How the Cloud Accelerates Change in the Supply Chain

The consumer sits on her sofa, tablet in hand, shopping for a friend’s perfect birthday gift. After finding a website that creates customized t-shirts, she spends a few minutes crafting her message and, with a few taps, sends the order. 

But will it arrive in time for her friend’s birthday? The site promises a delivery within five days. The customer will receive emails notifying her of order completion and shipping status.

Ten years ago, this scenario was hard to imagine. Now it’s the norm. Customers expect the products they order online to be delivered to their doorstep – in perfect condition – within days. You have to wonder: How is manufacturing, distribution and the entire supply chain adapting to these expectations? What’s the future for supply chain management, and how is cloud communications accelerating these changes?

The cloud in product design

When GE Appliances wanted to improve its design process, it opened lines of communication directly to its customers. GE’s FirstBuild website enables consumers to submit ideas and comment on products in development. They can even work alongside GE staff in the FirstBuild microfactory in Louisville, Ky. Products are developed, designed and manufactured all in the same location.

This trend of collaborating directly with customers is gaining speed. IDC predicts that by 2019, 50 percent of manufacturers will involve consumers in the design process using virtual reality, product virtualization and other cloud-based tools. It anticipates product success rates improving up to 25 percent as a result.

At the same time, a Gartner survey reports that a lack of visibility across the supply chain and difficulty with cross-functional collaboration are two challenges that remain to be solved. To overcome them, many companies are looking at “digital twins,” virtual versions of an actual product, system or facility that incorporates real information like the internet of things (IoT) or simulation data into the design process. According to Gartner, nearly 50 percent of the organizations implementing IoT reported either using digital twins or planning to use them in 2018. As a result, their supply chain stakeholders will use cloud communications to “see” the product, provide input and troubleshoot, increasing product success and reducing long-term costs.

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Data, data and more data

Today’s businesses are awash in data. This can be good – or frustrating. Many organizations struggle with the amount of data they have to process quickly and effectively. The sources of data are many: IoT devices, inventory systems, customer feedback, logistics and weather conditions, to name just a few.
Industry clouds and cloud-based commerce networks help supply chain partners share and analyze data pertinent to their vertical, avoiding supply disruptions and improving the overall performance of all participants. Fundamental to this process is the use of open and flexible cloud architectures, which allows data to flow from both inside and outside the organization.

“The cloud provides the mechanism for not only data sharing, analysis, and collaboration or joint ventures but also integration with even more data sources, such as environmental conditions (weather or traffic) or customer demand signals,” explains IDC’s report. The research firm predicts that by 2020, three-fourths of all manufacturers will participate in industry clouds, while 80 percent of supply chain interactions will occur across cloud-based commerce networks.

Automation has a role to play in all of this, too. IoT devices can communicate automatically, processing data and responding in pre-determined ways without human intervention. This sequence of events, called edge analytics, uses cloud communications to execute actions, such as calling police or fire departments when a sensor detects conditions that warrant an immediate, local response. 

Experts agree that cloud communications has revolutionized supply chain management and will continue to do so. Manufacturers, suppliers, designers and distributors can now collaborate and share data that wasn’t accessible just a few years ago. The result? Products that meet consumers’ demands and, ultimately, generate profit all along the supply chain.

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