First, Covid-19 has disrupted supply chains, which are more visible than the global chip crisis. Then the Russia-Ukraine war destroyed the supply of food, energy, and agricultural products. In an often chaotic world, Anant Adya, senior VP at Infosys Cobalt, shares how the cloud can help supply chains become stronger and more resilient.
The cumulative effect of these supply chain disruptions costs organizations, on average, $182 million in revenue. Organizations that had fine-tuned their funding to be more efficient – producing in the most cost-effective locations and maintaining adequate inventory – were ill-prepared for the devastation caused by the pandemic. Yes, factories were cutting production, and logistics were chaotic, but the main reason their supply chains could not cope was because they were opaque and suffered from information delays.
Without real-time information, leaders could not make critical decisions to minimize impact; worse, the pandemic changed spending patterns overnight, meaning businesses couldn’t rely on historical customer data to predict demand. It became clear that real-time, end-to-end visibility was critical to strengthening procurement.
Shock Resistant Supply Chains
What makes a supply chain resilient to shocks? A few years ago, it would have been better risk management. But events since 2020 have shown that supply chain resilience is much more, including the ability to pivot under pressure, move better than the competition, comprehensive disaster planning, and perhaps tapping into new opportunities. Business leaders need to be able to make informed, timely decisions to address future problems, change strategies, or capitalize on profits.
Transparency, traceability, and real-time information flow are critical to providing accurate, timely information to make such decisions effective. Something outdated technology, legacy processes, and supply chain models clearly cannot do. The solution is to modernize the supply chain with advanced digital technologies, such as artificial intelligence, robotic process automation, blockchain, and machine learning. And cloud computing.
Where Does the Cloud Enter the Picture?
The cloud cures all problems related to data in a weak supply chain. For example, it can connect multiple systems of various supply chain participants, from corporate factories and warehouses to supplier networks to distributors to logistics providers, allowing real-time information flow and end-to-end transparency.
- Covid-19 has exposed the vulnerability of supply chains in the face of fluctuating demand. The traditional, sequential supply systems of many companies, designed for predictable, consistent demand, break down when usage patterns change overnight. Disruption happened both ways – some supply chain systems could not scale to meet the level of demand; others remain idle amid reduced demand. A cloud-based supply chain system can easily handle these changes, thanks to the unlimited expansion of the cloud. Because cloud capacity is available on tap, businesses can only take what they need when they need it. When the retail chain, Kmart Australia, re-hosted its supply chain, inventory, and retail applications running on mainframes in a cloud-based mainframe simulator, we could better predict trends due to the availability of timely, accurate product inventory data. Moving to the cloud also brought stability because the mainframe could scale up and down due to fluctuating demand during the pandemic.
- Modern supply chains are global organizations scattered around the world. Not only users but also supply chain systems also need access to data, which can be found anywhere. Imagine a manufacturer that collects digital data from thousands of sensors throughout its factories and warehouses. Only the cloud can deliver the connectivity, integration, and computing access you need.
- Cloud vendors are also investing in and developing virtualized offerings that manage supply chain operations more effectively than traditional souped-up solutions. These solutions leverage artificial intelligence and machine learning for analytics, leading to better results.
- Seamless information flows through the supply chain system to simplify reporting by eliminating delays and manual intervention.
Cloud Computing for Intelligent Supply Chain Management
The cloud adds to the resilience of the supply chain in many other ways and, for example, by providing scalability and access. Below are a few key use cases for cloud computing.
- The twin of the digital supply chain: A visual representation of the physical supply chain – can improve resilience by providing a complete overview of the system, its transactions, vulnerability points, critical locations, logistics and more in real time. By using a digital twin, businesses can “visualize” supply chain operations and forecast demand, plan inventory, manage interactions with partners, and even anticipate disruptions before they happen. Given the big data and computing power involved, the cloud is the best place to model a digital twin.
- A modern database the cloud can include unlimited amounts of different types of data. It provides access to real-time information and insights, which are essential for maintaining the continuity of supply chain operations. There are a number of software solutions – including advanced analytics and artificial intelligence – that businesses can access “as a service” for supply chain modeling, strategic planning, risk/reliability assessment, etc.
A great example of how the cloud can make the supply chain more resilient and responsive through warehouse modernization comes from Toyota. In North America, the company had an on-site automotive data warehouse to record data related to forecasted orders, planning, production, logistics, profits and stocks.
Over time, the aging data warehouse has developed several problems, including high maintenance costs and poor scalability, making it unsuitable for handling growing data volumes. First of all, Toyota created a data lake within its premises and filled it with data from an old data warehouse. This was not a completely satisfactory solution as it led to data duplication and new overheads; also, users need to wait for a long time to get data for statistics and other purposes.
The company then advances the automotive data storage environment by building a next-generation data pool in the public cloud. The source data was integrated directly into the data pool, and all the legacy logic worked directly on it again to provide business-ready data tags for reporting. This has produced several benefits, including reduced complexity, elimination of data duplication, higher data quality, and a basis for implementing complex analyzes that can yield better insights and improve downstream applications.
Providing Resilience in the Cloud
Who would have thought that supply chains would collapse in the interconnected, interconnected world of the twenty-first century? Yet that is exactly what is happening in this epidemic. In addition, other events, such as repeated wars and climate change disasters, have made it clear that we will have to deal with supply disruptions for many years to come. A key factor in supply chain resilience is real-time information visibility because it allows businesses to identify, avoid, and correct problems in a timely manner. Embracing digital technology, especially the cloud, is the only way to achieve this vision.
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