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Supply chain management in the cloud

How can cloud computing make supply chains more competitive?

Overview

New cloud computing technologies are enabling breakthrough innovations in supply chain management (SCM) applications delivered via software as a service (SaaS) models.

As a key enabler in this new digital world, cloud computing can have a transformational impact on the business and the supply chain operating model by enabling data and analytics, mobility and social media functions.

Cloud computing helps organizations realize major benefits from key marketplace trends that are redefining traditional supply chain networks, including volatility as the new normal, surging data volumes, industrial-grade digital technologies and the arrival of end-to-end visibility.

Today, as every business becomes a digital business, organizations should reimagine the supply chain as a digital supply network that unites not just physical flows of products and services, but also talent, information and finance.

Background

Most supply chain strategies date back to when the business environment was more stable. With predictable business cycles, competent management teams could navigate the challenges and still focus their supply chain strategies on cost reduction. They did so partly by establishing low-cost manufacturing in locations far from core markets, rationalizing the supplier base, reducing inventories by integrating partners into an ecosystem and applying lean principles to their processes.

Today, as every business becomes a digital business, organizations should reimagine the supply chain as a digital supply network that unites not just physical flows of products and services, but also talent, information and finance. Digitization can transform the supply chain by making services more valuable, accessible and affordable.

Digitization can transform the supply chain by making services more valuable, accessible and affordable.

Analysis

Cloud computing is now recognized as a real game-changer, providing a route through which supply chain executives can rapidly and efficiently access innovative solutions—delivered through a SaaS model—and deploy them at scale. Driven by growing realization of the benefits these solutions provide, the SaaS for SCM market is predicted to grow by 24 percent in 2014, and reach a 19 percent compound annual growth rate to become a US$4.4 billion opportunity by 2018.

SaaS-based approaches work well when collaborative processes are involved. In today’s complex, global supply chain networks, effective B2B collaboration is essential—and this is where SaaS-based solutions can deliver real benefits.

In today’s complex, global supply chain networks, effective B2B collaboration is essential—and this is where SaaS-based solutions can deliver real benefits.

Key Findings

There are four distinct advantages to cloud-enabled digital supply networks:

  • Connectivity—Connectedness provides unprecedented visibility and the real-time ability to touch/influence, resulting in an intelligent supply network and evolved operating models.

  • Intelligence—Once the supply network is connected, analytics, cognitive equipment and smart apps provide the right information for decision making at the right time.

  • Scalability—Now connected and intelligent, the supply network is able to scale. Beyond plugging in different partners and suppliers as needed, companies can scale down their operations to target niche markets/segments/customers, and/or target newer markets.

  • Speed—Building upon the first three advantages, companies can now operate their supply chain networks at speed—successfully executing in the midst of permanent volatility.

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