Jim D'Addario, Sr. Director Product Marketing, Oracle SCM Cloud
“It’s not if; it’s when . . .”
You’re probably tired of seeing and hearing that phrase. It’s almost always attached to bad news: something terrible that will, sooner or later, mangle your organization’s supply chain, menace your career and, just for good measure, rain on the nearest parade.
Some of this doom and gloom is exaggerated, of course, but some of it is quite real: An annual survey of more than 400 supply chain decision-makers found that 65% experienced at least one significant supply chain disruption last year, and many of these firms even dealt with multiple disruptions.
Reviewing this survey data makes two things clear: First, many of these incidents are quite costly, with 32% reporting at least $300,000 in direct financial losses and 20% paying $1 million or more to deal with supply chain disruptions.
Second, supply chain leaders contend with threats and risks of all kinds—at least two dozen, in fact. These run the gamut from unplanned IT outages and cyberattacks, to civil unrest and (believe it or not) animal diseases.
Clearly, it’s useful to have an SCM environment that can handle unexpected departures from business as usual. Sometimes, that might mean switching suppliers quickly and on very short notice; redeploying transportation and logistics resources to route around bad weather; or hunting down the source of a quality-control lapse. In other cases, it might mean pursuing the advanced analytics or machine-learning capabilities that could have given you a few more hours to recognize and respond to an imminent disruption—an eternity when you measure downtime costs by the minute.
How Legacy SCM Limits Supply Chain Resilience
We encourage organizations to think about these types of scenarios in terms of supply chain resilience: the qualities and capabilities that enable a supply chain to persevere through disruptions, disasters and off-script events. (We discuss the concept in greater detail here.) Not surprisingly, a firm’s SCM technology choices have a decisive impact on its supply chain resilience and end-to-end capabilities—and this can quickly become a major concern for organizations that currently use a legacy application and traditional architectures, such as SAP ERP, to manage their supply chains.
The sticking point is the architecture that defines previous generations of on-premises SCM environments: powerful and capable of supporting immense complexity, but with limited responsiveness and flexibility when dropped into a highly dynamic competitive environment. Bringing about transformational change in the business operating model is hard in these scenarios. This was an acceptable tradeoff at a time when software upgrade cycles routinely consumed months or even years. That’s hardly ideal for building resilient SCM applications in a dynamic marketplace—but it didn’t matter when everybody had the same problem.
Today, however, legacy SCM environments are much more likely to turn a lack of resilience into a major crisis. First, an inability to respond in a timely manner takes a much higher toll than it did in the past as technology innovation moves more quickly, and disruption from competitors and market dynamics hit harder and faster.
Second, and more to the point, when your competitors have either shed their legacy SCM burden or never had one to begin with, the resulting supply chain “resilience gap” can pose a risk to your business.
This is an area where it’s more useful to see examples of these issues within your own supply chain operations, rather than considering them as abstract concepts. Let’s look at three areas where a legacy SAP ERP environment poses clear challenges to supply chain resilience. We’ll explain where to look for signs that a legacy SCM application is limiting your supply chain resilience—and what these can mean to your supply chain and general business performance.
Build Resilience, Minimize Risk
One point we emphasize again and again for SAP ERP users is the fact that adding Oracle SCM Cloud to your supply chain technology portfolio is an extremely low-risk investment. At a time when market forces in many industries are getting even more dynamic and unpredictable, and when technology innovation keeps accelerating, your business needs an end-to-end supply chain that can embrace innovation, seamlessly extend across data sources and applications, pivot to customer-focused processes, and adopt the best available SCM technology whenever and wherever it happens to be. Oracle SCM Cloud makes all of this possible—without sacrificing or endangering your existing SAP systems, data, and supporting processes.
For more information on Resilience and SCM transformation download the new eBook: Resilience - The New Imperative for Successful SCMTransformation