Wednesday, October 17, 2012

Global Supply Chain Network.. In the Cloud.

In a global supply chain network, there are several internal and external vendors, all of who are influx with the existing system. The challenges faced by every global company is to deliver products to customer in the promised state and time. Manufacturing units are responsible for shipping out the items, however, what happens after is something they have no control over since the transportation unit of the company takes care of delivering the product to the customer. However, it is the responsibility of the company overall to ensure this disconnect is not evident to the customer. The business leaders must be able to answer all questions right from manufacturing of the product to the final delivery. In this post, I will explore the challenges faced by large manufacturing companies in a global supply chain scale and discuss how cloud solutions can overcome traditional challenges.

Any global company interacts with several vendors to source parts for its products and to distribute the finished products via various other vendors in different parts of the world. Even though there are several interacting parties involved, the ultimate ownership of the product lies with the company. In a traditional supply chain network, there is a severe lack of disconnect in information flow network. The company needs to know the inventory status, sales figures at all its locations. De-centralization of power has overcome this problem, where every product outlet is responsible for reporting back to the company. This can cause a time lag between the actual state of the system and the reported state of the system resulting in a delay in troubleshooting. In this fast paced competitive environment, it is important to have a visibility to the business in real-time. This problem is especially prevalent when products are being manufactured overseas and shipped back into a country[1]

The Cloud Solution:
A platform hosted on the cloud can bridge all the gaps in the information flow network by providing a global real-time visibility of the system. Various arms of an organization can now upload all their information in real-time to the cloud platform and provide an accurate view of the system. External vendors can access the cloud platform to obtain the information that is relevant to them. The global company can set security controls, access controls, and allow for easy addition of new vendors onto a single cloud platform. This results in a company functioning in a truly global fashion fostering a community where people in remote locations of the organization can connect via the cloud platform and exchange ideas[2]

Case Study: Pfizer
Pfizer, a global pharmaceuticals company, used GT Nexus's cloud solution to transform its IT system architecture to manage the company's global network in a 'device-independent' manner. The move was seen as necessary as the Pfizer operates in "patented" market that places a high demand on the supply network for drug manufacturing and requires smart solutions to manage a large inventory. On the other hand, Pfizer also operates in the "generic" market that is focussed on inventory optimization and efficiency. The move to the cloud was taken as Pfizer felt the need to adapt to ever changing customer needs. Installing a cloud solution enabled Pfizer to communicate effectively with all its partners and also obtain a global visibility into the business as a whole. The success of the cloud solution can be seen when Pfizer claimed to have from a state of "zero shipment traceability" to handling more than 40,000 shipments through the cloud platform. This might convince more pharmaceutical global companies to think about cloud solutions to improve their logistics as well[3].

Cloud based platforms have seen applicability in various industries such as consumer packaged goods as well to save overseas shipping costs by allowing for better inventory management. It also provided the necessary transparency to understand costs and compliances on one part of the world from another part of the world. The benefits associated with cloud platforms include better management of various systems located globally, improved business processes to manage costs, allow for immediate troubleshooting assistance in case of calamities. Cloud platforms are changing traditional supply chain management strategies, especially for global companies. However, cloud solutions also have several weaknesses associated with it. Infrastructure is not a significant investment and thus may see a spurt of companies providing cloud based solutions. Would you consider starting up a company that provides a cloud based solution? If yes, which market do you think would gain the most from it?  

[1]: Cloud Computing and Supply-Chain - A natural fit for the Cloud -
[2]: Ways in which Cloud Computing can improve Supply Chain -
[3]: Pfizer Supply Chain Cloud -

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