Five reasons why cloud-based supply chain tech beats traditional on-premise

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PhotoAtellier (Flickr)
PhotoAtellier (Flickr)

What can we say about supply chains with 100% certainty?

First, supply chain processes are inherently collaborative activities involving multiple participants whose actions must be synchronized to deliver maximum business performance. Second, supply chain are also a community in which those parties who are already present and connected will be a superior solution framework than an isolated, inward looking enterprise-centric architecture. These two truths both point to the cloud as being an ideal way to manage supply chains.

But is the cloud really ready for today’s complex outsourced supply chains? I believe the answer is clearly “Yes”.. Here are five specific reasons why supply chain solutions delivered as a platform service over the web will outperform their on-premise alternative:

  1. Time & Responsiveness: On-premise solutions artificially segment into buckets and cycles what is in physical reality a continuous process. An artificial batch “wait” time between a triggering event and a solution response inherent in standalone systems can lead to both service failures and unnecessary inventory buildup that were otherwise entirely avoidable. A platform based model can detect in real-time and selectively direct that add Item1 (displacing filler Item2) be added to the truckload about to depart and thus avoid either missing the sale OR pushing another complete truckload to the destination.
  2. Veracity: On-premise solutions have an internal perspective on supply chain events. A buyer’s OMS may have one view of expected receipts; the supplier’s OMS an adjusted view of what actually can be delivered. During the interval at which those perspectives are not “synched”, the replenishment process may iterate (and make poor decisions) for a couple of cycles until the data variance is flushed. Platform-based solutions (by design) maintain a single version of the truth for all parties.
  3. Asset Utilization: Supply chains enabled with on-premise technology tend to have fixed, well-defined resource pools from which they can draw capacity; platform-enabled supply chains provide the capability for all types of assets (manufacturing, storage, transportation, computing etc) to be dynamically visible and allocated to match current supply and demand conditions on the ground.
  4. Simplified Connectivity: On premise solutions typically require repetitive connections to each trading partner or asset provider. This is costly and time consuming to manage. Platform based technology allows each enterprise to connect one time to the “grid” and begin interacting with other participants already present.
  5. Velocity: Supply chain performance is a directly related to cost efficient velocity. Serial (or vertical) integration up and down the supply chain between direct trading partners has generated significant benefits; however, the next step change in supply chain performance will come from velocity increases associated peer-to-peer (lateral) collaboration: co-location and co-delivery of goods from suppliers using shared resources to common channels and delivery points. Such a process cannot be effectively managed by on-premise tools from any single participant; it can be managed only from a neutral, platform based perspective.

Want to learn more? I suggest you download and read the three new tech briefs that cover CPFR, Push vs. Pull, and the new cloud-based supply chains.

Greg Brady