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The Move to Cloud-Based Management
Cloud-based management is here. It is a combination of cloud-based data mining tools and platforms where data generated from all business processes (from start to finish) is stored, monitored, analyzed, evaluated and improved. However, there are certain considerations that decisions makers must consider before adopting it for supply chain management and logistics.
Take everything in Strategic Stride
Having a long-term strategic approach to migrating to the cloud is of utmost importance. For instance, there are legacy system considerations to keep in mind. Cloud Management technology is still growing, but it is not completely there yet. In-house IT systems and applications have paved the way for the cloud but organizations still rely on these systems as they have been well integrated with their organization. There needs to be a synergy where these two systems work hand in hand. Gradual waning off the legacy systems will eventually happen in the future but until such a time comes, these systems have to work together.
There are processes in the overall logistics supply chain where the cloud has not reached its full potential. These may migrate to the cloud in the future but as of now, they are not suited for the transition. These involve processes:
• Unique to the organization and complex, requiring more customized processing
• Highly integrated with a physical flow of items or existing information and management systems and required to give instant feedback and response.
The best approach would be to hybridize both systems so they can work in harmony and synergy. What organizations need to make this hybridization possible is proper understanding and insights into both systems (the emerging cloud and the legacy systems).
For instance, decision makers must be aware of how both systems work, and what necessary infrastructure and assets are needed to implement the cloud-based system. There is a world of opportunities in this hybrid implementation, as it helps the organization gear up for a move into the future. The company should evaluate its decisions to make the move to the cloud gradually so that advantages can be leveraged from the current understanding of both traditional and cloud systems that they will work with.
Leadership from Functions
The readiness of functions to adopt new applications such as the clouds will determine how ready the whole organization is for the move to the cloud. The lead, however, should be taken by these functions.
Manufacturing management is the ideal candidate for early adoption of the cloud. But there are other software delivery models such as the On-Premise delivery model which has software and hardware installed where the customer is and it is operated by the customer. There are other alternative delivery models for manufacturing management that consider quality management and business intelligence, safety, environment and health issues as well. Cloud is one of them.
Supply Chain Planning
The biggest obstacle to adoption of the cloud for SCP is its integration with the available second generation legacy systems like the ERP software. The other major concern is the security of data. That is the reason why some large enterprises are still hesitant to adopt the cloud, although they may be forgoing the advantages that the cloud system poses for them. In the near future, as the major safety and integration obstacles are overcome, large companies are expected to migrate to the cloud management system rapidly.
This function is at the forefront adoption of the cloud. The integration of cloud and its evolution with regards to the visibility of fleet vehicles, networking capacity, freight payment, audits and even event management and ancillary is phenomenal. Companies migrating to cloud in logistics can secure end-to-end follow-up and closure on logistical processes involved in procuring, paying and delivery.
Even selection, payment, tracking, spending and audit analytics of outsourced carriers is becoming easier with the cloud, with visibly improved performance. A lot of data that is relevant to logistics such as carrier rates, fuel rates, freight charges and other important content can be retrieved from the cloud as it has a vast database of resources.
Sourcing and Procurement
Last but not least, the S&P function comes in second to logistics in adopting cloud-based management systems. This is due to the low cost because of the rapid growth in consumer cloud applications, higher avenues of innovation and ease of implementation of the cloud in this function.
It all comes down to compatibility. The more rigid and inflexible the function the lesser is its readiness to adopt the cloud. Luckily, advancements in the development and flexibility of the cloud to overcome obstacles will provide it with the necessary boost it needs. In the future, the cloud is all set to become more compatible with the functions that it currently doesn’t gel in with.
Impact on Organizations
The cloud has undoubtedly got the potential to revolutionize the supply chain and logistics of almost any industry. At the same time, it is making the role of information technology (IT) greater throughout the organization. It is no wonder that functions that had very little to do with IT in the past have become more active in IT buying decisions. The Everest group’s 2012 cloud adoption survey found out that a vast majority (65.1%) of cloud-related IT purchase decisions were made by non-IT stakeholders.
Given this fact, what is the next step towards effective and efficient management of IT?
Control is where the answer lies. The role of IT has transformed from one of support to that of service. The cloud essentially offers “Software as a Service.” Hence, capabilities need to be developed in order to make IT and cloud work in favour of growing the organization.
Optimal Service Delivery
There is a need for management skills from managers that have to make them stretch from their original comfort zone. It involves:
• Making informed IT purchasing decisions
• Developing capabilities in the same area
• Facilitating and monitoring the contractual process
• Creating strong profitable relationships with vendors, on-boarding them with the technology
• The planned integration of the software bought to provide better service to the end users (and the customers in between (B2B).)
Developing the Right architecture
This is necessary for supporting the cloud, making the necessary resources available to key functions and facilitating delivery needs. Otherwise, how will the mix of public, private, virtual and managed cloud systems deliver the results and solutions that they are intended to deliver?
To reiterate, the cloud is the ultimate future and has to be gradually incorporated in the whole system. The managers of key functions need to develop the skills and infrastructure to fully utilize the cloud’s capabilities. This is necessary to deliver value to the organization as a whole.