Cloud-based applications and platforms are revolutionizing supply chain management today, scaling operations from small businesses to complex enterprises. Cloud supply chain software solutions are showing significant increases in implementation – so much so that not having one in place makes you an outlier.
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Through our research, several key insights emerged.
The focus on achieving higher supplier quality, forecasting accuracy and inventory optimization while driving down manufacturing cycle times are priorities today. As a group, the senior management teams leading supply chains recognize the urgency of reaching these goals as quickly as possible. Due to the quick nature of deployment and configuration of cloud SCM software, more manufacturing teams view the cloud as a fast path to accomplishing goals.
This Article Covers:
Key Takeaways
- 54% of surveyed companies are substantially increasing their cloud computing investment to make supply chains more resilient, according to a report.
- Key advantages of cloud-based supply chain management systems include improved performance, higher flexibility, easy scalability and increased productivity.
- The global cloud SCM software market size was valued at $12.44 billion in 2020 and is projected to reach $222.23 billion by 2028, growing at a CAGR of 41%.
- Gartner predicts spending on public cloud services to grow 21.7% and reach $482 billion in 2022. It also forecasts that public cloud spending will exceed 45% of all enterprise IT spending.
Succeeding with the Cloud’s Speed and Scale
These are times of rapid transition where lockdowns, shelter-in-place orders, and travel restrictions have disrupted various segments of the US economy with a significant impact on supply chain operations. During such volatile times, businesses are increasingly shifting towards cloud computing and storage to make their supply chains more agile and flexible.
In a BBC interview, Anders Sörman-Nilsson, a strategic futurist, pointed out, “The cloud digitally untethers businesses and their workforces. They are no longer tethered to particular devices, physical workplaces, in-house bookkeeping and more.”
Monitor and manage major business processes from a unified dashboard.
A cloud-based SCM software can help deliver more speed, scale and accuracy and enable businesses to react to disruptions and changes. Cloud applications and platforms are the growth catalysts that will keep improving supply chain performance while catalyzing and fueling global manufacturing growth.
Key Insights
The ten ways cloud computing is revolutionizing supply chain management include the following:
1. Ensure Supplier and Raw Material Quality
Getting a 360-degree view of every quality measurement from start to finish reduces costs and increases customer satisfaction. Cloud SCM software can track and report quality levels by production center, product and customer level.
It delivers real-time updates on shipment inspections and quality levels, making sure the bill of materials (BOM) always defines the highest quality components and raw materials.
Another benefit of having a cloud-based SCM system is monitoring and tracing any assembly, component or subassembly throughout the supply chain in real time. With cloud SCM apps and platforms, quality becomes a more pervasive part of the system of record in any business.
2. Improve Manufacturing Cycle Times With Business
“Manufacturing cycle time” has to do with the time elapsed between an order’s origination until a product is created and stored in inventory. Making improvements to this valuable manufacturing metric requires consistent and clear data.
Cloud SCM can quickly gather and access data from multiple points across the globe. Without the cloud, sizable multi-national warehousing operations are stuck operating in accordance with time zones and geographical locations. With cloud computing, any member of any section of the supply chain can access and exchange data with other users. Communication is a fundamental piece of the supply chain, and cloud-computing takes this to the next level.
Improving cycle times starts with knowing why and where delays happen in manufacturing. With the real-time applications of the cloud, you can stay at your most competitive. As a product finishes its cycle, the information about its manufacture can lend valuable insight into any possible improvements. Even now, there are SCM software available that provide real-time updates on how a particular product performs and eventually impacts financial results.
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3. Streamline Infrastructure Management
Manual calculation of a machine’s performance and health are time draining practices of the past. With cloud-calculation of overall equipment effectiveness (OEE), decisions that affect product manufacture can be made quickly from anywhere.
OEE is an invaluable measure of a production machine or tool’s health. It can also be used to measure a product line, production team or an entire production center’s performance. An OEE metric tracks everything you would need to determine a machine’s health, performance and when maintenance is required. This metric is calculated using a formula that measures availability, performance and quality. Cloud supply chain software allows for the easy gathering and analysis of OEE data. With no borders between the various networks involved, thanks to the cloud, this data can be sent and received from operations across the globe.
Keep track of your equipment’s OEE and maximize productivity.
4. Automate Compliance and Reporting
Compliance with the many rules and regulations of various government or industry institutions affects much of a supply chain. These reports require careful input of data and can drastically decrease the productivity of employees tasked with their creation and delivery.
For medical device manufacturers, cloud-based compliance applications remove the burden of spending their valuable associates’ time cataloging records and reporting them. The U.S. Food & Drug Administration (FDA) requires that every manufacturer maintain device history records to the batch, lot and unit level. A cloud-based application capable of producing federal device history records (DHR) is a significant time saving and competitive advantage. Medical device manufacturers also need to stay in compliance with Current Good Manufacturing Practice (CGMP), CFR and FDA requirements, as well as ISO 13485 and 9001 standards.
Cloud-based computing, while helpful for all parts of the supply chain, is beneficial to niche providers. Each industry has its own set of regulations in place to ensure safe creation and transport of goods. Without quick access to parts of the supply chain, companies with ties to multiple niche industries would see a slowdown due to time wasted filing these types of reports.
5. Attain Real-time Track and Traceability Performance
The more production locations a manufacturer has, the more critical supply chain visibility is to maintaining quality levels and gaining data used for product tracking. Cloud-based track and traceability features save many manufacturers from the variable expenses of a product recall by catching product quality problems early.
As your enterprise thrives, the need for rapid scalability increases. Relying on in-house software can lead to wasted resources when new solutions need to be integrated. If your inventory is growing, you need to meet the scaling challenge as quickly as possible. Taking time out of production, or any part of the supply chain, for new software integration and training can be a drain on valuable resources.
Without the need for new software, inventory errors brought on by a transition vanish. Everything in use before the need to scale up will still be in place. If your supply chain was working before you started to take on inventory, scale up and move on!
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6. Scale Quickly With Personalized Integrations
Application Programming Interfaces (APIs) are a factor that’s driving the proliferation of cloud apps and platforms across manufacturers’ many production and plant locations. Serving as the glue between systems, APIs create real-time integration links between systems that enable more efficient data sharing, collaboration and transaction accuracy. Integration costs continued to plummet as APIs became more pervasive and broader in scope.
This ease of integration frees up vast amounts of time that can be spent in a more valuable way. As cloud supply chain software continues to grow in demand, you can expect to see even more game-changing additions included in their software suites. With flexible APIs in place, cloud computing can bring together a variety of different applications without excessive time spent integrating new software into your supply chain.
7. Optimize Production Planning Across All Warehouses
Knowing inventory levels throughout supply chains makes inventory planning and management more efficient for each production center.
Cloud-based WMS (warehouse management system) and ERP (enterprise resource planning) systems generate data sets over time that show patterns, making it possible to anticipate shifts in demand. Not only does meeting demand keep your inventory moving, but it also fosters fantastic customer relations. With quick demand calculations and easy to access data, demand problems should never come between you and a customer.
These insights allow improved forecasting accuracy, which in turn makes optimizing manufacturing schedules all the easier. Also, with cloud-based WMS, ERP and analytics systems designed to optimize inventory, order management and fulfillment, manufacturers can expect to see profit and revenue growth gains.
Systems like ClarusWMS give users visibility into and control over order management.
8. Streamline Order Management and Quote Prices Accurately
Product quality problems often begin when an incorrect or incomplete order gets created. Errors in pricing, quoting, product configuration or delivery instructions all introduce errors, slow down orders and drive down product quality. Automating pricing, quoting and customer approval workflows with a cloud-based application help reduce order cycle times and improve quality. Order accuracy goes up along with customer satisfaction, while delays in paying invoices drop, which reduces days sales outstanding (DSO).
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9. Consolidated Management Helps Increase New Product Introduction Successes
Cloud-based applications are integrating product development, engineering, supply chain management and production planning teams on a global scale to reach higher product quality levels.
Instead of rushing new products into an initial manufacturing run, manufacturers who excel at product quality are willing to sacrifice a few weeks to get the product right. Readiness reviews and the highest priority problems or bugs find a resolution, and the schedule gets shifted to support higher quality.
10. Measure Perfect Order Performance With ERP Software
manufacturer, if you can deliver products on time, to the right place, with the proper documentation on the first try – then you can assume your perfect order performance statistics are doing well. The challenge to maintain this statistic grows as complexity in orders and configuration rises. Tapping into cloud-based analysis from ERP software can provide valuable information on retaining your perfect order performance in complex situations.
11. Mitigate Potential Disruptions and Overcome Physical Boundaries
The story of global supply chain disruptions in 2021 was complex. COVID-19 vaccines were made widely available across the U.S., leading to the economy opening up and consumer demand almost reaching pre-pandemic levels. But companies struggled to meet the pent-up demand due to various factors, including surge in shipping prices, port slowdowns, shortage of workers and truckers, and supply chain bottlenecks.
Supply chain disruptions were up by 88% in 2021. This supply chain pressure will persist through 2022 due to the Ukraine war, China’s zero-COVID policy and various other factors.
Time is money, especially when the world’s supply chains are working to adapt to a new normal on the global stage. Leveraging simple SaaS integrations can get lifesaving cloud SCM platforms up and running in no time with very little initial investment.
Mapping out supply chains can be expensive and time consuming, but analytics features included in many cloud supply chain management systems can help guide you. Working in concert with supplier networking features and visibility into critical metrics can help you move all the way through your supplier hierarchy to discover vital partnerships that can keep the supply chain thriving.
It’s also no secret that as borders close and travel shuts down, being able to remotely manage and communicate with the segments of your supply chain is critical. Cloud SCM helps move businesses past political differences and collaborate to keep products flowing.
FAQs
What Is a Cloud Supply Chain?
A cloud supply chain is a solution that uses cloud computing and storage to manage all supply chain aspects from any location using any web browsing device.
It lets you manage, scale and optimize the entire supply chain using cloud-based tools like warehouse management, sourcing and procurement modules, supplier relationship management, end-to-end logistics solutions, supply chain intelligence, and more. You can create digital threads spanning the entire chain for smooth data flow and increased visibility into daily activities.
What Are the Benefits of a Cloud Supply Chain?
Cloud technology creates an interconnected digital world that facilitates rapid business growth if used properly. It increases supply chain visibility and improves collaborations with third-party suppliers, warehouses and fulfillment services. Here are four primary benefits you can achieve from shifting your supply chain to the cloud:
- Minimize Operating Cost: You can bypass hefty investments in hardware, IT infrastructure and personnel. Deploy the software on vendor servers without the need to maintain or run the platform.
- Scale Rapidly: Unlike traditional ERPs and SCM, you don’t need to upgrade your hardware and IT infrastructure to scale your operations. If you want to add extra storage space or connect an external module, you just need to upgrade your plan with the cloud SCM vendor. Scaling upwards can be as simple as a little bit of coding and inputting new data into an existing cloud network.
- Keep Up with Technological Advancements: The vendor regularly updates your system with the latest technology like up-to-date software versions, server upgrades, computer processing power, and new firewall and security measures.
- Prevent Data Loss: With on-premise deployment, your data remains in office computers and IT infrastructures. This may not seem like a problem, but you can lose all the data if your hardware malfunctions or gets damaged due to natural calamities. With cloud supply chains, your data is secure on vendor servers, and you can access it from anywhere.
How To Start a Cloud-based Supply Chain?
Transforming a traditional supply chain into a cloud-based one requires a disciplined and structured approach. First, you must determine the existing software’s cloud maturity and deployment model. It’s counter-intuitive to get a cloud SCM solution if your ERPs, CRMs and BIs are deployed on-premise and can’t integrate with cloud-based software.
Secondly, you should carefully consider your needs and prepare a requirements checklist that addresses every issue. You should also prepare a budget for software, additional features and vendor support.
We know this can be time-consuming and get overwhelming for a few. To simplify the process, we’ve prepared a straightforward nine-step approach at Selecthub that ensures you identify all your requirements and pick the ideal solution that fits your business. We call it the lean selection methodology and strongly recommend trying it out.
Final Thoughts
Cloud supply chain is on a meteoric rise with all forecasts expecting huge increases in value and implementation in the coming years. As this software market grows more agile and scalable, it will be impossible to avoid using it to stay competitive.
If you’re actively looking for cloud SCM software, take a look at our requirements guide and comparison report to find a package that best suits your needs.
How has implementing cloud supply chain software improved your efficiency? Let us know below!