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How cloud technology can transform supply chain performance

Brooks Bentz | June 11, 2013
The international supply chain is here to stay. That means working with multiple partners, many of whom have hundreds of partners themselves and some of whom lack the expertise or funding to connect to supply chain management systems. Cloud platforms could change that, according to Accenture.

When Carly Simon sang the words "...they were clouds in my coffee" in her 1972 megahit, "You're So Vain," the notion of industrialized cloud-based computing was several decades in the future. Steve Jobs, speaking at Apple's Worldwide Developers Conference in 1997, alluded to the fact that the concept had actually germinated some 10 years earlier.

But Jobs' vision was prescient relative to what we now think of as cloud computing. He was arguably the first to see the huge promise and seismic shift brought on by the advent of device-independent data accessible from anywhere, at any time, on any type of technology, be it an iPhone, iPad, PC or other smart device. This is common today for personal effects such as music, video and financial services-but only recently has this capability begun making its way into the fundamentals of supply chain management.

In Global Economy, Supply Chain Management Only Gets Tougher
Like pouring gasoline on a fire, large-scale changes in supply chain behavior began toward the end of the last century. The concerted rush to move substantial volumes of North American and European manufacturing capacity offshore provoked this trend. For many, the math was simple: It cost so much less to make things in Asia that the extended supply chain and additional cost was more than offset by the financial windfall stemming from labor arbitrage.

One key disadvantage, though, was the significantly longer and more complex supply chain necessary for moving products to the consumption centers in North America and Europe. A lack of robust transportation infrastructure in the Asia Pacific region, and a similar absence of reliable transportation and logistics data, further compounded this challenge, making any kind of reliable visibility into the supply chain a forlorn hope.

In the United States or European Union, if an apparel maker ships to a retailer, it typically puts the product on a truck and often the same driver makes the delivery no more than two days later. In the brave new world of global supply chain management, it can easily take three to four weeks, or longer, to deliver the same product to the end user. This can be further exacerbated by rapidly spiking fuel costs, which leads directly to "slow-steaming" and "super-slow steaming" among ocean liner carriers. "Visibility" of domestic shipments is generally much simpler, then, with fewer trading partners and a much less complex supply chain.

These extended, complex global networks also have a greater tendency to be affected by the seemingly persistent state of change in today's global business environment. This in turn creates a desire for agility and dynamic responses at a rate that supply chains are largely unprepared to accommodate.

 

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