Editor's note: This article is the latest in a series that looks into the ways supply chains, warehouses and manufacturing facilities are investing in technology. Here's the previous story.
Cloud is still a buzzword, and for good reason: It’s changing the way all businesses, but especially supply chain management, work.
In "Innovation Driven Resilience," the 2021 MHI Annual Industry Report, MHI and Deloitte surveyed more than 1,000 supply chain professionals worldwide about innovation investments in the supply chain. They found that 54% of companies surveyed are increasing or substantially increasing their investment in cloud computing and storage to make the supply chain more resilient.
The authors of the report also found that companies that were already on cloud supply chain platforms before the start of the pandemic were "able to establish new channels to meet customer needs and to quickly scale up to satisfy exponential growth in e-commerce demand."
Most companies are spending less than $10M on cloud
Cloud is at a major transition point, said Suresh Acharya, professor of the practice in decisions, operations and information technologies at the University of Maryland Robert H. Smith School of Business.
He likens it to how drivers went from using paper maps and AAA TripTiks to apps like Google Maps and Waze. They all get drivers from point A to point B, but apps are constantly using new information about things like accidents, construction and weather to tell drivers which way to go to save time, and frustration.
"We are really comfortable with real time information that they’re able to ingest to make a real time decision," he said. "That’s the kind of transformation that supply chain is going through."
Cloud grows up
Like with most technologies, cheaper prices and better products have put cloud and cloud storage within reach.
"It used to be that if you wanted any kind of cloud computing or storage, you’d have to self-host them," said Rob Wood, practice vice president of hardware and embedded security services at NCC Group. "You had to have entire teams maintain those systems. Cloud has made them unnecessary. Instead of having to build my own servers and stand them up and run them, you can go outsource that."
The storage part of cloud has also matured: Amazon Web Services turns 20 next year. That maturity has advanced enough that companies can now get a "control tower" view of their supply chain, said Acharya. They are "able to really see and understand and get insights about the supply chain in real time," he said. That has enabled supply chain professionals to get a better understanding of their entire supply chain, and make decisions based on it.
From control tower to direction
The next gains in cloud and cloud computing in supply chain will most likely be broader use of cloud computing, which can take in real time data, and make real time decisions on it. Just like Google Maps and Waze can spot trouble up ahead and map out a new route, optimized supply chain cloud platforms can take information on things like shipment delays, weather, geopolitics, subcontractor woes and anything else that would affect the supply chain, helping supply chain professionals make more real time decisions.
"If there is some kind of issue with a warehouse, can I then have that shipment maybe go to another warehouse or at least be able to delay it," Acharya said. "These are the kinds of supply chain things that help get supply chain to the next level of efficiency, and that’s what we’re seeing with the cloud."
"It used to be that if you wanted any kind of cloud computing or storage, you’d have to self-host them."
VP at NCC Group
He also believes that the sharing of this information between manufacturers and retailers will become more common, in part because it can improve supply chains, but also because younger generations just share more.
According to a "Generation Influence: Reaching Gen Z in the New Digital Paradigm," by the Center for Generational Kinetics and WP Engine, 54% of Gen Z is comfortable sharing images publicly online, and 50% regularly share videos. That’s a jump up from Gen X and the baby boomers — only 35% and 34% respectively are comfortable with sharing photos, and in both groups 31% are comfortable sharing videos.
"We’re going through a technology shift but we’re also seeing a generational shift," he said. "That will start to permeate the workforce as well, where retailers will open up because they will find sharing that information is mutually beneficial. It’s not a zero sum game."
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