Eight Ways Cloud Is Making Supply Chains Very Smart

Author

Joe McKendrick, Contributor

October 27, 2014

In the world of supply chains, signing on a new partner or trading partner has typically marked the beginning of a marathon. Whether by Electronic Data Interchange (EDI), EDIFACT, cXML, ebXML, value added networks, portals, or the rest of the alphabet soup of connectivity approaches, a great deal of time and effort is required to get trading partners’ systems aligned — even if trading hubs are involved. Every company has a different system, and different processes for getting things done. For a company with thousands of trading partners, imagine how much in resources it gobbles up just to manage and keep every partnership aligned.

Of course, cloud changes all that right?

There are some cautions that need to be weighed. Security is always a big concern, of course, and trading partners need to be confident in the overall security of the information they are sharing. Internal systems may be exposed to a much greater extent. There is also concern about competitive pricing arrangements getting out into the open. Previous, closed point-to-point EDI arrangements felt much more secure. There are also implications for the storage of data across jurisdictions — most trading partnerships are global in nature, and mandates such as those seen in the European Union regarding data storage must be addressed.

The good news is that cloud may help turn the onboarding and maintenance of trading partner relationships from a marathon to more of a sprint. But it gets even better than that — the use of cloud for supply chains means everyone can see into one another’s operations and requirements, and adjust their own product flows and transactions accordingly. In a recent report from Accenture, Saideep Raj and Aditya Sharma (both with Accenture) observe that cloud computing helps organizations better deal with volatility and surging data volumes. The emerging digital supply chain makes use of data and analytics, mobility and social media functions.

Cloud may be just the ticket for today’s crazy business environment.  “Most supply-chain strategies date back to when the business environment was more stable — with predictable business cycles,” Raj and Sharma write. Within a not-so-stable environment, it’s important to be able to track and manage “talent, information and finance” moving between organizations as it is for products and services.  Cloud-based supply chains are a growing area as well — the report cites Gartner estimates that the market for cloud-based supply chain systems is growing at a compound annual rate of 19%. Currently, the market is sized at $2.3 billion, and is projected to reach $4.4 billion by 2018.

Here’s where cloud and digital-based platforms are making supply chains smarter:

Analysis: Cloud offers greater capabilities to analyze all the data available about trading-partner relationships. As Raj and Sharma observe, cloud provides access to “capabilities such as in-memory databases, analytics and performance management increasingly being combined with the cloud to address many of the challenges arising from the mass of data that must be managed and mined for insights.”

Collaboration: All trading partners are on the same page, with access to the same tools and platforms.

Visibility: The ubiquitous connectivity that cloud-based supply chains offer opportunities for real-time visibility into partners’ operations.

Intelligence: A digital supply chain can make use of predictive and historical analytics, as well as cognitive equipment and smart apps, Raj and Sharma state. As a result, supply-chain managers “can make proactive decisions on the go, while enabling set-up of rule-based decisions for basic tasks.”  They cite the example of Taleris (a joint venture between GE Aviation and Accenture),  which “uses predictive analytics technology to analyze data from the various sensors installed on multiple aircraft parts, components and systems and make predictive recommendations on aircraft maintenance and operations.”

Scalability: Cloud enables an almost unlimited number of trading vendors to plug into the network. In addition, behind-the-scene infrastructure can be provisioned, or switched off, as required.

Speed and agility: Cloud and digitization help companies get to market faster, increase their responsiveness, and add a great deal of flexibility to operations.  “Faster planning and execution capabilities (supported by advanced analytics and in-memory computing) result in reduced time to market, while enhanced flexibility and responsiveness to market conditions comes from better access to resources and/or quick shifting of resources within the company, as well as across the extended enterprise,” Raj and Sharma state.

Lower cost: As mentioned at the beginning of this post, electronic supply chains typically have required a lot of legwork to get all connections up and running, and keep them running. Supply chains in the cloud take away a lot of these costs. Even smaller partners can join the network.

Data sharing: Not mentioned in the Accenture report, but definitely another huge advantage cloud brings to the equation, is the collective intelligence about trading partners that a cloud-based scenario offers. For example, data on partner capacity, availability and reliability may be more visible within cloud-based networks or communities. A lot of the due diligence work necessary before signing a P.O. agreement may be aided by data available through the network. At the same time, smaller vendors will see their visibility enhanced to larger prospects.

The full report is available at the Accenture site.

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