In the current fast moving business environment, most organisations are striving to operate a more dynamic supply chain to respond to customer demand. In view of the fact that supply chains are increasingly powered by ICT, flexible ICT based solutions are an increasingly important part of supply chain design. It is therefore no surprise that the topic of Cloud Computing is generating strong interest.

Cloud Computing is enabling a wide range of capabilities but it’s uses are very broad and it can be difficult to see where it’s true applications reside.

Nevertheless it is cetain that it is radically reshaping how computing power is sourced and deployed, how information is managed and the economics of supply chain technology.

When evaluating the potential of Cloud Computing, supply chain managers face a number of challenges and it is important to closely consider the fundamental changes that transitioning to the cloud will entail.

 

  • Transformation

    New competitive threats and shortening product and service lifecycles will drive companies with traditional infrastructure intensive supply chains to reinvent themselves adopting cloud based supply chain solutions to enhance competitiveness.
    As a result supply chains will become more dynamic, more scalable, and more capable of supporting the objectives of the organisation.However as always trhere are risks to be considered when formulating a cloud strategy.

  • Collaboration

    Most organisations do not own, control or operate their entire supply chain internally from end to end so decisions about using the cloud will involve multiple partners which of course creates complexities and sensivities between the participating parties.

  • Competitiveness

    Organisations are using sophisticated supply chain management to differentiate themselves from their competitiors. So it is vital to identify which cloud based applications can continue to deliver or enhance this competitive edge.

  • Sourcing and Procurement

    Cloud Computing represents a great opportunity to reduce total cost of ownership, the most commonly cited success metric in sourcing and procurement. A key reason is that cloud based tools are inherently collaborative and accessible, creating clear benefits for companies that deal routinely with thousands of suppliers. Cloud based collaboration allows multiple parties to jointly develope supplier contracts, dramatically enhancing contract management. Myriad sourcing and procurement capabilitites are coming online, including procurement report generation, database centralisation and supply chain visibility.

  • Security

    Whether operating on traditional or cloud based infrastuctures organisations need to protect their products and indeed customers. Compromised data can lead to lost intellectual property, products, customers and business. So security should be a key concern.

    Having considerd these issues supply chain managers need then to look at the key processes and applications that are best suited ot the cloud as it stands today. Below are some to consider but are by no means the only ones to consider as applications are increasingly being developed.

  • Planning & Forecasting

    Cloud based tools are now available for capturing itemised spend data, performing basic analytics, planning manufacturing runs and executing statictical demand forecasts. Applications focused solely on retail supply chains which are some of the most dynamic in industry are also prevalent, with capabilities that include planning and allocatiojn, assortment and space, pricing and promotion and forecasting and replenishment. More cloud service providers will add planning and forecasting applications to their offerings which is to be welcomed.

  • Logistics

    Some core warehouse and transportation management applications already are available from cloud providers. Increasingly more and more cloud based applications for functions such as network strategy, inventory management, warehousing and transportation will be added to the mix. Do not be surprised to see such applications as global trade compliance, replenishment planning, order processing and route planning to be rolled out quickly.

Where to Begin

As companies plan and prepare their cloud strategies, there are some initial steps that the supply chain needs to consider.

Develope your strategy: Identify which processes should remain in-house and which processes might best be outsourced to cloud based service provider.

Define the business case: Develope a detailed ROI and risk analysis. Insist that prospective suppliers suppliers provide data driven analyses to guantify the anticipated benefits, based on total cost of ownership.

Set benchmarks for success: Clearly success will not be solely based on costs, so it is important to define other benefits such as, flexibility, scalability, speed to market, etc.

Collaborate with supply chain partners: One of the key benefits of cloud based applications is easier integration. So it is particularly important to involve supply chain partners in decision making.

Identify your Cloud Computing provider: This can be difficult as new entrants launch in the market every day and customer service and contracts can be an issue. The ESCI will recommend some providers to you as our research and recommendation program commences.

The supply chains transition to the cloud is happening now and those that wait will be at a competetive disadvantage.

While it will take time for the supply chain to transition to clolud computing the operational benefits and potentilal savings are too great to ignore. So the question is not if but how successfully companies will profit from the applications it offers.

The ESCI is working closely with the cloud computing industry to provide you with the information you require in order to evaluate the benefits of transitioning to the cloud.