Cloud Computing in Supply Chain Activities, Benefits and Adoption
The aim of every business is to get their products or services to target customers. Even if a business produces top notch products or services, it will be redundant if it cannot get them across to the people in need of these products or services. This is where supply chain comes in. The supply chain refers to the system, collection and connection of resources, both human, material, financial, information, etc., that are used in a product or service to customers from the producer. The supply chain includes activities, organizations, planning, management, etc. It also involves the coordination and communication between every part of the supply channel which includes middle men and intermediaries.
Given the importance of the supply chain to businesses, there have been several attempts to improve the efficiency of supply chains. Several new technologies have been utilized to increase the effectiveness, reach and performance of supply chains. One prominent one, however, is cloud computing. This technology has been on the rise in terms of application areas, and supply chain is one such areas. Cloud computing refers to the access and use of remote servers as opposed to in-house servers to handle data. There are many ways cloud computing can affect supply chain. We will explore them here, as well as look at the uses of cloud computing in supply chain activities. Also, the benefits of cloud computing in supply chain will be explained. Everything that is needed to know in the adoption of cloud computing in supply chain will also be revealed.
What is Cloud Computing in Supply Chain?
Every business is always looking to improve their operations and gain advantages over competitors. One way to this has always been to use technology to improve operations and reduce costs. Companies have been using cloud computing to bring innovation to the management of their supply chain. These cloud computing solutions are always delivered as Software as a service (SaaS) models. Companies are jumping on this cloud computing model as it has been yielding good results. Executives can easily harness the benefits of cloud computing and deploy them at scale into every single part of the business.
SaaS has been proven to be the best way to ship cloud computing into the supply chain management market. SaaS models always work well when collaboration is involved. These days, supply chain is all about collaboration and connection of resources and activities. A system of business to business network and collaboration is essential in supply chain. Going with the earlier stated definition of supply chain, we can see that Cloud computing under SaaS will perform well. Companies are realizing this and have been utilizing it. Cloud computing in the form of SaaS in Supply chain is projected to have a meteoric rise in the coming years. In fact, according to PAT RESEARCH Forecast, the SaaS market for supply chain management is projected to rise by 24% in 2020. This same market is expected to reach a 19% CAGR (compound annual growth rate) which will lead to it becoming a US $ 4.4 billion market this 2018.
What are the Cloud Computing in Supply Chain Activities?
Some organizations have been taking advantage of cloud computing in specific supply chain activities. There are certain activities which are most commonly focused on in supply chain. These activities include forecasting and planning, logistics, service and spare parts management, as well as sourcing and procurement. Many of these activities have been greatly improved by supply chain managers with the use of cloud computing. We will now proceed to look in detail at how all of these activities have been affected by cloud computing.
- Forecasting and Planning: This is one of the most integral parts of supply chain. Every company wants to be able to forecast demand and supply, so as to plan for production and supply. Cloud computing can be of help here by collecting and unifying information / data from customers, retailers, wholesalers, and even the producers themselves. Some form of analytics can then be performed on the data in order to generate accurate forecasts and enable companies plan well for the future.
- Logistics: One of the things that plagues supply chain managers is logistics. From inventory to transport management, poor logistics can be the downfall of even the best supply chain. Cloud computing can help with logistics by providing tracking operations, automatic inventory management and transport route optimization. The sharing and unification of data on the cloud can also help the various entities involved in logistics plan effectively.
- Service and Spare parts Management: The management of spare parts and servicing can easily be improved with cloud computing. Spare parts can be easily ordered at a minimum level of availability in order to prevent shortage. Also, the time for servicing can be automatically determined utilizing information on the cloud, leading to a reduction in downtime. RFID can also be used to track inventory location ensuring accountability.
- Sourcing and Procurement: Acquisition and procurement of materials in critical to any supply chain. Cloud platforms can act as a master database that will contain all the information of suppliers. These platforms can also automatically order from the best supplier once a set minimum level is reached. The development of contracts automatically is another benefit of using cloud computing in this supply chain activity.
What are the benefits of Cloud Computing in Supply Chain?
Every business wants to know how any new technology benefits its operations. Cloud computing in supply chain offers numerous benefits. The intelligence and automation provided by cloud computing is perhaps the most important benefit. Several other benefits will be highlighted and explained here, providing you more than enough insight into how cloud computing can improve supply chain.
- Intelligence and Automation: The analytics and cognitive intelligence provided by cloud computing can totally transform the supply chain. Cloud platforms will provide insights into opportunities in the supply chain that can be harnessed. Potential risks can also be spotted by predictive analytics. It does not just stop in the suggestions and identification as the automation allows it to execute with operational efficiency. Automatic orders and supplies based on certain triggers are some examples of how cloud computing can automate supply chain.
- Real time Visibility: These days, several actions happen at the same time. Often times, the number of occurrences are too many to keep up with, resulting to an overload of information. However, cloud computing can ensure you stay up to date with the happenings in the supply chain. Real time visibility of occurrences and changes will help with the making of quick decisions about the supply chain, giving you advantage and improving operations.
- Improved Scalability: Cloud computing helps with the ease of scaling supply chain operations. Whether you have an increased number of staff or customer base, cloud computing will help with the scaling of supply chain operations in a very efficient and affordable manner. In periods of high demand, the supply chain can easily scale to cater for your needs.
- Speed: The speed with which companies can now perform supply chain operations and activities because of the efficiency provided by cloud computing is another benefit. The proactive identification and prediction of opportunities and risks will ensure that companies swiftly swing to action. Also, there is an enhanced responsiveness to increase in demand or other things.
- Cost Efficiency: The increased efficiency provided by cloud computing means that companies can save costs previously resulting from bottlenecks, logistics issues and other mishaps. The best part is that cloud computing does not require investments on in-house servers or software. Only a subscription is needed to improve the efficiency of your supply chain with cloud computing.
Adopting the Cloud in Supply Chain
It is very tempting to adopt cloud computing in supply chain, however one needs to be very careful. There are several boxed that need to be checked in order to successfully deploy and adopt cloud computing to your supply chain. It is important to develop an implementation strategy that will fit your supply chain. If your supply chain runs on legacy systems, you need to develop an implementation approach that will transfer all your data and dealings without any hitch. It is worthy of note that some supply chain systems are not suitable for cloud migration. There are two major ones which are not suitable. For one, any unique process that requires heavy customization and personalization is not very suitable for cloud deployment. Also, processes that are heavily integrated with physical processes or other technology systems are not very suitable for cloud computing as their integration may be negatively affected.
Furthermore, some companies might want to move only specific supply chain activities to the cloud and leave others untouched. The deployment or adoption strategy for these will be different from that of a company that is looking to completely move to the cloud. The key activities which companies usually consider include Planning, Sourcing and Procurement, Logistics, etc. Also, the ease of onboarding for a cloud platform should be considered before adoption. Your staff have to be ready to move from their legacy supply chain system to the cloud based one. The skill requirement to operate the cloud platforms and utilize them to your benefit should be considered when looking to adopt cloud in supply chain. If all of these are done right, then it will be a smooth transition to cloud computing and your supply chain can easily accrue the benefits highlighted earlier.