Supply chain management has embraced spectacular advances in digitization. Here are six ways in which cloud technology and big data are changing supply chain management.
The evolving technological landscape and the dynamics of business have transformed every dimension of business. Supply chain management, which largely relied on improvements in hardware and telematics, has embraced the spectacular advances in digitization. And among the many technologies that have impacted this critical component of everyday life are big data and the cloud.
While the cloud has become more of an analogy to most technological solutions, big data is the new technology on the block. Here are some ways in which these two have impacted supply chain management software and its functioning.
1. Working in Tandem
Let’s start with the definition if supply chain. By definition, supply chain is an activity that involves a large number of entities and systems in different locations. It can safely be assumed that supply chain is perhaps one of the dimensions of business with the most locations and activities combining in a single workflow.
From the movement of the raw materials to the production and distribution to warehouses and retail outlets, supply chain involves multiple stakeholders who need to collaborate at the same time. The cloud permits every single entity on the chain to collaborate, share information, and update reports on a real-time basis.
2. Operational Capabilities
The cloud has given a boost to the operational capabilities of supply chains. The use of legacy systems often had a constraining effect on the expansion of operations. Upgrading systems and maintaining hardware and associated software components led to increased CapEx, and OpEx towards maintenance.
With cloud, it is now possible for supply chains to expand at will. Integration of a new location can now be achieved in the shortest possible time and in a seamless manner at reduced costs.
3. New Differentiators
Businesses and supply chains are in a state of flux. New differentiators determine the success of operations and business models. Supply chains increasingly need to be one step ahead of the demand with predictive analytics. For instance, demand may rise during a specific period; similarly, demand could be sluggish in certain locations.
The use of big data and analytics will help managers to understand trends and gain insightful information from the patterns and real-time information. This will help in maintaining the right levels of merchandise/products at locations and keep the manufacturing line working in a manner that is optimized for maximum ROI.
With the right kind of supply chain management software supported by big data, businesses can now accurately work out the most competitive pricing for services based on the inputs about the availability of raw materials, demand for products at a location, the availability of services to the locations, and competitor pricing.
5. Reduced Operational Expenses
Businesses often find operational expenses to be the elephant in the room. For supply chains, operational expenses are not just an imperative, but actually form bulk of the expenses. This is because the nature of the business involves operations. Supply chains, like other businesses, need to slash operational costs wherever possible without compromising on the efficiency or the capability of the supply chain.
For instance, it may not actually be possible for a supply chain to reduce the cold chain infrastructure or the logistics component. The only area where supply chains can cut expenses is other operational costs, such as fuel, rentals for office space and hardware, maintenance costs towards systems and costs towards personnel to manage the back-end systems.
A large number of issues are generally resolved by supply chains through crisis management. While most of the businesses somehow scrape through the problems by putting all the resources to play, some suffer debilitating blows. Problems in supply chains are often a combination of issues, and the best method to resolve the issues is to understand the main reason.
Big data permits managers to understand the primary reason for problems and the extent and impact of the associated reasons for the problem. This will give supply chains the power to disentangle themselves from the issue in a more methodical manner and get to the root of the problem and pre-empt issues from repeating.
The cloud has been continually raining benefits in terms of reduced costs and greater efficiency with uninterrupted access that is device agnostic and supported across all locations. This explains a large number of supply chains that are embracing supply chain management software solutions that leverage the capabilities of big data and the cloud effectively.