By taking a measured approach, electronics OEMs can successfully capture the flexibility, cost savings, and rich feature set that cloud-based supply chain software offers.
We spoke to Vasu Rajagopolan, head of supply chain and transportation for Xchanging to get his advice on the best ways to start bringing cloud technology to the supply chain.
EBN: If organizations wanted to scale their adoption of cloud technology, what strategy should they use? Where should they start?
VR: There are four starting points I'd suggest:
- Sales and Operational Planning: There are many stand-alone products which can take in data from core systems (non-cloud based) and analyze and forecast sales and operational planning. This can be based on data collected over many years. As companies do not usually consider historical data relevant and critical to planning and forecasting, there would be less resistance to share this data on a common hosted environment (i.e. the cloud).
- Spare Parts Optimization/Store Shelf Optimization: These two operations can again be carried out using historical data and are not considered core/critical to an organization. There are tools available on the cloud which can take in data from core systems to calculate the optimum level of parts which needs to be stored and in the latter defines how optimally the parts can be stacked in a store shelf.
- Transportation Management Systems (TMS): The adaptation to this functionality will come later in the event of scaling; the primary reason being that the TMS have carrier rates, item description, routes and other critical data defined. Unless the IT team is fully satisfied around data security in a common hosted platform, there would be a great reluctance to embrace cloud based offerings. Another factor would be around how much business process gets covered in the product as part of the cloud offering as most products allow for very little or no customization.
- Supply Chain Management: This may happen very soon as more companies start embracing the cloud in a phased approach. There would come a time in the very near future where suppliers/carriers and other involved parties would be able to collaborate across a wide network and offer more efficient services. A common source of data can be used by involved parties like supplier and carriers. Visibility across the entire supply chain will become much easier with tighter control and one source of data for all the involve parties.
EBN: What strategies should the supply chain manager use to work with IT to smoothly integrate cloud-based apps into the supply chain?
VR: A supply chain manager should work closely with the IT team and identify all the touch points/systems involved. They should then identify what the core systems are that the business would be reluctant to move onto the Internet immediately. They should start with some generic applications over the cloud and show the practicality of the ROI, remove all the myths and ensure that the risks are mostly well mitigated.
The next step would be to get the other core systems into a private cloud.
They should then evaluate whether their organization can suffice with the Private-Public cloud combination or if there is room for migrating over completely to cloud. Type/size of business and contracts with regards to external customer data along with risks need to be evaluated before making the final decision.
Let us know your experience with the cloud. What lessons have you learned? What advice would you offer?