By: Dominic Reagan, Senior Director for Value Chain Execution
Managing modern supply chains is becoming increasingly complex, requiring agile software solutions and analytical insight in order to keep up. Leaders understand the challenge: By 2023, at least half of large global companies will be using advanced analytics, artificial intelligence (AI), and Internet of Things (IoT) in their supply chains.
It’s a new reality for businesses that manufacture and sell products. They need to transform their supply chains from a rigid series of disconnected functions into an agile, connected, and automated supply chain.
This requires a modern end-to-end supply chain management (SCM) solution. Such solutions are based in the cloud — not on-premises —and increasingly include AI and other emerging technologies. (You can dig deeper into key drivers of this change in the e-book Accelerate Innovation and Agility Across Your Supply Chain upon which this blog is based.)
Two big reasons supply chains need to change
The No. 1 reason supply chains need to change is that modern customers have different expectations than they did before the e-commerce era. Whether they’re buying online or ordering in bricks-and-mortar stores, consumers have come to expect they will be able to buy what they want, when they want it, in the quantities they need, no matter how or where the order is placed.
To serve customers across multiple channels and fulfill orders quickly, supply chains need to be agile enough to change, as well as digitally connected from end-to-end.
As an example, if a customer places an order online, the retailer must quickly determine how to fulfill the order rapidly. This requires locating the item, which could be in a distribution center or retail store hundreds of miles from the customer, and expediting the shipment using a transportation mode that ensures the customer will receive it in time. Orchestrating this complex transaction requires real-time visibility into the seller’s inventory, regardless of location. Connected applications — such as order management, inventory, and logistics — are what enable this kind of agility.
Automation is another increasingly necessary capability. While it’s already used in some parts of supply chains, it’s starting to augment more and more manual transactions, and incorporate AI for automatic learning and process refinement.
For example, warehouse automation enables cost-effective fulfillment of highly variable orders by reducing errors and speeding up the fulfillment process, making personal service at-scale possible. Manually processing and fulfilling orders cannot achieve this because preparing each order would simply take too long and cost too much. But for this level of automation across systems to be effective, partners up and down the supply chain must be able to communicate in real time — something that on-premises SCM systems lack the required levels of connectivity and automation to support.
The second trend affecting supply chains is the need to extend them across geographic locations. The overall management of global operations — especially scaling for new market growth — is incredibly complex and requires greater flexibility. Regulatory changes are constant, as is political instability, together with fluctuating market factors such as monetary exchange rates, raw material shortages, and rising oil prices. Regulators expect proper customs documentation to be prepared and tariffs to be paid, while customers expect sellers to meet their requirements regardless of unplanned supply chain disruptions.
On-premises applications don’t support the necessary ability to dynamically reconfigure processes or achieve comprehensive visibility and granular control of global inventory. They also lack predictive analytics that use technologies like AI to model multiple logistics scenarios, so businesses can effectively adapt to unexpected disruptions.
Cloud solutions: Consolidated planning, visibility, and control
The bottom line is that integrated, end-to-end cloud solutions, such as Oracle Supply Chain Management Cloud, can make supply chains faster and smarter, as well as more agile.
Modern supply chains are much more resilient and adaptive because planning, visibility, and control are integrated instead of operating in isolation. Also, in the cloud, it is easy to scale by adding new users and innovating with new technologies as they emerge, such as intelligent track-and-trace using blockchain for shipments of perishable food products or pharmaceuticals.
Oracle SCM Cloud can also create a virtual representation of the physical world using IoT-delivered sensor data — for example, tracking shipments as they make their way to their destinations or monitoring the condition of sensitive cargo. Simultaneously, it connects sensor data with intelligent automation and provides actionable insights from real-time monitoring.
You don’t need to be a data scientist or an IT specialist to use these capabilities. Rather, many are embedded in the applications themselves as features enabling business users to make better decisions — and to do so faster.
Meet customer expectations and simplify complexity
Cost-effective supply chains that meet increasingly demanding customer expectations provide a unified view of your supply chain with real-time insights and integrated applications. Compared to on-premises applications that were built on legacy technology, are labor intensive, and were not designed for data-driven decision-making, modern cloud solutions enable more agile supply chains and drive better business outcomes.
Learn more in the e-book Accelerate Innovation and Agility Across Your Supply Chain.