What’s the deal with supply chain resilience and cloud?
January 5, 2021
I can’t get through the day without hearing about supply chain resilience and the cloud. But I’ve yet to read or hear anything that clearly (and simply) explains how the two are related or why they even should be.
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Why should supply chain leaders care about the cloud? And what does supply chain resilience really mean in plain language?
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As a supply chain consultant and former practitioner, I’ve tried to unpack these two seemingly unrelated topics to understand what all the hype’s about and share what I’ve learned. The simple answer is this: These areas are really important for supply chain leaders, and cloud and resilience really are joined at the hip—you honestly can’t have supply chain resilience without the cloud.
For context, let’s go back to school. Most college or university supply chain “101” classes start with the basics of how supply chains operate: Products, parts, and inventory flow downstream from suppliers to customers, while information flows upstream from customers to suppliers. I can still picture the graphic with opposing arrows my supply chain professor showed us and the subsequent discussions about the “bullwhip effect,” collaboration, and many other bedrock supply chain concepts. These are tried-and-true principles we’re all familiar with. They also take center stage in the famous “Beer Game” invented by Jay Forrester in the 1960s at MIT that most of us probably played in college or business school. And the principles are still relevant today, underpinning the basic operations of supply chains everywhere.
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Now we have the COVID-19 pandemic
There will be plenty of time for historians to reflect on what we learned when COVID hit, but one thing became painfully clear: Organizations were blindsided by the lack of visibility they had across the extended supply chain. Smart, experienced, and well-educated leaders were caught off guard. Suddenly, they didn’t know where parts and products were, how well their suppliers were performing, or what to do to respond to changes in demand they’d never seen before. But how is this possible? How did supply chains simply break down and “lose” resilience?
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It’s an easy answer, but not something leaders typically think about during “normal” times. Contrary to everything we’ve been taught or know about high-performing supply chains, information sharing, and collaboration…most supply chains today are still very linear. Just as products have a physical lead time for delivery, the supply chain’s linearity also creates an “information lead time” that’s often ignored, underappreciated, or overlooked.
COVID-19 changed all that. In a span of a few weeks, supply chains everywhere were thrown into chaos by the lack of timely information leaders needed to make key decisions that would determine whether their supply chains stayed afloat or “broke.” And many, many supply chains during that time did, indeed, break. In the months since, leaders have had their eyes opened to the information latency challenge. They now see that it’s arguably the single most important thing they need to address to build the resilience to withstand future disruptions of any magnitude.
Now it’s time to talk about the cloud
Put simply, the cloud is the cure for information latency. It’s what knits together the complex web of systems and data across multiple nodes of supply chain partners—from suppliers and their suppliers, to inbound logistics providers, to a company’s factories and warehouses, to outbound carriers, to distributors and, ultimately, customers. Imagine trying to hardwire all of those together. You can’t. And that’s why the cloud is so revolutionary for supply chains. It provides the technology and environment that takes information sharing to a level never before possible—affordably, securely, and timely.
With the end-to-end supply chain’s information flow entirely in the cloud, there’s no waiting for reports to process, no manually sorting through flat files of point-of-sale data, no juggling of many different interfaces, no more flying blind. It’s just seamless integration across supply chain partners that provides extreme visibility of the entire supply chain, in near real time.
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The best part of all is that someone else has built the capability for you. The cloud providers have invested tens of billions of dollars to create these great environments for data that you and your supply chain partners can leverage at a fraction of the cost it would take you to build it in house. And that doesn’t even begin to consider all the cloud-based tools like analytics and artificial intelligence you gain access to (again, very inexpensively) that can help you get insights on your operations you’ve only dreamed about—insights that are vital to being able to make the right decisions to keep your supply chain running during times of uncertainty.
