Ten years ago the idea of delivering complex enterprise quality software via the cloud was uncommon to say the least. Since then, I’ve seen customers and prospects move from extreme suspicion of cloud computing to cautious acceptance, to active pursuit. More and more, people are now beginning to grasp the potential benefits of putting their supply chain in the cloud, and as a result, software vendors of all types are scrambling to label themselves as being “in the cloud”.
You should know that the “cloud” label is incredibly broad and loosely defined. Not all cloud supply chain management (SCM) solutions are created equally, nor are they architected the same way. Current cloud-based SCM vendors fall into three categories:
The vast majority of SCM vendors fall into this category. Occurs where the vendor hosts and runs the SCM solution within the enterprise’s own private network. This is cloud in name only, and suffers from the same fatal flaw as traditionally installed software. Namely, these tools simply aren’t designed to manage what happens outside of the four walls of the enterprise and make connecting and coordinating with others a nightmare. And given that much of a supply chain’s value lies outside of the four walls of any given enterprise, this approach will lead to disappointing results.
Also called the “hub-and-spoke” model. I can think of only a few companies in this category, and it’s little more advanced than the local cloud model. A one-to-many works by connecting a single company (“hub”) to surrounding companies (“spokes”). The major drawback here is that the connections aren’t reusable! Thus, if a spoke wants to connect to other spokes, a whole new set of connections must be formed, which is unlikely given the amount of effort it takes to form a connection in the first place (integrating systems, establishing new business processes, etc). Individual companies within a real-world supply chain are constantly forming and breaking relationships, and the one-to-many network approach is simply too unwieldy to keep up.
Very simple. A company connects once to the network and has the ability to transact, coordinate, and plan with any other company already on the network. The question then becomes whether any two given companies want to transact, and if so, what information they decide to share and what integrated workflows they want to share. This is very similar to happens when you join LinkedIn; you have hundreds of millions potential “connections”, but first you both need to agree to connect and decide what information you want to share. The benefits of going this route can be pretty amazing, such as eliminating stock outs completely and responding to supply/demand events in real time, etc.
Looking for additional information on supply chain management software? Be sure to browse our supply chain and logistics research center, where we’ve collected product reviews and top content on SCM software. To compare the best SCM software solutions, download our free Top 15 Supply Chain Management Software report.