The supply chain technology market has been growing rapidly. In 2022, it was valued at US$21,129.2 million and is expected to expand at a CAGR of 11.1% from 2023 to 2030. And one of the most interesting areas amidst this growth has been the shift to cloud.

According to a survey, supply chain executives reported cost reduction and increasing efficiency are the key drivers for migrating their supply chains to the cloud. And with all the new tech platforms and tech in play, the supply chain industry is becoming increasingly complex. Meanwhile, companies are seeking efficient and adaptable solutions to maintain a competitive edge. One such approach gaining widespread popularity is the implementation of a microservices architecture.

Microservices

Microservices architecture is a powerful software approach that can revolutionize supply chain tech. Imagine breaking down your complex application into smaller, independent fragments called "services." Each service focuses on a specific functionality, making a system more resilient and scalable.

The beauty of microservices lies in their independence. These services work seamlessly together without complex coordination. Development teams can work on different services simultaneously, making updates and improvements without affecting other parts of the application.

Microservices architecture, with its nimble and adaptable nature, allows you to quickly respond to the ever-changing demands of the market. It's like having a bunch of mini-applications that work harmoniously to keep your supply chain running efficiently.

Here’s why microservices architecture stands out in the supply chain industry:

Enhanced Scalability

In the supply chain, demand can fluctuate significantly. Microservices allow individual services to scale independently, enabling you to handle varying levels of demand without affecting the entire system. This means you can easily expand your operations during peak seasons or times of increased activity.

For example, a well-known 3PL’s legacy systems were designed to deploy on separate servers for each new client. Through rearchitecting a cloud-native multi-tenant application built on the principles of microservices architecture, new client implementation was reduced from over a month to under a day, ensuring there were no deterrents to scaling.

Improved Flexibility

The supply chain industry is subject to constant changes, from shifting market trends to evolving customer demands. Microservices offer the flexibility to adapt quickly to these changes. Each service can be developed, deployed, and updated independently, allowing you to make necessary adjustments without disrupting the entire application.

Streamlined Maintenance

Managing a large monolithic application can be cumbersome when it comes to maintenance and updates. Microservices' modular nature allows you to focus on specific services without affecting others, making maintenance tasks more straightforward and reducing the risk of system-wide issues.

Faster Time-to-Market

While microservices architecture requires more effort in development compared to a monolithic approach, the resulting benefits are significantly greater in terms of delivering the end solution to the market. Development teams can work concurrently on different services, leading to accelerated delivery of new features and functionalities. This allows you to respond promptly to market opportunities, gaining a competitive edge.

While developing a returns management software that could integrate with multiple vendors as well as provide white labelling for their clients, we used microservices architecture to develop the post-MVP (Minimum Viable Product) features. This enabled us to develop different features for different target markets simultaneously in response to client requirements.

Improved Fault Isolation

In traditional monolithic applications, a single bug or issue can bring down the entire system. Microservices offer better fault isolation since each service operates independently. If one service encounters an issue, it won't affect others, ensuring higher application availability.

Increased Innovation

Microservices allow for a more agile development process, encouraging innovation within the supply chain industry. The ability to quickly experiment with new functionalities and ideas can lead to breakthroughs and more efficient workflows.

Easy Integration with External Systems

In the supply chain, integration with various external systems, such as logistics partners or inventory management tools, is crucial. Microservices' independent nature facilitates smooth integration with external systems, making it easier to create a connected and cohesive supply chain ecosystem.

Case in point, an e-commerce brand wanted to use a carton cubing tool that uses AI to perform calculations on how to best fit X number of items into a box and the most efficient way to ship them. However, they needed a solution to interject orders from the source to calculate the dimension data while also integrating with their current warehouse management system (WMS). By creating a custom middleware based on microservices architecture, they were able to resolve this problem. Instead of each item from the same order going out in different boxes, the middleware helped in consolidating the orders, allocate gift boxing and other functionalities.

Decentralized Decision-Making

With each service focusing on a specific functionality, decision-making becomes more decentralized. This can lead to better autonomy for development teams, fostering a culture of ownership and responsibility, which ultimately contributes to improved performance and efficiency.

Continuous Delivery and DevOps

Microservices architecture promotes a continuous delivery and DevOps approach. Smaller, independent services are easier to test, deploy, and manage, enabling faster release cycles and ensuring a more responsive supply chain operation.

Microservices Architecture Best Practices in Supply Chain

Microservices architecture has become a key practice to develop efficient and scalable solutions. Here are some best practices of how microservices architecture can be in leveraged in supply chain tech development:

Modular Design

Break down your supply chain application into smaller, focused services. For example, separate inventory management, order processing, and shipment tracking functionalities into individual Microservices. This approach allows for easier maintenance, updates, and independent scaling of specific services based on demand.

Asynchronous Communication

Implement messaging systems and event-driven architectures to enable asynchronous communication between microservices. This ensures that services can exchange information without waiting for real-time responses, enhancing system resilience and responsiveness.

For example, a logistics company can use microservices for route optimization and real-time shipment tracking. Microservices responsible for updating shipment statuses asynchronously communicate with each other, allowing real-time tracking updates without affecting the overall shipment processing.

Fault Isolation and Resilience

Design Microservices to be fault-tolerant and resilient. If one Microservice experiences an issue, the failure should be isolated and not impact other services or the entire application.

Continuous Integration and Deployment (CD/CI)

Embrace CI/CD practices to automate testing, deployment, and updates for Microservices. This allows for frequent releases and reduces the risk of deployment errors.

If a warehouse management system utilizes microservices architecture for inventory tracking and order fulfillment, developers can regularly release updates to improve inventory accuracy and optimize warehouse operations.

Data Consistency and Integration

Plan for data consistency across Microservices by using appropriate data storage solutions and integration patterns. Events and messaging systems can help maintain data integrity while ensuring seamless communication between services.

Microservices architecture has transformed supply chain tech development, offering a flexible, scalable, and efficient approach to handle complex operations. By adopting best practices, businesses can utilize microservices to create robust, interconnected, and agile supply chain solutions that adapt to the dynamic market demands.

Co-founder and CEO of Fulfillment IQ, Ninaad Acharya is an award-winning supply chain leader with nearly 20 years of experience in supply chain digital transformation and technology. He has successfully led and continues to lead the creation of disruptive ecom logistics solutions in Fortune 50 companies, retailers, 3PLs, and eCommerce brands. Ninaad is also the co-host of the eCom Logistics Podcast, where he interviews thought leaders to share insider perspectives on supply chain and logistics.

This article originally was published in the November/December, 2023 issue.