Cloud Supply Chain Management: Benefits and Use Cases

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This web of human and material resources that comprises the supply chain requires careful management, real-time data, and even predictive capabilities to handle the complexities of modern commerce.

The cloud has been gaining popularity throughout every industry for the last several years. In broad terms, cloud computing provides data mobility and analysis, typically using remote servers rather than on-premises computational infrastructure.

What is cloud supply chain management?

Cloud supply chain management encompasses the tools, infrastructures, and processes that allow people to oversee the movement of goods by relying on cloud computing offerings rather than on-premise equipment. This enables them to enter and access this data from anywhere, and provide redundancy with cloud backups — meaning supply chain data is always available, current, and backed up against loss, damage, or theft.

However, company decision-makers usually don’t go all-in with cloud products when managing their supply chains. They want evidence of a return on investment (ROI) before increasing budgets for more cloud services.

Top 3 configurations of cloud services that support supply chains

Cloud configurations for supply chain professionals are usually one of three types:

  • Software-as-a-service (SaaS) tools are hosted and distributed by third-party providers. Customers can access them without making infrastructure changes. Software updates and maintenance also occur in the background automatically.
  • Infrastructure-as-a-service (IaaS) is another business model through which logistics and supply chain companies adopt cloud-based data management and data analysis technologies. This infrastructure might include internet of things (IoT) sensors, virtual machines, networking technology, and energy-management infrastructure.
  • Platform-as-a-service (PasS) is useful in cases where app developers need a stable, cloud-based development environment in which to test cloud services — and especially to test them for cross-compatibility with existing products and application programming interfaces (APIs). This is useful in supply chain management, where partners may use a panoply of products from various vendors.

No matter which management and enterprise-planning workflows companies select to operate in cloud environments, such activities may take place on private clouds or public clouds. A combination of these is known as a hybrid cloud model.

7 use cases of cloud computing in the supply chain

Supply chain professionals have numerous reasons to get involved with cloud computing to support current and future business needs. Here are seven of the most common use cases.

1. Managing logistics

Maintaining a responsive and effective supply chain requires a strong grasp of logistical efficiency. While human beings once managed each discrete detail in logistics, cloud computing and big-data analysis now provide manifold opportunities to streamline or automate some of the most important logistical tasks within the supply chain.

Here are just some of the logistics-related management capabilities provided by cloud data and computing:

  • Managing the movement and allocation of trucks and other vehicles.
  • Sequencing and prioritizing new orders.
  • Automatically generating or updating supply or shipping routes to eliminate delays.
  • Automatically filling out compliance documents, invoices, receipts, and more.

The deployment of cloud technologies provides the ability for various departments and stakeholders to compare and combine data to create more synergistic workflows and collaborate more effectively.

2. Automating inventory management

Inventory management becomes much more straightforward when people find ways to automate some of the most time-consuming tasks. Cloud tools make that possible. Someone might set up an interface to automatically reorder a product once it reaches a specific stock level. Another possibility is to link cloud products to connected sensors so you can see the exact location of in-transit parcels.

Inventory management automation is particularly helpful during high-demand periods, such as the holiday season. Customers will understandably become upset if they shop online or arrive at stores and find products are out of stock. Bringing automation to existing inventory management processes can significantly reduce such instances, making businesses more responsive to customer needs.

3. Making future plans and predictions

Forecasting and making predictions for what the future may hold is one of the most important functions within supply-chain management. The ability to anticipate future sales enables the ability to alter processes and scale departments to ensure supply matches demand.

Cloud computing is essential for effective enterprise planning and logistical forecasting. The cloud collects and organizes data from disparate sources to create a more full awareness of current and future situations. These sources might include:

  • Customer service channels.
  • Online sales portals.
  • Retail locations.
  • Wholesale suppliers.

With the cloud unifying these data streams, logistics professionals can engage in deep analysis and make accurate forecasts for the future based on current trends.

Cloud-based data analysis is the reason major pharmaceutical companies like Bayer are able to keep critical and seasonal medications in stock reliably throughout the country year-round. The right technologies can provide several months of forecasting and prediction data to keep ahead of seasonal surges and even unpredictable changes in local demand patterns.

4. Improving procurement and sourcing

Supply chain disruptions can cause profits to drop by more than 107%, making it necessary to actively prevent such circumstances. Supply chain managers should start by diversifying their procurement and sourcing strategies. Cloud computing tools can assist them by tracking communications, contracts, and other information.

Some companies must maintain relationships with hundreds or thousands of providers of finished goods or raw materials. Cloud computing provides the means to digitize the sourcing and procurement processes. The potential benefits include:

  • Facilitates faster communication between partners.
  • Provides a single source of truth to eliminate errors and unnecessary purchases.
  • Provides the potential to automate vendor changeovers based on current supplies.
  • Automatically generates invoices, custody documents, and databases for traceability compliance.

Many cloud tools also track expenditures, helping supply chain professionals see whether what they’re paying for specific raw goods is within market rates. Cloud tools can also remove many administrative bottlenecks that slow the procurement process. Additionally, a user may rely on them to get breakdowns of which products come from certain global regions, encouraging expanded supplier networks.

Accessibility is the name of the game here: accessibility, via the cloud, of all the documentation and ongoing data-gathering that makes for a harmonious supply chain ecosystem. Supply chain coordination and financing can be complex beasts — and some companies might need the speed, efficiency, and organization the cloud provides to enable reverse factoring and other types of cash-flow-boosting financing options.

5. Managing maintenance and equipment breakdowns

One of the more popular IaaS product types involves the automation of maintenance tasks.

Breakdowns of delivery trucks, assembly lines, or other critical assets can cause far-reaching supply chain problems. Cloud platforms can minimize those issues.

Cloud computing gives supply-chain companies the ability to unite their physical infrastructure in a cloud-based maintenance dashboard. This includes building systems, material-handling mechanisms like conveyors and pallet trucks, and energy or water systems.

Cloud maintenance platforms using hardware sensors and software intelligence constantly monitor mechanical assets for leaks, pressure drops, and temperature or vibration anomalies, saving manufacturers millions of dollars per year.

Examples abound — in pipe and tire manufacturing, the chemical industry, and throughout the supply chain — of technology adopters boosting the ROI for their machines. This is an important advantage given their expense. An additional benefit: eliminating product defects that result from faulty or failing equipment.

6. Expanding collaboration opportunities

One of the reasons cloud computing initially gained popularity is that it allows people to work together and get things done more efficiently despite geographical boundaries. Relatedly, these tools support remote and hybrid work environments.

A 2022 study of supply chain leaders revealed that 62% were allocating resources for communication and policy tools to cultivate in-person and remote relationships. It’s easy to imagine how workflows improve when people can instantly see supply chain statistics, shipment locations and other details from wherever they are.

7. Supporting multisite visibility

Leaders must compare performance across sites and identify potential problems early as modern supply chains grow larger. Cloud tools enable that aim, giving authorized parties real-time access to see whether specific warehouses or suppliers meet key performance indicators.

Managers may even get camera feeds, helping them determine if employees at specific facilities regularly engage in risky behaviors that could attract regulatory attention. Getting information at any time significantly reduces the chances of problems getting out of control before leaders can tackle them.

Advantages of cloud supply chain management

Cloud supply chain management solutions are seeing widespread adoption for a reason — or rather, several reasons, including scalability, sustainability, and cost efficiency.

Scalability is a major advantage of operating a supply chain in the cloud. The elastic nature of the cloud means you can work with a provider and scale resource usage up or down as necessary, remaining flexible as marketplace conditions change.

Using the cloud to run a supply chain can also support sustainability goals. According to a 2022 survey of supply chain executives, respondents rated sustainability as their third biggest challenge shaping the next few years. Additionally, 56% said they were already working with hybrid cloud solutions. Cloud analytics can show where companies are doing well in pursuing sustainable operations and where efforts fall short.

People can also expect to gain cost-related efficiencies when investing in cloud computing. Those benefits typically occur because providers accommodate many customer needs in the background, removing the need for clients to make on-site upgrades.

Disadvantages of cloud supply chain management

Cloud-based supply chain tools also have some potential downsides. Many users experience a learning curve, mainly if they’ve never used them. Providing people ample time to get to know a program minimizes challenges.

Reduced cybersecurity is another possibility associated with cloud tools — but only if they aren’t properly secured. Cybercriminals often strategically plan attacks to cause the most disruption. The cloud could provide them with the necessary entry points. Company IT teams should follow cybersecurity frameworks that help them create best practices. A well-managed cloud platform is ultimately more secure than a traditional database.

Finally, cloud customers may realize it’s harder than expected to find solutions with all their essential features. That’s more likely if a company already relies on other tech products, meaning supply chain leaders must find compatible options. Creating a list of must-have features will help organizations narrow their choices.

Bottom line: Why adopt the cloud across the supply chain?

There is a reason why IaaS and PaaS are growing at a rapid rate: this family of technologies has the potential to add significant value to any supply chain organization. Interested CEOs, CTOs, and entrepreneurs enjoy the automation, real-time intelligence, scalability, speed, and resource-efficiency that cloud computing provides.

When it’s at its best, the cloud is a tool that allows humans to spend their time on creative and innovative work rather than babysitting mundane, repetitive processes. With the cloud, supply chain companies and others can build something better and deliver the best service possible.

Get to know some of the best cloud service providers and platforms to help you choose the right one for your supply chain management needs.

Devin Partida
Devin Partida
Devin Partida is a contributing writer for Enterprise Networking Planet who writes about business technology, cybersecurity, and innovation. Her work has been featured on Yahoo! Finance, Entrepreneur, Startups Magazine, and many other industry publications. She is also the Editor-in-Chief of ReHack.

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