The use of cloud computing in supply change management is not some dark, forbidden territory any longer. In recent years, the use of cloud-based solutions has dramatically changed how modern supply chain companies operate, and the cloud supply chain management has the potential to level the playing field between all supply chain companies, especially shippers.
The cloud is almost primarily responsible for much of what modern society takes for granted. In business, the cloud is enabling the growth of predictive analytics and big data processing. The cloud is making new, innovative transportation management systems (TMS) available to more shippers. In some cases, the cloud is taking on the human responsibilities of retiring experts in the supply chain. As technology improves and society moves forward into the future, supply change management will only become increasingly involved in the cloud. Supply chain entities need to understand and take notice of some of the most interesting facts in this innovative, ethereal, but still physical trend.
At the annual Modern Supply Chain Experience in San Jose, California, Oracle announced plans to devote more time and energy into improving cloud supply chain management seems to point towards an eventual shift of all supply chain management from legacy-based systems to the use of the cloud. However, some supply chain companies remain reluctant to embrace the cloud, but the cloud poses many benefits for improving efficiency and reducing costs.
As explained by Monica Mehta, 2015 was the year of mergers and acquisitions (M&As), valued at $4 trillion. Obviously, modern economics are changing, and these changes show no signs of stopping. The use of cloud-based technologies helps to safeguard against the instability from such a high level of M&As and corresponding economic issues, such as low oil prices. Concerning Oracle’s new improvements in the SCM cloud, user accessibility and ease-of-access will further drive adoption rates of cloud-based solutions, particularly TMS solutions.
The TMS is responsible for managing a shipper’s routing, scheduling, carrier selection, shipment consolidation capabilities, and load tendering processes, explains Bridget McCrea of Supply Chain 27/7. For supply chain companies who have already embraced TMS solutions, the average return on investment stands out at a 7.5 percent reduction in operating costs. Surely, the use of TMS is driving more companies to want to employ this software. However, most supply chain companies have historically only used a TMS when the company had more than $20 million in freight spend.
The cost of purchasing an on-premise TMS was impractical for small to medium-sized businesses. However, the use of a web-based TMS revolves around a different model in cloud supply chain management solution, software-as-a-service, or SaaS. This SaaS model is much cheaper to manage, work with, customize, and utilize than a traditional TMS. Subsequently, more small to medium sized business owners can break through this financial large barrier and reap the benefits of the system.
Cloud computing does not revolve solely around the transportation management system either. Cloud computing is one of the driving forces behind the Industrial Internet of Things (IIoT), as explained by Pivot 88. The IIoT is being deployed to manage the flow of goods in the supply chain from tablets, smartphones, and other handheld devices, putting more workers in the field where the action happens. The connectivity between devices and people through the IIoT is gathering information within the supply chain management cloud, which can then be leveraged through predictive analytics and processing power to identify inefficiencies within the whole supply chain, reducing the overall cost. Furthermore, this shift towards bigger data indicates the creation of better evaluation and performance management tools are on the horizon.
Yet, some supply chain entities may be unwilling to directly move to an entirely cloud-based solution. However, the supply chain management cloud does not require a company to abandon all previous systems. This is termed an application convergence strategy, and supply chain entities can layer the cloud-based solution on top of the existing, legacy solution and derive better results through the integration of both systems. Basically, cloud computing allows for faster, easier integration.
Obviously, another factor in supply change management will always be risk management. The supply chain is inherently filled with risk. Consumers may decide they hate a product. The government may impose new regulations for truckers without much warning. The weather could destroy an entire shipment, or a factory could face a crisis with a supplier.
Supply chain entities cannot avoid risk, but those who take an extra step to figure out how to respond to delays in production and operation through the use of the encyclopedic knowledge and data within the cloud will be better suited to overcome the event. In other words, supply chain entities can learn from the mistakes of other supply chain entities by leveraging the data within the cloud from other operations to the respective companies existing operation.
The next step for the use of cloud supply chain management in the industry will focus more on operations’ planning and inventory management. However, the benefits of the cloud continue to grow exponentially as more data becomes available.
Today, the use of cloud-based technologies and cloud computing seem to consistently point towards saving money for supply chain entities, and cost savings in business tend to evolve into one outcome, growth. As supply chain entities become more agile, cost-effective, and efficient, the issue of scalability and growth will come to the forefront. Fortunately, cloud computing is already designed to enable large scalability when legacy systems would be incapable of handling such a concept. Cloud supply chain management is not going away, and supply chain entities need to understand why and how cloud computing will benefit them now and in the future.
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