Turn Your Supply Chain to the Cloud

As companies continue to shift to the cloud, users must watch for its community access components to unlock its true potential


While in Atlanta for CSCMP’s annual global conference in early October, I found myself repeatedly answering the question, ‘What’s this cloud stuff all about?’

As a technology practitioner who’s been beating the cloud drum for many years, fielding this question was both frustrating and rewarding. On the one hand, it was painful that many of those asking—the supply chain professionals who were generally interested in what cloud technology can bring to their company’s operation—still lacked a basic understanding of what cloud computing is, despite quite a bit of very high-profile activity in the market. But after a very basic discussion about cloud and what it can mean to the supply chain, the prevailing response was an emphatic ‘wow.’ That felt like a win.

With technology vendors across the planet collectively touting cloud as the next greatest thing, it’s safe to say that the average person understands the basic equation of ‘cloud = good.’ Still, this kind of noise also creates a staggering level of confusion—which explains the barrage of questions I encountered at the event.

The ‘wow’ factor around cloud supply chain is often boosted by industry insiders tapping into familiar ideas and parallels to tell the story. In an effort to clarify what cloud means for the supply chain, here are a few of those correlations to identify what they mean for you.

Cloud is like an electric utility

This is a commonly-used analogy that can support almost any kind of cloud solution, especially when compared to traditional software.

At one point and time, factories and cities each had their own power plants to generate electricity. These were massive, expensive and complex machines that were the domain of a select few in the early days of electric power. Over time, electrical utilities and the notion of shared infrastructure emerged. These would only be successful when a large community of users all contributed a low monthly rate and in turn, would have access to a robust, reliable source of power. Today, for a few hundred dollars a month, we get access to an electric grid that costs billions to build and maintain.

Not too long ago, the only way for a company to get technology was to buy an enterprise software license and then go through a massive implementation process and expense. The customer bought the hardware, paid for installation and paid to keep it running. Such projects typically ran millions of dollars over budget, took years to complete and rarely worked as advertised—issues that are still relevant today in some scenarios. With cloud, the customer buys a subscription, rents access to the technology and pays for what they use as they go. Typically, the customer gets access to a highly reliable system that is shared with other companies. The technology is maintained by the vendor, which develops into a utility of sorts.

LinkedIn versus Outlook

In supply chain, one of the biggest challenges is keeping an entire value chain of partners connected and informed about what’s actually happening. This requires that entire trading communities all see and act on the exact same piece of information—a single version of truth. This requires an information model that looks like LinkedIn, not Outlook.

About 15 years ago, we all had our contact lists in an Outlook address book. If we changed our phone number or email address, we had to send an email to everyone and hope they each changed the information in their own address book.

With LinkedIn, the model is inverted. Now, we simply go to our profile page to change the information and our entire network gets the news instantly—everybody in the network is on the same page. This is a completely different information-sharing model that’s predicated on a centralized cloud platform. In supply chain, this goes beyond information about organizations and includes dynamic business objects like orders, shipments, inventory, documents, costs and events—all of which are in a state of constant change. Thus, when the status of a shipment changes, everybody who needs to know gets the news instantly.

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