Monday, February 17, 2014
Cloud Computing is Improving Supply Chain Performance
The benefits of cloud computing in supply chain management boil down to more efficient means of collaboration, communication, information sharing and organization.
As reliance on efficient and accurate data flow increases among complex trading partnerships, cloud computing has gradually been recognized as a significant tool in supply chain performance improvement.
Different functions of the supply chain exhibits different levels of adaptability to cloud computing, according to a study published by SCM World on cloud computing application on supply chain management. It says that sales & operations planning, transportation management system, spare parts management, and store shelf optimization are the four supply chain strategies that are the most cloud- friendly due to the greater potential to benefit from network effect.
The same as the application and adoption of any other innovative technology in business operations, the adoption of cloud computing is largely dependent on the legacy ERP system. Furthermore, the IT departments those companies rely on for their technology innovation focus mostly on maintenance of existing systems and infrastructure and only allocate, on average, about 11% of their budgets to new system application. Apparently, any technology advancement needs detailed planning and agreements among management and employees. There are still many questions that management needs to be able to answer before going ahead with this new technology.
How to quantify the benefits (efficiency gained in communication and scheduling) and costs (human capital, training, testing and upgrade of systems) of implementing cloud computing and replacing the legacy system and their effects on the company’s bottom line? How to ensure consistency and efficiency in data migration and storage? Which vendor provides the services we need at the right cost and how to integrate apps from different vendors? Will the costs and savings force the IT department to adopt a new approach to budgeting?