Although cloud technology has been around for almost 20 years, supply chain professionals are relatively hesitant to migrate their systems. Though the industry’s move to cloud computing is still in its youth, supply chain management (SCM) software revenue is on pace to exceed $19 billion by 2021. However, sales of on-premises licenses will decline to less than 20% of total spending. Hybrid SCM environments with coexisting cloud and on-premises applications are becoming more commonplace, with information hubs and supplier networks dominating the move to cloud. Cloud technology makes a lot of sense for supply chain managers. Computing in the cloud makes it possible to closely track a product throughout its lifecycle. Cloud-based supply management can also significantly cut down on lost product as it can locate a shipment during any stage of transport. And it enables you to make quick decisions and communicate effectively if you need to reroute a misdirected shipment.
Traditional supply chain management systems are much more transactional, and can’t offer the real-time accuracy and 360-degree management of cloud management solutions.
The Benefits of Cloud-Based Management
Though it can be challenging to transition to cloud systems from traditional management systems, this doesn’t outweigh the many benefits of cloud-based management, which include:
- Scalability. As business needs change, your existing IT systems must evolve to provide the necessary resources to meet those needs. Cloud services allow you to scale without having to overhaul an entire system. Even if your company expands rapidly, a cloud provider has the off-site computing power to accommodate your needs.
- Immediacy. It can take months to implement new software within existing IT systems, but you can contact one of the many cloud supply chain management software providers, and expect a new service to be up and running within a couple of weeks. Data migration can take a while, but some providers assist with the process.
- Cost containment. Because resources are on demand and immediate, scalability doesn’t come with the hefty price tag often associated with IT system changes. IT departments are learning to do more with less and allocate only about 11 percent of their budgets, on average, to new applications. With cloud-based management, a dedicated off-site IT team is standing by to limit downtime from technical malfunctions.
- Efficiency. By converting to a cloud service, information management no longer taxes internal resources, allowing you to shift team members from system management to ongoing needs, such as research and product development. Expect product innovations and improvement to come more quickly and without the need to hire more employees.
- Accessibility. Physical systems come with limitations. Oftentimes, employees must be on site to access information. The reverse is true with cloud computing. Within minutes, everyone from drivers to account managers can download all the necessary files on virtually any device, making it much easier to conduct business from anywhere.
- Onboarding. Difficulties often arise for supply chains during the onboarding process of new trade partners, with less than 30 percent of trade partners reporting a problem-free experience. This shouldn’t come as a surprise; it can take months to merge large quantities of data into internal IT systems. Access to new information is made much easier with cloud-based services, making onboarding processes much smoother.
- Flexibility. Cloud-based services can connect everyone in the supply chain, providing a more strategic approach for inventory deployment. With geoanalytics, cloud computing can enable you to monitor delivery networks and prioritize slow-moving shipments. You can also automate tasks and more easily combine moves.
- Optimization. Cloud-based service providers tailor solutions to your industry, allowing you to accelerate the integration and adoption of their services across all parts of your organization. In fact, 46% of surveyed supply chain management professionals said greater collaboration led to problems being solved twice as quickly. This can help optimize product development, market expansion and delivery times, while reducing overall costs by improving the agility of your operating model.
The bottom line is that everyone within a trade network must be able to communicate and share data to meet the ever-increasing needs of customers.
Cloud computing is just one piece of that puzzle—but it’s a critical one. By moving systems beyond your four walls, you provide access to the information necessary to get orders to their destinations at the appointed times in a highly efficient manner.