People talk about the cloud as if it had the power to change the world. That may be a lofty goal, but we have apparently reached a point where it could be changing the electronics supply chain, if not on a wide scale, then at least on a company-by-company basis. A collaboration between Lenovo Group Ltd. (Hong Kong: 992) and the supply chain solutions provider E2open Inc. offer an example.
Executives from the two companies spoke a couple of weeks ago at Gartner's Supply Chain Executive Conference. Lenovo talked about how it is using cloud-based real-time visibility and communication tools in its global procurement network, and E2open talked about how it is implementing real-time supplier collaboration and integration. You can read a fuller version of their story in this whitepaper (registration required).
When Lenovo acquired IBM's personal computing division in 2005, the Chinese company didn't have its own IT infrastructure. The only option it had for supply chain management was a set of rigid legacy systems that lacked scalability, and the inherent limitations of these antiquated, manually controlled platforms made operation integration challenging.
According to the whitepaper, Lenovo saw the need to build a world-class global supply chain, and it identified the following key objectives:
- Leverage cloud-based systems to reduce operating costs, improve IT flexibility, and deliver a superior customer experience.
- Reduce the cost and time to bring new trading partners on board.
- Enable a real-time, consolidated view of processes and operations -- a "single version of the truth" for Lenovo and its partners.
- Eliminate the need for manual intervention.
- Enable collaborative execution of key supply chain processes, including order-to-cash, procure-to-pay, and inventory management.
- Converge physical and digital networks to increase savings and improve service.
With the help of E2open, Lenovo migrated to a cloud solution that allowed information sharing, process management, and collaborative exception management. Lenovo says the tool has delivered the following results:
- Reduced on-boarding time by 85 percent
- Reduced IT costs by 53 percent
- Reduced IT management costs associated with supplier integration by 70 percent
- Faster supplier adoption due to lower costs and ease of doing business, and
- Global availability with reliable performance and rapid change management.
Lenovo and E2open also focused on centralized procurement and software license management with the idea of "increasing control and transparency of purchasing costs associated with strategic components, while continuing to reap the efficiency and risk mitigation benefits of outsourcing."
I'm of two minds on this. On one hand, we've heard this all before. Over the years, any number of supply chain solutions have promised stellar results. At the same time, the cloud may finally be the way to get results without the constraints of expensive technology and software.
What do you think? Will the cloud change supply chain management, or is it just hype?