Now that cloud has officially arrived in the mainstream IT world, practitioners in different industries are racing to figure out what it means. At its most basic level Cloud is a technology service delivered over the Internet, which is always on, ubiquitous, global, and connected to just about every PC, iPad and Smart Phone on the planet.
Cloud has huge implications for Supply Chain management. Supply Chain is an inter-company, business to business world that has not yet realised the full power of technology innovation. Investment in technology is needed as there is evidence that the supply chain is growing in importance to global businesses as it is more competitive than ever with volatile consumer demand, globalisation, changing retail models and new inventory strategies.
In fact 80% of supply chain heads now report directly to the CEO compared to 40% five years ago. The supply chain industry needs to look at the potential for cloud to help communicate between businesses, as traditional business software is restrictive as it is designed to work within single companies, not between companies.
Look what Facebook did for sharing information with friends: a new holiday photo posted once and every friend instantly sees it. Now imagine that same concept in Supply Chain, only instead of a holiday photo, it is an inventory status event where every partner and stakeholder gets the new ETA news instantly. e.g. when there is a natural disaster that affects the supply chain such as the Japan earthquake or the potential UK fuel strike, everyone involved can get immediate updates on contingency plans. This is cloud supply chain.
Here are 10 things to consider when moving your supply chain into the cloud:
1. Start with visibility
Before you start automating processes, turn the lights on and identify the problem areas in your supply chain. Then, with that visibility “spinal column” in place, you can start addressing business process pain points based on what’s actually happening in your supply chain.
2. Don’t overlook the network
A cloud supply chain platform is more than applications. Applications need data and must be tightly integrated to an existing network of supply chain partners. This is more than an EDI VAN hub. The information processing must reside in the centre of the network alongside the applications so each file can be opened, rationalised and linked to form intelligent business objects.
3. Look for an active customer community
Cloud technology customers have become much more than a typical software company user group because they all share the same platform. User communities who are actively working as a group on things like data quality and partner relations are rapidly becoming industry influencers because they speak as a collection of major shippers. In supply chain, where companies often share a small, common set of partners (like carriers and 3PLs) this can be powerful.
4. Walk before you run
With cloud, you will often find entry level packages that allow buyers to start small and then add capabilities and partners to their platform as they expand the scope of the solution.
5. Understand the data quality approach
Software applications are only as good as the data that feeds them. Cloud is no different. However, a cloud supply chain provider should have a common data quality monitoring and improvement process for its customers. Since all customers share the same platform, a common process means the work of any one party actually benefits everyone on the network.
6. Look for real momentum and market traction
One quick way to identify success is to go to the press release page on the vendor website and look for customer announcements. If there is little or no customer PR, there is a good chance the vendor is new to cloud, or has not been successful. PR does not happen if a customer is dissatisfied.
7. Is it a single instance, multi-tenant model?
Most of the big software companies have announced cloud offerings. These are mostly dedicated instances of their software that they will deliver as a cloud service. While this approach has IT benefits over installed license software, it usually means the buyer is still faced with building out their own partner network and dealing with data quality on their own. The power of cloud is in the shared network data model, which only happens with a single instance, multi-tenant model.
8. Change management doesn’t go away
While many of the very difficult IT deployment problems will be reduced, good sound change management principals still apply to cloud deployments. Supply chain automation can impact thousands of partners. Corporate IT and consulting partners can play a vital role in a successful cloud supply chain roll out.
9. Make sure you are satisfied with the security approach
Skeptics often point to data security as a key reason to avoid cloud. In reality, cloud providers have extremely strong and effective security systems and processes in place. Their business depends on it. Cloud vendors are well prepared to answer the tough questions around security and data integrity, so don’t be afraid to ask.
10. Augment existing software systems
The emergence of cloud does not immediately spell the end of existing software. Companies aren’t ready to write off their massive software investments, and it’s not really necessary. Cloud supply chain solutions are designed to integrate with (and communicate with) all types of in-house software systems. Cloud platforms actually extend software to include supply chain partners (and their systems).