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Although the cloud is considered a platform rather than a tool, aspects of the cloud are particularly well-suited to supply chain management (SCM). Among the advantages of cloud solutions tailored for SCM are speed, visibility, ease-of-use and low cost of implementation. Two companies, E2open Inc. and GT Nexus, have been particularly active in the supply chain.
Cloud-based supply chain platforms enable partners to establish a set of rules that allow certain constituents to see information relevant to them. Unlike a typical closed system, the universe of collaborators can be opened to include financial institutions, logistics providers, and even governmental and regulatory agencies. That’s because in addition to the partners in a typical supply network — suppliers, distributors, and customers — global commerce also depends on air, land, and sea freight handlers, third-party logistics companies, trade and tariff officials, seaports, and trucking and rail companies. Each of these groups manages information that isn’t necessarily shared with an end customer that’s awaiting a shipment.
A classic example, presented by GT Nexus, would be a delay at a major shipping port in the United States. A single container is held up at Customs and typically, that information would not be cascaded throughout the supply chain. The end-user of one box of parts sitting in that container may not hear of a delay until it is too late to reach its EMS partner’s manufacturing line. Through the GT Nexus system, partners with shipments in that container could be automatically alerted of a delay; as could end-users, manufacturing partners, transportation companies and other strategic partners.
Each system emphasizes certain strengths: GT Nexus focuses on the ease of sharing data. Its vision: The supply chain is basically comprised of a lot of points of data that have a distinct chain of custody. This data is different for each company, and that information is often stored, or ‘locked up’ within individual ERP systems. These systems aren’t designed to work across enterprises, so the data isn’t flowing.
The only way to do that, GT Nexus believes, is through the cloud. Not only do most ERP systems not talk to one another, they don’t even speak the same language. GT Nexus partners provide data from their ERP systems: GT Nexus takes it, translates it, and then makes the data available to select members of the network. Although the information is standardized, linked, and centrally stored in the cloud, it is also partitioned. It is visible only to stakeholders that have been granted permission.
A similar concept was developed by E2open, which started as a component-sharing Website for OEMs. E2open emphasizes the real-time aspects of its system. E2open identified issues unique to the electronics industry: it has the fastest moving supply chain in the world. E2open’s cloud-based trading platform allows supply-chain partners to view and manage procurement events in real-time. It also enables users to “monetize” the various aspects of a buying transaction. It captures and compares component costs; assesses various logistics scenarios, and calculates risks such as manufacturing line downtime.
PC manufacturer Lenovo Group Ltd. and global distributor Avnet Inc. are among users of the E2open system. In a white paper published by E2open and Lenovo, Lenovo outlines how it set out to reduce the cost and time to onboard new trading partners and to build a real-time, consolidated view of processes and operations. Since implementing the platform, Lenovo reports it has reduced onboarding time by 85 percent, lowered IT costs by 53 percent, and reduced IT management costs associated with supplier integration by 70 percent.
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