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Eight Ways Cloud Technology Affects Supply Chain Management in the Digital Age

July 15, 2015

Historically, supply chain management (SCM) businesses have proven a major truth that your business can fail if you don’t keep up with societal change. The cloud’s creation affects all facets of our existence in the digital age we live in, far beyond the business realm. Cloud technology allows supply chain management providers to reap big benefits in our new era of processes, particularly any related to the ethereal space. Traditional SCM used human physical processing, but you can easily see a major change from cloud computing technology’s impact on SCM industry concepts.

Analytics Capabilities Advancement

Previously, analysis of data gathering required both a data entry clerk and a person to conduct data analysis. The cloud, in conjunction with the Internet of Things, has enabled rapid collection of data from various resources and analysis of this data. As a result, businesses can eradicate these former “human” positions in favor a service that performs the same results one an exponentially faster scale. Ultimately, this allows the business to make better decisions for how daily activities behave.

Multiple Platform Integration

Many platforms were created in facilitating changes as companies began accessing SCM providers. Sadly most of the platforms failed to merge or coexist with each other. Using cloud technology enables multiple platforms to work with one another through a series of standardized protocols though, so finally this issue has been resolved. Old digital conflicts preventing rapid order fulfillment and communications are a thing of the past!

Geographic and Political Boundaries Removed

In close relation to integration of systems, cloud technologies remove physical and political boundaries from the supply chain management perspective. Since many cloud hosts rely on common practices for accessing, storage, and retrieval of cloud data, the same information may be altered from any place on the globe. Furthermore, cloud technology allows for the dissolution of political debates between business practices; although, the rules of governing entities may have the capacity to limit Internet access, such as was seen in Egypt in past years.

Security Measure Enhancement

Since cloud hosts must abide by strict public perception and government privacy standards (i.e. financial and medical information), the state-of-the-art security practices and measures offered by the cloud are useful and brought to the forefront for SCM. Interconnectedness allows for massive security monitoring and implementation across all cloud-based digital planes while still maintaining communication and enhancing the flow of business practices.

Add IT Capabilities

Cloud provider agreements with supply chain management providers cut company needs for a full-fledged in-house IT department. Minimal in-house IT departments are still employed for physical in-house IT needs however. For digital needs like e-commerce, companies must cover issues for buyers within the system day and night so most cloud hosts offer 24/7 business support.  Service users, by preference, can also even reroute appropriate corrections of end-user issues without having to personally manage the process.

Making Market Volatility Adjustments

Damaging volatility is not new to US plants – just under 10 years ago the worst market collapse since the Great Depression happened so SCM providers should stay conscientious of how to use resources in case of another economic collapse. Cloud technology is an effective buffer and hedge against volatile markets. Also keep in mind that partnerships are renegotiable between cloud hosts and SCM providers. They can even be cancelled should sudden declines in the markets occur. Costs can further be minimized in case of collapse and maintain service at competitive rates as a result.

Add Scalability

Owners are insulated by cloud technology from volatility in the markets and can also achieve quick scalability. As success hits for a business and a higher demand arises, their SCM provider may suddenly face upping production by factors of 5, ten, and beyond. The strain each added order places for extra bandwidth and processing can be met with cloud technology in mere minutes.  SCM providers can quickly extend terms or services within their respective cloud hosting and cover instant demand growth with full capability. Beyond this, using cloud-based analytics will also help companies isolate crucial inefficiencies in their order fulfillment processes. That will grow the respective company even more.

Cost Reductions

Operational expense reduction is the top cloud technology benefit for SCM providers. All through a supply chain, worker numbers and task hours can be diminished by cloud technology. One way the cloud can be utilized is to generate a report automatically of a specific warehouse’s needed units, trigger a delivery of said units and log the units once received. Minimizing order-processing man-hours allows workers to instead handle other physical supply chain areas. SCM providers will also reap the benefits of lower security, IT, data analysis, and beyond.

Summary

As dependence on the cloud increases in our society, more SCM providers will acknowledge the important role of the cloud for current supply chains. Lowered costs of using cloud technology will quickly offset snags in the implementation of the cloud within traditional SCM processes.

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