Building a cloud-driven foundation for supply chain management

Cloud computing is a crucial technological advancement that organizations across industries have started to embrace. Cloud-based applications allow companies and all its stakeholders to access the information from anywhere at anytime, and does not require any organization specific infrastructure. Supply Chain within all organizations, on the procurement as well as distribution sides, have several moving parts. Supply Chain Management necessarily implies visibility of relevant information in order to respond to the rapidly changing environment with respect to consumer preferences as well as supply positions.

Cloud computing is an essential element for overall digital transformation of the supply chain providing a significant value-creation opportunity. The Enterprise supply chain as well as the logistics industry is witnessing adoption of technology and digitalization that is accelerating rapidly. Digitization of the Supply Chain has shown it can reduce cost and idle inventories while also making sure of better product availability resulting in higher revenue. The visibility on the sourcing as well as the distribution side facilitates a synchronization of production and inventory with consumption of the finished product by providing visibility of off-take rates at each leg of the chain.

Large proportion of the manufacturing and distribution businesses, especially those in the unorganized sector, still handle business transactions in the traditional way which is mostly manual . However, an increase in internet penetration through affordable mobile devices combined with an aggressive drive for digitization by several leading organized players has helped move the industry forward on the path of digitization . It has helped rapid proliferation of transactions being executed and tracked through applications that can be accessed through the internet.

Impact of cloud technology on business processes

Cloud technology helps companies manage large amounts of data and process it to get relevant information about their overall business. Collaborative-Execution makes all relevant data available to the relevant eco-system players and has the potential to help improve productivity and reduce cost by as much as 20%.

Using cloud technology for digital transformation ensures businesses only need to use the services they need. Such an approach is highly cost effective for organizations, with the absence of upfront costs for hardware and maintenance being an additional benefit.

The ready availability of data on each leg of the supply chain on inventory levels at each point of the distribution chain - on the product sales side as well as on the sourcing side - inventory on the move and its availability as well as off-take / consumption rate at the sales and consumption point makes it possible to optimize the entire chain while ensuring product availability matches up with off-take rate.

Supply Chain Management in the Cloud

A significant push towards usage of Internet application and Digitization of each facet of supply chain have come due to multiple Start-ups & new-age companies focusing on each part of the supply-chain and eCommerce proliferation in the larger consumer population. Most such applications are already 'on the cloud' or in the process of being moved to the cloud. The movement of Government & Banking applications like toll systems, GST and eWay bill regulations, digital and tax payments to the cloud has also contributed towards facilitating the digitization of transactions.

For encouraging and pushing forward the supply chain & logistics sector towards digital transformation, there needs to be a two-pronged approach –  On one side, Large organizations need to promote the move towards digitization as they realize the benefits of higher efficiencies and shorter cash cycles through quick information sharing & digital payments and on the other, the startups need to facilitate new business for small companies and the unorganized sector of the supply chain through cloud-based applications..

Large organizations that mandate visibility of goods between locations for de-risking goods movement and visibility of the entire supply chain are in a strong position to moving their own logistics functions to the cloud as well as having all their service providers align to the digitization mandate.

This two-pronged approach will accelerate the speed of digitization and lay the foundation for collaborative-execution between the large Enterprise and their logistics & supply chain suppliers.

Key challenges

One of the key challenges for companies to shift to a cloud-based platform is their unwillingness to shift from traditional systems and set processes. Companies also hesitate to invest in technology if they don’t see cost benefits. Fortunately the benefits having been realized by some large organizations as well as Start-ups, it is being increasingly accepted that the advantages of a complete digitalization transformation far outweigh the investment required for making this happen. Conviction of the Leadership driving an orchestrated change management within their organizations is what will overcome these challenges.

Another challenge companies face in moving towards a cloud-based platform is upskilling manpower. Small and medium enterprises may especially find that their employees do not necessarily have the skills to align themselves to the new processes. The companies should understand that digitization and collaborative execution can help companies grow faster and effectively, without needing to invest heavily in infrastructure and facilities such as servers and storage facilities.

Reinventing supply chain

Companies will need to embrace cloud technology, as it’s the future for a cost-effective management system. Large companies will need to lead the way in the supply chain & logistics sector, so that SMEs and the unorganized sector can catch up quickly and adapt to the new normal.

Cloud technology allows for secure collaboration between all the stakeholders in the supply chain cycle. Cloud can make communication easier among two or more teams, and they can be located anywhere around the world. Companies need to see the benefits and given a demonstration of how it’s not possible to run operations cost effectively without cloud technology.

Intelligent Supply Chains would mean self-adjusting and automated, which can make quick decisions and reduce turnaround time with the help of deployment of AI and ML through a control tower. It helps to manage service levels in an effective and efficient way. It will help ensure that no demand is left unmet & idle inventory is only to take care of supply chain & environmental risks. The most cost-effective interconnected supply chain must necessarily be a cloud solution. 

 The article has been written by Anjani Mandal, CEO, Fortigo Logistics