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The Cloud Herald is happily featuring Anirudh Saini. He is a content writer specializing in technical concepts related to the digital economy and finance, such as AI, SEO, cloud computing, and more. A curious learner who has been writing on Medium, LinkedIn, and other reputable writing platforms, aims for excellence, and endeavors for personal and professional growth.
Do you know the market size of the supply chain? It is USD 31.77 billion as of 2024. What is the market size of digital transformation? According to precedence research, it is a staggering USD 1184.69 billion in 2024. What will happen if we combine these two mega technologies?
How will they impact the world? Digital transformation in the supply chain means integrating digital technologies in supply chain processes, such as IT modernization, creating new digital business models, and utilizing IOTs, resulting in enhanced operations, reduced costs, and better visibility.
And just imagine what will happen if the gigantic technology – cloud computing, which is growing at a CAGR of 16.40% and with an estimated market size of USD 680 billion in 2024, is combined with these phenomena? Then, what will happen?
In this blog, we will understand and comprehend properly how cloud computing in the supply chain is shaping digital transformation, eventually shaping people's lives worldwide, from individuals to massive businesses.
Reasons to Implement Cloud Computing in Supply Chain
Several reasons to implement cloud computing in the supply chain are as follows:
1. Streamlining Logistics Tasks
Cloud can manage logistics-related tasks quite efficiently and effectively by:
- Creating organized and updated routes for delivery and shipment automatically with AI and machine learning.
- Prioritization of new orders over mundane or easily doable orders that can be delayed.
- Cloud technologies can automatically fill out the necessary forms like compliance documents, invoices, etc.
2. Enhanced Inventory Management
3. Forecasting and Planning
Cloud technologies can analyze, utilize, and organize the collected data to create plans for supply chain processes, such as logistical forecasting, predicted future sales, the need for more stock, etc. It collects data from:
- Customer service channels
- Online Sales Portals
- Retail Locations and wholesale suppliers
4. Maintenance Management by Cloud Computing
Cloud maintenance platforms can examine various concerns, such as temperature or vibration anomalies and pressure drops by sensors and software intelligence powered by AI in the mechanical assets of a supply chain. Several industries, such as the chemical and tire industries, can face issues like the breakdown of delivery trucks and assembly lines, but with the cloud, these issues can be eliminated.
5. Improvement in Procurement and Sourcing:
Cloud computing allows digitizing the procurement and sourcing process. Potential benefits include:
- Faster communication between business partners.
- Automatically generating custody documents and invoices for trackability compliance.
- Automate vendor changeovers based on current supplies.
Benefits of Cloud Computing in Supply Chain
On-demand computing can offer various benefits in the supply chain. Let’s explore some of the invaluable and pragmatic benefits of cloud computing in the supply chain:
Ability to Store Large Amounts of Data
With cloud computing, supply chain companies can easily store big chunks in cloud servers, which can be used for tracking the locations, suppliers, and orders of the shipments.
Increased Efficiency
Technologies like artificial intelligence and machine learning in on-demand computing can widely improve shipment, processes, and delivery, cutting down costs and time and facilitating better communication between the people associated with supply chain management. With automation and machine learning algorithms, better efficiency can be achieved.
Increased Collaboration
The cloud helps increase collaboration by offering real-time visibility, which helps manufacturers, suppliers, and distributors streamline communication and look for any potential threat. Real-time visibility consists of clear visibility of the operations from procurement to delivery, ensuring the trust and transparency of the supply chain, leading to improved supply chain management.
Improved Security and Analytics
AI-based cloud solutions offer improved security by backing up data automatically through connected devices. The cloud also significantly enhances data analytics services by providing essential insights into the health and performance of supply chain networks, which helps better analyze and eliminate possible downturns and problems.
Easy Scalability and Growth
Companies operating on supply chains can easily access ample or on-demand data storage capacities according to their needs. Without the prerequisite of expensive hardware, enterprises can take advantage of the cloud’s easy scalability feature to maximize their business potential and seamlessly operate the SCM.
Implementation of Cloud Computing in the Supply Chain
Digital transformation plays a huge role in the planning and strategic execution of the supply chain. Let’s see what digitalization offers in this area:
APS:
APS is also known as Automated Planning Systems; digital transformation automates the planning systems in the supply chain by crafting efficient plans from various sources. By considering labor, the capacity of the supply chain, and the goods, APS schedules the production of goods and the distribution of plans.
Scenario Planning:
The integration of digital technologies gives rise to digital simulations, which further help create models' scenarios and test potential impacts and concerns. Due to scenario planning, supply chain strategies become flexible and resilient.
Intelligent Strategic Sourcing:
In the supply chain, sourcing refers to suppliers. Digital platforms analyze current or future market conditions, supplier functioning and performance, and associated risks to create intelligent strategic sourcing, further helping in better energy allocation, cutting costs, and improving supply chain management.
Integrated Business Planning:
Enterprises utilize IBP (Integrated Business Planning) to match supply chain strategies with their mission, objectives, and overall vision. This process integrates supply chain planning with the company's overall financial planning.
Quick and Nimble Execution:
With traditional or in-house software and hardware infrastructures, executing new technologies or existing software becomes complex and slower. However, cloud computing (a major part of digital transformation) has significantly improved the implementation of new processes, facilitating agile execution of supply chain strategies.
Future Trends Cloud Computing in Supply Chain
- Blockchain Technology
Blockchain technology, with its decentralization properties, will improve the trackability and transparency of the supply chain processes, fortifying several documentation processes, including invoices and compliance documents.
- Reduction of Carbon Footprints:
Cloud computing will focus on sustainability, working to reduce carbon footprints by introducing innovations and optimizing resource allocation.
- Advanced Analytics
Currently, the cloud offers robust predictive analytics. But, with digital transformation advancements, it will soon offer more advanced analytics, which will help provide real-time insights for quick responses to concerns.
- IoT Expansion
Real-time tracking of goods, improved process visibility, and predictive maintenance are some of the inevitable trends in the IoT (IoT or Internet of Things are connected devices that exchange data through sensors and networks) powered by cloud computing. The cloud will help in the better allocation of resources, enhancing energy management.
Conclusion
In the coming years, the impact of digital transformation in the supply chain will just increase, offering advantages and efficient ways to operate. As technology evolves, new advancements in cloud computing will impact the supply chain, offering automation, reduced costs, and effective processes with on-demand scalability.
The future trends we discussed above will have massive implications, and the benefits will only increase and not decrease. Suppose the enterprise goes in different ways with the latest technology. In that case, they will not be able to sustain themselves in the market, leading to poor growth and development, extra processing costs and time, and lower performance and profitability. So, integrating the cloud into the supply chain is necessary, facilitating digital transformation and offering updated and advanced innovations.
