An essential evolution

Moving the supply chain to the cloud in a volatile environment. By Tony Harris


In a hyper-connected world, any form of disruption anywhere in the world – be it a pandemic, a war, embargoes, or a cargo ship blocking a canal – can cause major ripples in the global supply chain. We live in a time when volatility is almost a constant, and procurement and supply chain leaders need visibility into their supply chains, as well as access to a network of partners so they can predict disruption and pivot to new trading partners and strategies in real time.

Yet, according to recent research from SAP/Oxford Economics, one in three supply chain executives still relies on manual processes, like phones, e-mails, and spreadsheets as the primary way to collaborate within their supply chain. Knowing this, it’s no wonder that supply chains were brought to their knees when the global pandemic struck!

To respond to changing conditions while meeting operational requirements and staying within budget, supply chain leaders need to put down the phone and accelerate their shift to the cloud. Ironically, the same issues most likely holding companies back from adopting cloud technologies – like perceived disruptions to the business, or the expense of cloud – are actually among the best reasons to move. Following are three key benefits businesses often overlook when considering a cloud transformation.

1) Cost savings and better decision making
Cost saving is often the deciding factor for companies considering migration of their supply chain to the cloud. Through a cloud-enabled business network, companies can find and partner with the most efficient and low-cost suppliers and partners. While this is certainly an important element, it is just one of many benefits. To realize the full value of a transition to the cloud, users must leverage the data that cloud provides them.

Cloud computing enables supply and procurement teams to process vast quantities of data rapidly from sources across their entire supply chain. This deep analysis makes it possible to generate critical insights and identify opportunities or vulnerabilities, and it enhances their ability to make effective decisions. Combining this holistic supply chain information with supplier visibility provided by business networks improves a company’s agility and responsiveness. It enables it to reconfigure activities to adapt quickly to current or anticipated industry disruptions.

Take the example of ITP Aero, which designs, manufactures, and maintains engine parts for civilian and military aircraft. By replacing phone and e-mail communications with a cloud-based supplier network, it improved collaboration with suppliers and increased the visibility and efficiency of its supply chain operations – ensuring it has the right materials at the right time to ramp up manufacturing capacity.

2) Cloud compels innovation
Access to the cloud’s cutting-edge technology enhances supply chain innovation as companies can benefit from software updates as they’re released, rather than having to go through the process of implementing these updates in their on-premises systems. Companies can also connect data with a digital thread across their value chain, a communication framework that consolidates traditionally isolated elements to provide an integrated view of supply chain activities. Along with better trading partner collaboration, this enables new ways of working and provides continuous innovation for operating models, products, and business outcomes. In addition, companies, can co-innovate with trading partners for new materials usage, products, and manufacturing processes.

3) It’s easier to find like-minded partners.
Cloud-based business networks also provide transparency that allows companies to choose suppliers who best align with the company’s values and processes, and their customers’ expectations. For example, SAP research showed that customers now favor brands that support local suppliers (83 percent) and are seeking ethically sourced products (55 percent). Those operating in a business network can respond to consumer trends by identifying suppliers who prioritize sustainability and can help them achieve their environmental, social, and governance (ESG) goals.

Manage the migration. Realize the benefits.For many businesses, the critical question of moving to the cloud is not a matter of why, but when. Where existing on-premises or hosted software is performing well and meeting business needs, it may be more difficult to build a case for moving to the cloud, despite the obvious benefits. However, strategically tying the move to other pivotal events can quickly demonstrate cost savings and a strong business case.

Once the timing has been determined, building a cloud-based supply network requires a structured approach that will vary company. Supply chain leaders need to identify the current cloud maturity standing of their organization, and the exact measures that must be implemented to advance.

Boosting this degree of knowledge will allow leaders to better understand how to respond to ongoing challenges and supply chain disruptions, therefore increasing the organization’s ability to thrive in this new environment. Once connected to a cloud-based business network, companies can leverage cost reduction, enhanced agility, and real-time access to integrated data for total visibility encompassing all operations and supply chain partners.

The cloud has a clear role in the future of supply chains, enabling businesses to adjust resources in real time to drive agility, scalability, and visibility. It supports swift and effective decision-making and improves the ability to anticipate future opportunities and risks across the supply network.

In a volatile and hyper-connected world, having cloud capabilities in the supply chain is no longer a benefit. It’s essential. D

For a list of the sources used in this article, please contact the editor

 

Tony Harris is Senior Vice President and Head of Marketing & Solutions, SAP Business Network. SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: SAP customers generate 87 percent of total global commerce. Its machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers’ businesses into intelligent enterprises. Its end-to-end suite of applications and services enables its customers to operate profitably, adapt continuously, and make a difference.
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