When we founded One Network over 10 years ago, the cloud was not yet a revolutionary concept. Since then, I’ve seen customers and prospects move from extreme suspicion of cloud computing, to acceptance, to active pursuit. More and more, people are now beginning to grasp the potential benefits of putting their supply chain in cloud, and as a result, software vendors of all types are scrambling to label themselves as being in the cloud.
You should know that the “cloud” label is incredibly broad and loosely defined. Not all cloud SCM solutions are created equally, nor are they architected the same way. Current cloud-based SCM vendors fall into three categories:
1. “The local cloud model”—The vast majority of SCM vendors fall into this category. Occurs where the vendor hosts and runs the SCM solution within the enterprise’s own private network. This is cloud in name only, and suffers from the same fatal flaw as traditionally installed software (e.g. WordPerfect). Namely, these tools simply aren’t designed to manage what happens outside of the four walls of the enterprise and make connecting and coordinating with others a nightmare. And given that much of a supply chain’s value lies outside of the four walls of any given enterprise, this approach will lead to disappointing results.
2. “One-to-many network”—Also called the “hub-and-spoke” model. I can think of only a few companies in this category, and it’s little more advanced than the local cloud model. A one-to-many works by connecting a single company (“hub”) to surrounding companies (“spokes”). The major drawback here is that the connections aren’t reusable! Thus, if a spoke wants to connect to other spokes, a whole new set of connections must be formed, which is unlikely given the amount of effort it takes to form a connection in the first place (integrating systems, establishing new business processes, etc). Individual companies within a real-world supply chain are constantly forming and breaking relationships, and the one-to-many network approach is simply too unwieldy to keep up.
3. Many- to-Many Network: Very simple. A company connects once to the network and has the ability to transact, coordinate, and plan with any other company already on the network. The question then becomes whether any two given companies want to transact, and if so, what information they decide to share and what integrated workflows they want to share. This is very similar to happens when you join Linked In; you have hundreds of millions potential “connections”, but first you both need to agree to connect and decide what information you want to share. To my knowledge, One Network is the only company with a full suite of supply chain planning and execution systems that has been architected as a many-to-many network, and the benefits of going this route can be pretty amazing, such as eliminating stock outs completely, responding to supply/demand events in real time, etc.
So which category do you fit into?
Latest posts by Greg Brady (see all)
- Why a Network Model Makes Sense for Automotive Suppliers - July 30, 2019
- The Financial Impact of Master Data Management - February 5, 2016
- Sharing the “Best Version of the Truth” with Trading Partners - January 18, 2016