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Supply chain digital transformation: Look to the cloud

In the past few years, businesses had been dealing with unpredictable trade policies, increasingly complex consumer preferences, shorter-than-ever product lifecycles and rollout times, and various other supply chain issues. To compete – and thrive – in this challenging landscape, many business leaders are taking a closer look at their current supply chain operations, with the urgent goal of making them more resilient, efficient, and cost-effective.



A recent, in-depth report from Oxford Economics revealed – somewhat unsurprisingly – that “business works best when every part of an organisation, including its external partners and customers, is agile and interconnected.” This is especially true of supply chains, as they are comprised of so many interdependent moving parts.  


The traditional linear supply chain is (as the saying goes) only as strong as its weakest link. Traditional supply chains often contain gaps and silos where supply chain managers simply lose sight of their partners, as well as the goods and materials they’re responsible for. But when supply chains are connected – when everyone from the raw goods supplier to the delivery driver are part of the same network – the opacity is removed. Cloud solutions help to innovate processes across every link in the chain, from planning and sourcing to manufacturing, distribution, and logistics. These modern supply chain technologies help to connect all the teams and moving parts across the business, to automate processes and functions, and, ultimately, to help solve many common supply chain issues. For today’s businesses, cloud supply chain solutions help to power a more intelligent, scalable, and resilient supply chain, which drives growth and competitiveness across the company.  

Cloud solutions help to innovate processes across every link in the chain, from planning and sourcing to manufacturing, distribution, and logistics.

Cloud supply chain networks: Connectivity and resilience

Instead of a serial view of the links in a linear supply chain, a digitalised, cloud-based system views the supply chain as a connected network. This “network” view of the supply chain makes it easier for teams to work together more collaboratively and helps to minimise risks the moment they present themselves. The connectivity of a cloud-based system coupled with the power of artificial intelligence (AI) and machine learning means that the more data that goes in and out of the supply chain network, the better the accuracy when it comes to demand forecasting, automating processes, and orchestrating the myriad of moving parts that make up the operation.  


When a cloud-based system gives supply chain managers real-time visibility across the entire network and all its partners, it’s referred to as a supply chain control tower. The data captured from all devices and systems within the network is on a 24/7 cycle. All the incoming and outgoing data must be captured, analysed, and understood – mostly in real time. This is why cloud connectivity is so essential to the functionality of the best modern supply chain solutions.

Why is supply chain visibility so important in today’s economy?

Supply chain visibility is the ability to track products and all their components, from raw materials to their arrival at the customer’s front door. Maintaining visibility within a company’s own operational borders can present a significant challenge. However, when overseas supply, manufacturing, and logistics partners are brought into the mix, it can become very difficult to keep everything in view. To achieve meaningful and accurate supply chain visibility, today’s best businesses use cloud-based supply chain technologies to provide real-time data across all their operations. With the centralised, cross-business visibility that smart supply chains bring, businesses can achieve greater efficiency and responsiveness while better mitigating supply chain issues.


Process visibility can help solve the most common supply chain issues.


Inflation issues and supply chain risk

When prices go up, it hits everyone across your supply chain, from your raw materials providers to your customers. Businesses must look across their operations – and especially their supply chains – to find ways to optimise and streamline. Companies that survive (and thrive) during times of economic upheaval do so by being strategic, not reactive. Building resilience into company culture is an essential tactic for mitigating inflation. With smart cloud-connected supply chain solutions, companies can make their manufacturing processes more streamlined, centralise control of their logistics networks, and tighten inventory margins. And integrating customer feedback and real-time data into your business and planning systems can ensure that you are responsive and agile when dealing with inflation-related customer issues.

Agile supply chains for better planning, forecasting, and inventory management

Supply chain planning is a forward-looking process that helps to synchronise and optimise all the links across the supply chain – and the business functions that support them. This includes sales and operations planning (S&OP) as well as managing inventory along with supply and demand. It has always been a tough challenge for supply chain managers to strike an accurate (and profitable) inventory balance. Cloud-based supply chain solutions with AI and machine learning at their core help businesses add accuracy and speed to their demand sensing and demand forecasting strategies. Complex data sets can be analysed quickly and sudden risks or trends can be captured and acted on in real time. 

Supply chain transformation: Leveraging the power of analytics

Advanced supply chain analytics helps businesses get a more accurate understanding of both known and unknown risks. Using analytics, supply chain managers gain the ability to gather and process data with speed and flexibility. These data sets can come from customer behaviours and feedback, news and market trends, as well as real-time input from Internet of Things (IoT) devices and assets across the breadth of the supply chain. 


Additionally, many businesses do not have a clear idea of what is going on in the lower tiers of their supply chain, particularly when they are geographically dispersed or remote. However, it is within these tiers that many of the worst potential risks and supply chain disruptions may lay hidden. Supply chain analytics can process data curated from a wide range of sources to help businesses choose and verify the best suppliers and partners in the first place and to warn if risks are imminent.

Supply chain innovation and on-demand logistics solutions

The Amazon Effect refers to the increasing demand for both B2C and B2B customers to receive speedy or next-day delivery. A 2021 research article in Harvard Business Review reminds us that “E-commerce success depends on the last mile. Today’s consumers aren’t keen on excuses, especially when it comes to accessibility, affordability, and convenience.”


Modern businesses are learning that no matter how terrific their products and services may be, their ability to compete very much hinges on their logistics performance. On-demand logistics solutions mean that companies can deploy freight and delivery options where and when they are needed, giving businesses access to a robust and distributed shipping network without having to pay for the upkeep of a large fleet sitting idle when not needed. 

See how Uber and SAP are collaborating to deliver on-demand logistics. 

Industrial IoT (IIoT) networks and supply chain transformation

Cloud-based supply chain solutions underpin IIoT networks, allowing companies to communicate in real time with all the mechanical assets across their operations. When augmented with smart technologies like machine learning, these software solutions can not only gather and manage vast amounts of complex IoT data, they can also analyse and process it to deliver powerful insights and recommendations.


For example, a McKinsey report shows that when IoT networks deliver predictive maintenance intel, it typically reduces machine downtime as much as 50 percent and increases machine life by up to 40 percent. Additionally, AI and machine learning tools can use IoT data to help to automate more efficient and resilient processes and workflows – even learning from experience to be increasingly accurate and predictive over time.

With supply chain optimisation, the benefits are in the cloud

A recent article in Forbes states that “Companies don’t have crystal balls. They do, however, have the next best thing: data. By digitising their factories and supply chains in ways that facilitate data collection and analysis, enterprises can mine past and present operations for intelligence that helps them predict future business outcomes.” And the beauty of intelligent cloud-based solutions is that from the moment you start using them, they begin to capture and deliver the very data that businesses need to attach ROI and quantifiable benefit to their software and operations investments.


Here are some of the main cloud-based supply chain benefits:

  • Scalability: Supply chain cloud solutions allow businesses to grow when and how they need to. This is especially valuable for businesses that are in the early stages of digitally transforming their business and supply chain planning systems.
  • Immediacy: When systems and devices are connected in the cloud, they begin sharing data and information immediately. Within a short period of time – often just weeks – businesses can amass sufficient amounts of operational data to inform powerful and transformative business decisions.
  • Efficiency: Supply chain cloud solutions help businesses avoid waste and inefficient inventory management. The use of demand sensing and demand forecasting tools means that inventory levels and whereabouts are accurate in real time – across the entire supply chain and business.
  • Accessibility: Supply chain managers no longer need to be on site to access operational information. Cloud-based solutions consolidate systems and mean that everyone from drivers to account managers can be connected to each other across locations, devices, and time zones. 
  • Agility: Supply chain cloud systems that are powered by AI technologies, allow supply chain managers to use what-if scenarios and predictive analytics to deliver powerful insights and recommendations. Unexpected disruptions or opportunities are not only better predicted, contingency plans are already in place and can be more quickly implemented across the entire operation.
  • Loyalty: In a post-pandemic world, we’re seeing consumers more willing to look at generic brands and even B2B customers exhibiting greater flexibility in their brand preferences. They are prioritizing convenience, price, and customer experience over longstanding brand loyalties. Cloud-based supply chain solutions allow businesses to spot and respond quickly to customer trends and preferences and deliver personalised and responsive customer experiences that help strengthen loyalty in a rapidly shifting marketplace.  

Supply chain transformation: What are the next steps for your business?

Digital transformation – like all business initiatives – begins with good communication, clearly shared and understood KPIs, excellent change management protocols, and well-planned roadmaps. A supply chain maturity assessment can prepare you for your transformation journey by determining your current situation and helping set realistic goals and an actionable plan. 


Explore SAP Integrated Business Planning

Cloud-based supply chain solutions boost resiliency through integrated planning.

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