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Supply Chains Have Finally Found Their Silver Lining in the Cloud

Analyst Insight: For both B2C and B2B, cloud technology is nothing new, but for supply chains the adoption has assumed a more guarded pace. That is to be expected: supply chain professionals are accustomed to operating in a world built on legacy applications and bolt-on point solutions. The promise of the cloud had been elusive, but supply chain systems are beginning to take advantage of the business model changes afforded by cloud solutions. - Guy F. Courtin, Vice President, Research, SCM World

Supply Chains Have Finally Found Their Silver Lining in the Cloud

Supply chains, by their very nature, have been built on best-of breed applications, often cobbled together and layered on top of ERP systems. Supply chain organisations have had to make do with this situation - indeed, the speed of change in their physical supply chains have often outpaced technology's ability to respond. The cloud offers a new opportunity to leverage this existing infrastructure and to build on top of it to enable supply chain to better coordinate trading partners and deliver greater value.

The cloud means better visibility. For supply chains to work, they need to have visibility into what each part of the chain is doing. At the crux of visibility is about being able to communicate in a "business time" appropriate manner. Having access to rich information does you no good if it falls outside the time frame within which it can be acted upon. SCM World research found that only 12 percent of respondents have what we would call "extensive" communications with their network, while over a quarter are still relying on e-mails, phone calls and faxes. Tapping into the cloud will accelerate the path to better visibility.

Visibility means greater connectivity. The 1990s gave rise to a burst of innovation that was meant to access the power of the internet (a marketplace of trading partners, all universally visible and ready to do business) with what were then called B2B exchanges. They included industry-sponsored efforts like WWRE in retail and Exostar in aerospace. Some of these early pioneers have survived and thrived: E2open in high-tech and Elemica in chemicals, for example, as well as Exostar. The ideas they developed are continuing to evolve as user bases add new members. These success stories serve to show how the cloud empowers a vital and unique advantage over traditional software applications - the network effect.

Greater connectivity means collaboration. Having better connectivity leads to greater collaboration. According to our research, only 30 percent of 374 respondents claimed they had no problems "connecting or onboarding new trade partners". In a supply chain environment where being able to ensure reliable and flexible connectivity is key, the cloud allows this to come to fruition. More than half of our survey sample reported that supply chain issues were resolved twice as fast with better connectivity and collaboration. By its very nature, the cloud allows for connections to be made rapidly and at a lower cost, opening the door for richer connections to be made - and to be made faster.

                                                          The Outlook

Don't hesitate to integrate the cloud into your supply chain. Cloud is a real game changer for supply chain applications. Its unique characteristics include a variable cost structure, quick rollout and easy access by entities outside the four walls of the organisation. These elements make a network effect possible that can tap new efficiencies in supply chain collaboration for sourcing, logistics management, sales and operations planning, and more. On balance, the movement to cloud seems less fraught with downside than replete with opportunity.

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