Neoclassical
microeconomic theory predicts that in the long run there will be no entry costs
to an industry and that any new firm would be able to enter; a fact that will
push profit margins down and ultimately lead to a Schumpeterian process of
hyper competition. The cloud based supply chain services may have already brought
us closer to that theoretical scenario.
At the
beginning of the 2000s decade, only large companies with substantial amounts of
capital were able to invest in supply chain management as well as Enterprise
Resource Planning (EPR) software (Rettig 2007). Ten years later a new
revolution in the capabilities of the internet as well as the greater expertise
of software developers in cloud solutions is changing the way firms understand
supply chain management. The cloud based SCM increases visibility by providing
real time access to products, forecast, inventories, transport etc., (Dredge
2011). It also means less need to invest in IT infrastructure, practically
limitless storage capacity (the cost of an additional GB can be as low as $15c), less
in-site consultants, and a more uniform and less complicated network and
businesses processes (Rettig 2007). Some of the cloud services offer individual
user payment schema while software access setup takes only a few minutes (Dredge
2011).
The
advantages are already increasing competition and innovation as a myriad of
small and medium size firms are taking advantage of reduced cost and tailored
software (Tomkins 2009). Small manufacturing firms, retail stores,
transportation firms, internet retailers, health care services are just some of
the industries that have greatly benefited from the new technology.
But the
increase in demand, approximately 40% in 2012 in comparison with the previous
year (McCrea 2012), is not only driven by small and medium size companies.
Giants like Mitsubishi are starting to adopt cloud supply chain management
solutions (Business Wire 2013). Traditional champions of logistics are also exploring
the new possibilities of this type of technology. Last year UPS adopted a
cloud-based technology platform that increases customers’ collaboration with
international suppliers and provides better management of their inbound supply
chains (Yahoo Finance 2012).
Nevertheless
not everyone is eager to support adoption of the cloud revolution. Some
critiques have stressed the reliance of cloud services on internet availability
and the trustworthiness of servers. However this argument fails to consider
that the IT revolution and the way supply chain functions today are already
based on a fragile equilibrium of complex interdependent systems. With this in
mind I cannot help but bear in mind Walter Benjamin’s reflection on the Crystal
Palace of the Great exhibition of London in 1851; how it represented the
epitome of progress and will of mankind to alter nature while at the same time
it was a reminder of civilizations infinite fragility. Perhaps the cloud supply
chain is a new metaphor for the endless capability of innovation and progress
and the brittleness of civilization altogether.
References
Business Wire (2013), JDA Services Delivers Real Results in the Cloud for Mitsubishi Motors Go-Live, February 18, available at: http://www.businesswire.com/news/home/20130218005078/en/JDA-Services-Delivers-Real-Results-Cloud-Mitsubishi
Dredge, Matt (2011), “Is the cloud the answer to supply chain woes?”, Business Computer World, September 2, available at: http://www.businesscomputingworld.co.uk/is-the-cloud-the-answer-to-supply-chain-woes/
McCrea, Bridget (2012), “Supply Chain Technology: Cloud computing breakthrough”, Logistics Management, November 1, available at: http://www.logisticsmgmt.com/article/supply_chain_technology_cloud_breakthrough
Rettig,
Cynthia (2007), “The Trouble with Enterprise Software”, MIT Sloan Management
Review, Fall
2007.
Tomkins, Benjamin (2009), “Cloud Based Supply Chain
Management Offers SMBs Flexibility”, Information
Week, May 27, available at: http://www.informationweek.com/smb/ebusiness/cloud-based-supply-chain-management-offe/229206285
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.