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Supply Chain in the Cloud

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 {complink 9284|Lenovo Group Ltd.} and the supply chain solutions provider {complink 12942|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?

3 comments on “Supply Chain in the Cloud

  1. Cryptoman
    June 13, 2012

    In the case of Lenovo, using the Cloud makes a lot of sense since they did not have a proper enterprise network. I can see the benefit they have gained in terms of reduced costs and increased efficiency in their business. I am not sure if the success Lenovo has achieved can be entirely attributed to the Cloud. They have simply used the Cloud to put their network into shape. That's all. If they already had a proper enterprise network that was up to scratch, they could still be successful without the Cloud.

    In terms of automation and thereby speeding up response is a benefit that the Cloud offers. However, human intervention cannot be alleviated just because a company uses the Cloud.

    I sometimes get the impression that the Cloud is used as a buzz word by companies to convince people (who do not know the Cloud but have been bombarded with the term) that they provide a fantastic service because of the Cloud. This is obviously not true. Most claims about the Cloud go no further than marketing campaigns.

  2. prabhakar_deosthali
    June 14, 2012

    In my opinion Cloud is the best option for the companies who want flexibility in their IT investments and scalability in the usage of IT services by using the subscription model that these cloud services offer. and  doing away with the fear of obsolescence of the IT systems.

    Cloud is created by somebody, maintained by somebody, upgraded by somebody and when you use it you get the state of art services at a fraction of the otherwise required capital cost.

     

    Supply chain being a heterogeneous network of  manufacturers, distributors, retailers and buyers , a global cloud service is an ideal platform for it.

  3. t.alex
    June 16, 2012

    With cloud services, supply chain can main tain and close the loop faster as data are all updated in real-time. However, I can see one of the key challenges for this to work is to have all the systems to interoperate seamlessly. 'Cloud' seems to be a common/shared infrastructure but in reality, one cloud needs to talk to another cloud.

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