By: Dominic Reagan, Senior Director for Value Chain Execution
What will supply chains look like in the future? People envision unmanned vehicles zipping around crowded streets and overhead drones dropping packages on doorsteps. Whilst autonomous delivery will certainly be part of the future supply chain, the most meaningful changes are taking place behind the scenes: Modern cloud applications for supply chain management (SCM) are helping supply chains transform so they can flex and respond as new technologies emerge and customer expectations change.
Supply chains are the backbone of product-centric companies and have the greatest potential to affect overall performance, for better or worse. In fact, the World Economic Forum reports that 75 percent of manufacturing, logistics, and retail businesses expect a positive financial impact from digital technologies in their supply chains. We explore this topic in the eBook Accelerate Innovation and Agility Across Your Supply Chain, and this blog provides a summary about why and how supply chains need to change.
Data and connectivity are core to the ability of companies to serve increasingly demanding customers. Online consumers have come to expect personalized service and rapid response in all purchase channels. Similarly, business leaders want highly responsive and more agile supply chains that can rapidly process customer orders and fulfill them according to customer expectations.
What changes should organizations make to ensure their supply chains stay competitive?
Commit to modernizing with cloud
Replacing siloed legacy systems and processes with connected cloud applications is the first step toward achieving an agile and responsive supply chain.
On-premises SCM applications are typically limited in scope and rarely designed to support fast-and-informed order fulfillment. As a result of their siloed information structures, users typically lack complete visibility into all supply chain processes and can’t easily share information among functions to allow everyone to quickly and easily adjust for changes.
By contrast, an end-to-end cloud platform of connected SCM applications creates a digital thread that connects products, services, and assets with customers, employees, and partners. The result is comprehensive and real-time visibility, communication, and control.
Oracle SCM Cloud’s modern architecture inherently does this, and our customers have provided numerous proof points about value. Among other benefits, IDC found that Oracle SCM Cloud customers had a five-year ROI of 267 percent, a 12-month breakeven, and 28 percent more productive supply chain teams.
Let’s take a look at six characteristics of adaptive and agile supply chains:
Modern supply chains use cloud solutions to:
Cloud solutions provide intuitive, built-in, and always up-to-date analytics. They also increasingly use advanced technologies, such as artificial intelligence (AI) and machine learning (ML). Advanced technologies enable elevating levels of automation in applications and better business decisions through predictive and prescriptive modeling and recommendations. They also provide the foundation for companies wanting to take advantage of other emerging opportunities, such as blockchain for private trading networks and track-and-trace capabilities.
Cloud solutions provide up-to-date visibility into various aspects of the supply chain, such as inventory, order status, and shipments, as well as alerts about status changes that might negatively affect business outcomes. Cloud applications can also provide insight into events that once were hard to detect by using embedded analytics and Internet of Things (IoT) connectivity. For example, fragile or perishable goods can be monitored for environmental conditions, such as changes in temperature and humidity.
Cloud applications are more scalable than on-premises applications. New users can be added faster and without hardware/software requisitions. On-premises applications lack this capability, and this has limited how they can be used to manage supply chain challenges such as seasonal spikes in demand. With cloud, for example, a business can deploy a full warehouse management system (WMS) to manage overflow seasonal inventory and then turn it off once it is no longer needed. This was neither economically viable nor operationally feasible in the days of on-premises WMS deployments.
Another benefit of using cloud SCM applications is that the data within the system is stored by the service provider in a highly secure data center; this means administrators can apply patches immediately to address the type of rapidly emerging cyber threats that can so quickly affect modern supply chains.
Businesses need to be able to concentrate on customer experience instead of the limits and lifecycles of their applications. All aspects of managing SCM applications are easier in the cloud versus on-premises: adoption, use, management, configurability, and upgrades.
Using an end-to-end cloud platform also eliminates a common challenge of legacy applications where adoption of SCM functionality is dependent upon, and often subservient to, the core ERP. Many supply chains can’t rapidly change business processes or adopt emerging technologies because updates to their on-premises SCM applications can only take place once a major ERP implementation or release upgrade had been completed, a process that can sometimes take years.
Having a cloud partner that not only has deep technical skills, but also proven business expertise, can make a supply chain upgrade easier and more successful. No two supply chains are alike, and a partner with a long history of architecting and supporting business solutions for all types of businesses can bring valuable extras to the table.
For example, Oracle has a large installed base of SCM customers both on-premises and in the cloud. As on-premises customers transition to the cloud, they can sync data between the two sets of applications so that teams are working with the same information. Once in the cloud, customers can use anonymized user data to benchmark their performance against peers because all users have the same, standardized applications.
Say goodbye to yesterday’s supply chain
Customer expectations have changed. They want fast and safe delivery of goods regardless of whether they are ordering cheap household consumables or millions of dollars in industrial equipment. This disruption is reverberating across supply chains and requires change from the old SCM model to a new, more agile version that is connected, flexible, and proactive.
Legacy on-premises SCM applications simply can’t provide the capabilities needed to make this transformation, but modern cloud-based systems can. An end-to-end SCM platform, such as Oracle SCM Cloud, integrates information into one place and provides deep visibility and control, so that supply chains can flex to meet changing demand and conditions.
For more information about building a more agile, connected supply chain, download the eBook Accelerate Innovation and Agility Across Your Supply Chain.