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How cloud computing and cloud-based solutions can add value to supply chains

Jonas Mehrhoff
Jonas Mehrhoff
May 17, 2022
5 min read

Note on the authors

Heiner Murmann is the founder and CEO of Orkestra SCS, a logistics, technology and services company. In addition, Heiner serves as Executive Chairman for Evolution Time Critical and President of The Five Inc., and as an Advisory Board Member for both Metro Supply Chain Group and Black & McDonald Limited. Notably, Heiner previously held various senior executive roles at DB Schenker, one of the top three global logistics companies, as a Member of the Board of Management responsible for Air and Ocean Freight, and as CEO of the Region Americas.

Arnold da Silva, Senior Ocean Freight Advisor for Orkestra SCS, is head of an ocean freight consulting company where he actively advises global shippers on ocean freight strategy and execution. With 40 years of experience in the ocean freight industry, Arnold served as Executive Vice President for Ocean Freight Region Americas for DB Schenker. Arnold's passion is to conceptualize and implement innovative ocean freight solutions that transform one’s supply chain and promote a shipper's success.

Supply chain is an integrated but often complex network of partners and suppliers collaborating to supply, produce and distribute various products. Supply chain is involved in every product that we use daily, and it is growing. The sheer transactional and operational volumes involved in the successful production, planning and distribution of the goods necessitates quick response times, which can only be achieved by digitally transforming the supply chain.

The need for digital supply chain transformation

The days of trying to run supply chains on spreadsheets and ERP systems that do not cover the company’s entire ecosystem are a thing of the past. Digital supply chain transformations have become a must. However, many supply chains have been slow to react and are still in the process of developing the physical capabilities required to compete with many mature supply chains.

Supply chain leaders who achieve supply chain digital transformation successfully integrate well-established physical capabilities with emerging digital innovations. By first developing the foundational supply chain capabilities and then incorporating proven business and technology innovations, leading supply chains are able to move beyond exploration to integration and optimization.

- Gartner

Digital supply chain planning is required to achieve digital transformation. Gartner defines digital supply chain planning as:

The use of digital technologies, such as cloud, big data, robotic process automation (RPA), artificial intelligence (AI) or ML to improve or transform the quality of planning decision making in the supply chain.

Cloud platforms have been identified as one of the eight technology trends that supply chain leaders must rapidly assess to accelerate supply chain digital transformation. Cloud computing is gaining popularity, with end-users projected to spend up to USD 332.3 billion in 2021, growing 23.1% from 2020.

Gone are the days of predictable business cycles, primarily managed through the application of lean principles, cost reduction, and supplier rationalisation. As consumer demand increases, companies are evolving and growing digitally, and their supply chain management needs to keep pace to make services more accessible and affordable to the customers.

Transforming supply chain through cloud computing

Cloud computing can transform supply chains through the use of data analytics, mobile applications and leveraging social media helping companies to recognize significant benefits from key marketplace trends that are redefining traditional supply chain networks.

Cloud computing can assist in enhancing responsiveness to many supply chain disruptions such as volatility, which has amplified itself in today’s supply chain. Cloud computing can also help supply chains unlock the value of data. Cloud-based solutions enable companies to leverage the extensive internal and external data available across their ecosystem to generate actionable insights, making their supply chain networks intelligent.

Cloud-based solutions can be used extensively in industrial supply chains both for data and human resource management to combine technology with humans. For an industrial business, this provides greater flexibility and customisation of its products and services. Of course, the primary requirement for any supply chain is end-to-end visibility as it is interconnected, and customers can get visibility in real-time.

Digital technologies, including cloud computing, businesses and supply chains, need to be converged into a digital supply network by bringing together physical cargo flows along with human resources, finance, and data.

digital supply network

Source: Accenture

Cloud computing delivered as SaaS (Software as a Service) model is one of the fastest-growing technologies.

The global software as a service (SaaS) market is expected to grow from $225.6 billion in 2020 to $272.49 billion in 2021 at a compound annual growth rate (CAGR) of 20.8%. The market is expected to reach $436.9 billion in 2025 at a CAGR of 12.5%.

- Businesswire

Cloud computing optimizes the supply chain network by providing sound IT infrastructure, access to visibility platforms and software solutions that drive sales growth, increase efficiency, minimize risk, and deepen operational resilience.

Benefits of cloud computing

Cloud computing applications provide critical information such as cargo pick-up and delivery schedules, vendor performance, equipment utilisation and automate several time-consuming manual tasks. This automation allows the elimination of billing errors, streamlines processes and provides access to essential information relating to supply chains allowing supply chain managers to make more informed and data-driven decisions.

The accessibility of cloud-based solutions is a huge plus. It boosts the value of the platforms as it provides direct connectivity and access to the various stakeholders in the digital supply network, simultaneously and in real-time. Cloud-based solutions offer competitive advantages; real-time visibility, data insights, flexibility and agility, and scalability. The real-time capability of cloud-based solutions to influence intelligent digital supply chain networks is unprecedented. Companies that leverage this advantage can gain a competitive advantage through the ease they can connect to their customers, suppliers, service providers and other stakeholders in the ecosystem.

stakeholders in the ecosystem

Past studies have shown cloud-based solutions can reduce energy use and carbon emissions by more than 30 percent when compared to their corresponding applications installed on-premises.

- Accenture

A cloud-based interconnected supply chain has the advantage of being more dynamic, interactive and secure while harmonising itself beyond physical boundaries through seamless collaboration. Many cloud-based solutions come with predictive analytics, which can identify and predict potential operational risks and suggest alternatives to the supply chain managers for proactive action/damage control.

An interconnected supply chain is also scalable with the ability to bring in new partners, suppliers, vendors and other stakeholders, integrating people with various processes using technology. This allows flexibility within the company’s operations with capabilities to reengineer the processes as the situation demands.

Cloud-based digital supply chain platforms allow supply chain managers to expedite processes giving them a superior competitive advantage over those who still operate their supply chains on excel and ERP platforms. The rapid nature of cloud-based supply chain platforms enhances responsiveness using the relevant data and predictive analytics available, providing supply chain managers with the requisite tools to manage their supply chains efficiently.

Cloud computing tools offers supply chain managers a few strategic advantages over physical on-premises solutions such as

  • Quick deployment
  • Faster ROI
  • Regular upgrades/updates
  • More accessibility
  • Improved connectivity
  • Lower capital investment
  • Flexible implementation

Key take-away

Modern-day supply chains need companies to be competitive globally, agile, flexible, and adaptive to cater to the high consumer demand and manage the complexities arising out of the supply and demand and the current highly volatile situation.

Cloud-based technology solutions are an excellent way to achieve digital transformation in the supply chain, converting it into a dynamic, automated solution providing visibility, control, and integration with all stakeholders across the ecosystem.

More and more companies are adopting cloud-based technology solutions to gain insights into tactics, market strategy, best practices and to help them analyze, measure and monitor business activities to ensure the company’s business matches customer demands.

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How cloud computing and cloud-based solutions can add value to supply chains

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