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

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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. And if we were lucky, one third of our contacts made the update.

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. 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.

The HD picture

Visibility is a top priority for most companies. But while many claim to have it, few actually have a technology that takes each small ‘pixel’ of information and creates a true, high definition (HD) picture of what’s happening in their supply chain. Silos of information are common; a collaborative HD picture is not.

For example, think about the pixels that make up your beautiful 1080p screen on the HD TV standing in your living room or hanging on your wall at home. Now, imagine going back to standard definition TV for things like movies and sports. In those cases, it can be nearly impossible to read a sign in the background or make out a number on a uniform. Now, take that a step further and imagine big black holes of missing information. Maybe you see the football helmet, a few cleats and the stadium, but you can’t see the ball or the end zones. You have TV, but is that really TV?

Those ‘black hole’ information gaps are common in the global supply chain. But cloud platforms fill them by sitting above the physical supply chain to create a virtual informational replica of what’s actually happening on the ground, around the globe. The cloud platform captures ‘pixels’ from all players and systems across the network. That information is rationalized and linked to related objects, parties and processes. An HD picture is assembled of the supply chain and made available to all stakeholders. So as the picture changes, everyone in the network sees that same picture and acts accordingly.

There are many other analogies that help shed light on why cloud is a big deal in the supply chain space. Probably the most important shift in mindset is that many of the benefits are not about software applications or functionality. While screen shots and slick demos have been seducing buyers for years, the traditional software systems were always designed for the single company. Today, supply chain technology must be capable of working fluidly and quickly between companies as networks. This is a domain that is ideally suited for cloud.

A utility-centric platform brings entire trading communities onto a single, shared network. New information models that move data to the center of a network support the creation of virtual replicas of the physical supply chain to give entire networks an HD picture of what’s really happening—at any point in the supply chain with any partner.

The future of the cloud supply chain

Major companies across business sectors continue to make the shift to cloud—especially in the CRM and HR technology spaces—and cloud users must brace themselves for a new era of global commerce efficiency through the emerging cloud supply chain. Evident of this are the major corporations going public with their stories—such as at CSCMP where attendees witnessed Pfizer talking about supply chain segmentation, supported by virtualized information layer in the cloud.

As established big software providers continue to hammer their cloud offerings, companies interested in moving to the cloud should not only listen to what the early movers are doing and saying. They must also look for the community aspect—not just hosted software—that is key to unlocking the primary benefit of cloud.

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