Supply chain management has been – and continues to be – a fascinating topic/debate for procurement and supply chain professionals to analyze and discuss.
And admittedly, supply chain management is a big tent with numerous avenues ripe for analysis and exploration. But amongst the many issues associated with supply chain management – supplier performance, logistics management – the discussion of cloud-based supply chain management has proven quite interesting.
So…what is cloud-based supply chain management? Well, it is a nuanced idea, with a number of applications and outcomes. But at its core, cloud-based supply chain management is the use of cloud-based technology/software to manage or govern a company’s supply chain management function.
And how is cloud computing technology improving supply chain performance?
According to a 2013 study, Supply Chain and The Future of Applications, published by SCM World, cloud-friendly supply chain strategies range from transportation management systems to sales and operations planning to spare parts management.
The SCM study was lengthy (with data gleaned from a survey of 150 international firms), so listed below are the key points (via Forbes magazine):
- Cloud computing adoption in supply chains is heavily dependent on the legacy ERP systems in place, as they provide the system of record corporate-wide.
- Only 12% of enterprises have “extensive” communications with their network, while over a quarter are still relying on emails, phone calls and faxes.
- The majority of suppliers (60%) have a moderate level of collaborative execution with Electronic Data Interchange (EDI) and other automatic/scheduled communications being commonplace.
- On-boarding new trade partners continues to be problematic for the majority of supply chain organizations with less than 30% of a recent survey of 374 respondents claiming they had no problems “connecting or on-boarding new trade partners.”
- 46% of respondents report that greater supply chain collaboration leads to problems being solved twice as fast. Cloud computing platforms are becoming more pervasive in large-scale supply chains as enterprises look to gain agility and speed in resolving complex problems through more effective collaboration.
Cloud computing technology is shaping supply chain management in large organizations. But cloud technology is newer development, so companies that embraced on-premise technology in the past are more prepared to implement cloud technology and cloud-based supply chain management processes.
But, I would argue, the key benefit outlined in the report is that cloud technology promotes agility within the supply chain. Supply chain face greater risk year after year – droughts, negative press etc. – and agile computing is a must to respond to such changes. And cloud technology is that agile option.