Back in the day, most supply chains had their strategies built around a more or less stable business environment. While tackling ongoing challenges, the managers had their eyes on cost-effectiveness by introducing lean approaches, establishing cheap local manufacturing, optimizing inventories and supplier base.
With the advent of the digitalization era, the business began to revolve around conveying value — an entirely new mindset that requires innovative tech across supply networks and beyond. The time has come for integrity, transparency, and collaboration. And that has been successfully achieved with cloud computing. The market is set to reach $11 billion by 2023, and it’s high time to look closer at available solutions.
Let’s go through supply chain industry trends, challenges, and how cloud computing transforms and helps a business.
New normal: trends that reshape supply chains
Even though volatility is nothing new to supply chains globally, its scope and pace are truly impressive. Today, unfortunately, only a minority of businesses can adapt, react quickly and relevantly, survive and remain competitive. Many organizations find themselves in a position where the partial introduction of tech results in data being scattered and underused.
The supply chain is a huge, complex ecosystem with multiple stakeholders. The data volumes — both internal and external — are growing exponentially. And companies are challenged to accumulate, store, analyze, share and convert it into optimization actions. Also, the question of cost-effectiveness does not go anywhere.
I am not saying that the pandemic was the one and only trigger for transformation to happen. It definitely aggravated things. Nevertheless, the problem of understocking and overstocking was quite serious long before the present day. In 2020, the global inventory distortion cost businesses $1.8 trillion. Covid should be considered as a harsh lesson: an organization can go downhill when the supply chain activity — every step of it — lacks effective management.
All in all, for the ecosystem to operate like clockwork, organizations have to realize the power of end-to-end visibility, close collaboration, flexibility, and real-time responsiveness. As the enabler of seamless data flow, cloud computing brought unparalleled intelligence to supply chains.
Advantages of cloud computing logistics and supply chain
Let’s focus on the key specific benefits of cloud and logistics combination.
- Real-time inventory and pricing. Cost optimization and risk mitigation are in direct correlation with top-notch inventory management. Having real-time inventory information allows for rapid reaction to whatever market fluctuation occurs. Cloud enables constant data flow on crucial aspects such as profit margins, sellers, etc. Therefore, having this information, an organization can increase sales levels, enhance customer experience, and positively influence performance. As far as pricing is concerned, weather conditions, market fluctuations, and demand spikes can significantly impact business margins in concise time frames. The round-the-clock access to rates, a company can take action in a matter of minutes.
- Connectivity. Having all the elements glued together and synchronized, a company acquires due visibility. Cloud technologies give the opportunity to connect with clients, vendors, suppliers. Therefore, a connected supply chain opens doors to tight collaboration and highly evolved operating models.
- Intelligence. The connectivity mentioned above paves the way to deploying analytical tools and cognitive tech to bring a timely and relevant decision to the table. Intelligence literally means being proactive rather than reactive to significant challenges while dealing with the minor ones via rule-based decisions. Industry leaders use predictive analytics to process data received from numerous sensors and provide guidelines on operations.
- Scalability. Since gaining intelligence and connectedness, an organization is empowered to scale and expand (or condense) its network where and when necessary. Solutions based on cloud computing are based on usage, therefore, enable flexibility and adaptability whether we are talking about stocks, capacities or else. When the supply chain is scalable, it works with 100% efficiency, agility, and personalized services.
Activities for cloud computing
The companies involved in the supply chain industry can benefit from cloud computing in the following activities:
- Planning and foresight. Cloud computing can be used to accumulate and unify data from multiple stakeholders, and further the application of analytical tools to generate precise forecasts on supply and demand. By doing so, a business is well-prepared for the future.
- Procurement and sourcing. Platforms based on cloud technologies can be the only source of truth and a unified database for materials, suppliers, and levels. The major trick of these platforms is automation: once a minimum level is hit, the platform automatically makes an order to a relevant supplier and develops a contract.
- Maintenance. Cloud computing analogically to the previous activity can significantly boost the process with the spare parts and service. Cloud computing solution orders a spare part. The data from the cloud helps determine service time automatically, thus, an organization eliminates the possibility of shortage, downtime and on the contrary — displays utmost accountability.
- Logistics. A single error in logistics can shatter even the most robust supply chain. Cloud technologies enable real-time tracking, route optimizing and inventory management. When the data is tracked, unified and shared in the cloud, the entire logistics network moves forward as a whole.
Today, the supply chains must be adaptive. Supply chains must be fast and maneuverable. Every party involved in the industry is demanding; every stakeholder wants appropriate data here and now, provided the service quality is never compromised. The business environment demands organizations to be digitally savvy. Since many have already appreciated the present capabilities of cloud tech, there is much more to come in the near future. Cloud equals being dynamic, relevant, and farsighted. In other words, alive.
This article was written for Business 2 Community by Rocky Osborn.
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