Jon Chorley, CSO and GVP of SCM Strategy and PLM Development, Oracle
In the decades leading up to Y2K, decisions about supply chain web applications were relatively straightforward. There were only a couple of vendors, and the stack consisted of enterprise resource planning (ERP) and material requirements planning (MRP); it was all on-premises. As software evolved, new apps were added that sought to address different areas, such as more sophisticated planning, transportation optimization, and cross supply chain collaboration. These apps were usually delivered as point solutions to solve that one particular problem, but often created inconsistencies, misalignments, and integration complexity. These differences also added significantly to the amount of specialized knowledge that the supply chain organization required to keep the system running.
Another aspirational theme was to transform a set of applications fundamentally designed for the “island enterprise” into applications that manage a complex, multi-enterprise value chain, and switch from being an “Inside-Out” organization that focuses first on the needs of the organization to an “Outside-In” organization that focuses first on the needs of the customer. In other words, organizations were trying to fit a square peg into a round hole with their supply chain philosophies.
" Businesses should be developing an end-to-end strategy around supply chain cloud deployment to maximize their ability to make supply chain an enabler of business change"
The unfortunate net effect of all of these good intentions has too often led to reduced flexibility and increased cost and frustration. As system complexity grew, supply chains became an inhibitor to business growth, not an enabler. Supply chains became the long pole in the tent of a new product introduction; the most complex part of an acquisition. Supply chains became the reason not to change, instead of being the engine of change.
Fast forward to present day: We have new reference models for the 21st century supply chain. We have new tools and technology. We have new standards and unified processes. Together, these can deliver a simpler, broader footprint to manage the entire supply chain. We can build a footprint that improves data flow, incorporates pre-built business flows to optimize operations, is designed for easy adoption and use, and eliminates the need to keep all those disparate systems independently fed and watered. And as a deployment platform we now have the cloud to offload the IT infrastructure capital expense, the investment in specialized human capital, and are able to avoid the “release-lock” challenge of on-premises software.
So it's not just about cloud for Cloud’s sake, it’s the combination of new architectures, new technology, new user experience, and cloud as the new deployment paradigm that maximizes your ability to address your current and evolving SCM challenges.
What we’re seeing now are supply chain leaders turning to Cloud to solve business challenges in four key ways:
1. Drive down Costs: The cloud helps transition costs into business process change, which is extremely important within supply chain.
2.Optimize Systems: The cloud is designed to operate in the way businesses operate. With quicker, more agile Cloud systems, businesses can innovate quicker, scale, and streamline business flows while eliminating complexity.
3. Improve the User Experience: Easy and intuitive user interfaces can reduce the amount of specialty knowledge and understanding a user has to have to get the most out of the system. The net result is that businesses can deploy new systems and get more business value out of their investments.
4.Become More Responsive to Change: With the cloud, businesses can more easily configure and modify systems as needed and adapt to business model and market changes on the fly. At a high level, the cloud provides organizations with continuous innovations and new features to their systems from frequent updates, enabling them to move quicker and be more responsive to market changes and evolving customer needs.
So how can organizations get started on moving to the cloud to take advantage of its many benefits?
There are three main approaches:
1. Point solutions targeted at specific business processes
2.A phased approach, gradually replacing existing on-premises systems in a logical sequence with cloud solutions
3. A full transformation to cloud of a specific business unit or the entire organization
Which approach is best suited to your business will be dependent on your ability to absorb change and the external and internal pressures you face to perform those changes. However, whatever path you take, it is vital to have a clear and complete idea of where you want to end up. Otherwise, you may find yourself in a best-of-breed swamp of multiple cloud solutions, having recreated on the cloud a solution just as complex as your current on-premises systems.
If a full transition to the cloud isn’t on the table yet, you could identify a specific business process that requires improvement and target that for Cloud deployment. One example is transportation, which can often deliver a fast ROI. This is critical, as unlike the long-running ERP implementations of the past, you want to match the cost and speed of implementation to the lower cost of entry that cloud solutions provide. Another example is product master data management, which provides a critical common-information backbone as you move through your journey to the cloud.
There may be processes that are predominantly manual or poorly served by current systems that could benefit from improved support on the cloud. A great example is the front end of the product definition process—innovation management. Such an implementation can have a very significant impact on your ability to generate that “other ROI,” Return in Innovation, spend, and to help translate those C-level strategy goals into new products in the market.
At a broader business process level, you could look at deploying a centralized order management solution that provides a common backbone to your existing capture and fulfillment channels—with the goal of gradually folding these into the central application.
As noted earlier, you could also begin with ERP, and gradually phase in the supply chain solutions from there.
The key point is to have a destination in mind, and to construct your map to that destination.
So, regardless of how the journey starts, supply chain applications are and will remain critical to the overall operations of modern businesses. Modern supply chain applications designed for the cloud offer cost and time savings, while also optimizing efficiency, infrastructure, and business operations. All businesses should be developing an end-to-end strategy around supply chain cloud deployment to maximize their ability to make supply chain an enabler of business change and growth within their organization.