labor issues swirling.
Eventually, the true cause surfaced: the old, outdated technology that Southwest had been operating on crashed.
It was the perfect holiday storm, costing Southwest roughly $825 million dollars and inviting a federal investigation. On top of that, the travesty damaged the reputation of the Southwest brand, and lost trust with their loyal customer base.
A company flush with cash, like Southwest’s $14 billion, can absorb this risk.
Southwest has the assets to make amends with employees, run a quality PR campaign, use marketing ploys to regain customer loyalty, and endure the damaged reputation of the Southwest brand. It appears Southwest will do just fine.
But a small or medium sized business that operates on a tight cash flow cannot weather this kind of storm.
Running outdated systems or disjointed processes jeopardizes data accuracy and cripples efficiency, and that risk must be calculated. An SMB manufacturer can’t afford to hold onto legacy technology and systems, as Southwest Airlines now regrets doing.
We can shift this lesson to the manufacturing world by considering the leveraging of APIs to make inventory data more readily available to customers.
The ability for a contract manufacturer to turn a quote around quickly is the difference in won or lost business.
You need to take a product, price components, and gather lead times quickly in order to get that quote delivered.
APIs allow a small contract manufacturer to get real-time data from suppliers. If one of those suppliers doesn’t keep up with the technology, they jeopardize a contract and valued customer.
The risk of running on outdated systems extends to operations. When you have 5-10 employees, running a business on a system of manually maintained spreadsheets works.
But if you want to grow, a rudimentary information system represents a significant limiting factor.
If you grew out of spreadsheets and moved to a legacy system, you’re now vulnerable to crashing, with ever-increasing cost of support and further customization. You end up like Southwest, burying your company into a deeper hole, but without the vast assets needed to dig yourself out. While upgrading technology always represents a risk, weigh it against the long-term risk and opportunity cost of not having a system that can handle your current business and future growth.
So, how do you avoid surrendering to the storm? Ground yourself in a sturdy ERP that’s built to last.