The Cloud. If you haven't heard about this yet, you've probably been walking around in a fog.
The ubiquitous buzzword is even taking on new lives and branching out to other areas. To date, we have cloud computing, cloud storage, cloud engineering, and Intercloud, the interconnected global cloud of clouds. In the last week, we've added Apple's iCloud (an announcement that pulled CEO Steve Jobs out of medical leave) and HP's CloudSystem, and talk of cloud-connected gaming will likely come up at the video game industry's E3 conference.
I bet pretty soon the supply chain cloud will be on the tips of all our tongues, so let's get the conversation started.
On many levels, a supply chain cloud makes sense. For starters, supply chain visibility, agility, and flexibility have been the elusive trio taunting supply chain professionals for decades. Lean practices, traditional ERP systems, and easier-to-implement software as a service (SaaS), among other things, have achieved a good number of improvements. But what if they've taken companies as far as they can go? Maybe the reason companies can't glean more from existing systems is that something is still missing. Perhaps what's missing is a hyper-robust interconnectivity layer that sits on top of systems and better routes internal and external supply and demand exchanges.
I'm not sure if the cloud can do all that, but the questions are worth considering. As Gartner VP Jim Shepherd noted after a recent NetSuite user conference, more and more clients are asking about cloud-based ERP. “They aren't necessarily ready to adopt it — some aren't even looking for a new ERP system — but everyone wants to know if it's ready for prime time,” he said.
He continued, “Nearly everyone was convinced that ERP in the cloud is much less expensive than on-premises ERP, but they tended to be much more focused on the speed and agility advantages. Everyone seemed to have stories about how quickly they had gone live with parts of the suite, or how they responded to some business change in days instead of months.”
That brings me to the second advantage of a supply chain cloud: It's cheaper than classic supply chain tools that require large capital investments and extensive implementation planning and execution. As the Financial Times points out, cost-saving is one of the most cited benefits of moving to a cloud environment.
Lastly, if one good thing has come in the aftermath of Japan's tragic earthquake and tsunami, it could be that companies are reassessing supply chain practices and looking for alternative ways of protecting themselves from these kinds of risks. Perhaps, in certain supply chain activities, the cloud would provide the element of speed that's often required to effectively collaborate within the ecosystem. Of course, I realize that without electricity or Internet service, any communication will be challenging. But, the cloud does seem at least to provide the framework through which multiple communication platforms could be linked to a variety of devices the world over.
Unfortunately, there is a potentially big hole in the cloud's otherwise sound argument: Is the cloud safe? If a big OEM like Sony is still reeling from a major online data-hacking incident in April that exposed personal information of more than 100 million of its video game users, the issue of security is an absolutely legitimate one.
The sad truth, though, is that I have come across very little convincing data for that piece of the puzzle. There's acknowledgement that companies must protect their IP, data, products, customers, and that good planning may mitigate some of the security risks. But, without a plausible solution, the other benefits may come to naught.
So, when and how will the cloud affect the way the electronics industry does business? What pros and cons are on your list?