Throughout the pandemic, all eyes have been on the supply chain. Supply chain leaders have been challenged to figure out how to quickly, cost-effectively, and responsibly meet ever-changing demand while ensuring their supply chains are as flexible as possible. If COVID-19 has taught us one thing, it’s that we can’t simply optimize for what the new normal is. There is no new normal. If a supply chain is to survive, it has to be resilient forever, so it can continuously evolve to respond effectively to whatever’s thrown at it.

This is why the cloud has become critical to every supply chain. The cloud provides technologies that allow companies to process huge amounts of data—from virtually unlimited sources across the entire supply chain—at speeds and volumes never before possible. It enables companies to deeply analyze that data to generate critical business insights that can vastly improve decision making. And it allows companies to reconfigure how they work to gain the agility to deal with the consequences of whatever the data says. The cloud provides vast amounts of computing power, with a simple, flexible and affordable data and digital architecture, that opens up myriad possibilities for the supply chain—and enables leaders to manage service levels and cost, build in resilience and ensure responsible operations.

What’s the true value of the cloud?

When thinking about the value the cloud provides, many people still mainly think cost savings. And it’s true that the cloud does save companies money. By running applications in a public cloud, a company benefits from the economies of scale of thousands of customers while abandoning a highly customized solution and the costly maintenance it entails in favor of agile, best-in-class prebuilt components, managed by a service provider. But cost savings are just the beginning.

The cloud drives speed, agility, scale and visibility. Companies using the cloud gain the flexibility to quickly adjust the amount of computing resources as needed, up or down; the ability to reduce the time (and cost) to develop and deploy new applications; the integration with a whole new world of players; and the visibility across operations and the entire value chain for faster, more-informed decision-making.

The cloud also is a huge enabler of innovation. With the major cloud providers investing billions of dollars in new features every year, the cloud provides the foundation for affordable, unrestricted access to cutting-edge technologies and capabilities that would ordinarily be out of a company’s reach.

Finally, the cloud plays a key role in responsibility and sustainability—especially when it comes to the supply chain. The cloud and efficient data computing help accelerate companies’ adoption of emerging technologies to reduce the supply chain’s environmental footprint and improve resource efficiency while increasing regulatory compliance and improving risk mitigation.

Where’s the opportunity today and tomorrow for the supply chain?

By fully embracing the cloud, supply chain executives will be able to influence all dimensions of the supply chain—engineering (product), planning, procurement, manufacturing, fulfillment and service—to create a supply chain that is:

Interconnected

across the ecosystem

Intelligent

through digitization, analytics and automation for traceability, agility and resiliency

Innovative

to replace a one-size-fits-all strategy with a tailored supply chain strategy

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Attaining these goals may require a much more ambitious push to the cloud across the supply chain. All supply chain functions will have to embrace the cloud to tackle short-term and long-term challenges, including developing remote access to a wealth of data, cross-collaborating and collecting data in real time to quickly and appropriately improve customer experiences and reacting to unforeseen disruptions.

The cloud has already made significant inroads in the procurement function, and this will continue. Planning and fulfillment, both currently with medium cloud penetration, also have high potential for future adoption. While cloud adoption in R&D and engineering is low today, there’s a big opportunity to expedite new product introduction through cloud-based product lifecycle management solutions. Manufacturing is slowly moving execution systems to the cloud and that will continue as the cloud is more accepted.



How to move forward

Creating a cloud-based supply chain is an ambitious effort and, as such, requires a structured, disciplined approach. This approach, of course, will be different for every company—especially given that all companies won’t necessarily be starting from the same point. Supply chain leaders need to know where their organization currently stands on the cloud maturity spectrum and what they need to do to advance.

This starts with understanding the key supply chain questions and challenges a company wants to address, which allows the company to identify the data and types of insights needed to solve them. This, coupled with a standard set of data architectures, integration approaches and data governance, enables a company to build a cloud-native data foundation in which multiple data sources can be readily connected to cloud-native supply chain applications and analytical platforms. The company is now moving from just porting applications to a new platform, to unlocking the elastic and scalable computing power and open data architectures that underpin the innovative side of the cloud. As its cloud presence continues to mature, the company can then focus on using the cloud to drive greater speed, agility and efficiency into its supply chain through increasing automation and industrialized processes.

Our world today is truly different from what it was only 12 months ago, and all companies need to figure out how they respond to and thrive in this new reality. For most companies, success will largely hinge on their supply chain and its ability to concurrently handle fluctuating demand, the need for resilience, the pressure to manage costs and calls for greater responsibility for society and the environment. It’s a tall order, but the cloud can help—and supply chain leaders should consider how they can start taking greater advantage of it.

Frequently asked questions

Cloud technologies give you extra power and scalability. That means you can process truly vast amounts of data, from a huge range of different sources. It means you can scale operations up and down at a speed that was previously unthinkable. Not only that, but cloud gives you faster access to the latest analytical technologies, including artificial intelligence and machine learning. That allows you to gather, process, understand, and react to data from across your supply chain in close to real time.

Cloud infrastructure is typically more cost-effective. That enables you to drive up efficiency right across the supply chain. But it also drives speed, agility, and scale. That allows your business to do entirely new things, such as integrating systems with suppliers to get end-to-end visibility across the supply chain. Cloud also enables faster innovation because it gives you access to cutting-edge cloud services from some of the world’s most innovative companies. It can also support greater responsibility, such as monitoring environmental impact and ethical practices throughout the supply chain.

Yes. In fact, cloud supports a digital transformation in everything from engineering and planning to procurement and manufacturing to fulfilment and customer service. It enables you to build a supply chain that is more interconnected, more intelligent and more automated. And that transforms your supply chain’s ability to support business innovation. To do this, you need all supply chain functions to not only embrace cloud, but also collaborate to integrate data, enhance resilience, and improve customer experience.

Transforming a supply chain in the cloud requires a disciplined and structured approach tailored to the unique needs of your business. The first step is to assess your current cloud maturity. That will determine whether you need to start by defining your objectives and integrating your data, or whether you’re ready to start industrializing processes and driving up automation. You also need to consider what investments are needed to change ways of working and upskill your workforce.

About the Authors

Kris Timmermans

Senior Managing Director – Strategy & Consulting, Supply Chain & Operations Global Lead


David Simchi-Levi

Professor of Engineering Systems at MIT and Head of the MIT Data Science Lab


Tracey Countryman

Senior Managing Director – Industry X, Digital Manufacturing & Operations, Global Lead


Francois X. Bourbigot

Managing Director – Strategy & Consulting, Supply Chain & Operations


Jordi Paris

Managing Director – Strategy & Consulting, Supply Chain & Operations, Technology Strategy & Advisory


Kristine Renker

Managing Director – Strategy & Consulting, Supply Chain & Operations, Global

Contributors

Craig Gottlieb

Managing Director – Strategy & Consulting, Aerospace & Defense, North America


Olivier Proulx

Senior Consultant – Strategy & Consulting, Supply Chain & Operations


Steve Puricelli

Managing Director – Strategy & Consulting, Supply Chain & Operations

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