By Srinivas Kamadi, Senior Vice President and Global Head of Enterprise Application Integration and Services, Infosys
Traditionally supply chains were optimized for low costs, high profits and efficiency but lacked the resilience to deal with disruptions. The two years of pandemic witnessed constant supply chain crises. As of March 2021, around $4 trillion in revenues were lost due to supply chain issues.
During the pandemic, for the first time in history, supply chains had problems both on the demand and the supply side.
On the demand side, the lever to forecasting and planning was broken due to lack of visibility into end-to-end inventory, sourcing issues, and fluctuating demands.
On the supply side, inventory liquidation, shortage of storage spaces, movement restrictions and unstable carrier availability made logistics planning difficult. Organizations had to take a quantum leap in flexibility and agility via automation to respond to customers ordering from anywhere and seeking delivery anywhere.
The defining era of digital supply chains
Even before the pandemic, there was a shift from a linear model to a circular or connected supply chain, due to technological advancements. The pandemic accelerated the trend further. No one was visiting physical stores. The forecasts based on historical patterns were no longer relevant.
Hence, digital supply chains came into existence to enable companies to optimize their supply chains and operations to remain competitive and resilient.
A digital supply chain warrants flexible, agile, and networked systems which are connected to operate in near real-time with data-driven processes and decisions. Applications in cloud provide the easiest way to achieve the results without investing a lot of capital on infrastructure.
Cloud Applications help in decoupling large complex processes of supply chains and connect them across the traditional boundaries of individual enterprises thus revolutionizing supply chain management, helping stakeholders scale operations from small businesses to complex enterprise system landscapes at optimal costs. Augmented with concepts of APIs and microservices, they can create loosely coupled environments and have faster go-to-market timeframes. They provide need-based scalability and build differentiated functionalities for every enterprise.
Demystifying the cloud applications
Cloud applications (apps) are pieces of software that users access via the internet where the processing can happen on the remote server-side or on the client’s side. Cloud app servers are located in data centers operated by third-party cloud services infrastructure providers such as AWS. There can also be microservices for customization, that are a fraction of these larger services.
Cloud apps can be hyper responsive, have instant scalability, adopt simplified operations, enable improved data sharing and security, and extensively leverage APIs. They deliver outcomes that include reduced operational costs, improved efficiencies, and enhanced margins. And they do so with the added resilience. It’s no wonder cloud apps are transforming supply chains.
Cloud apps – The building blocks of digital supply chains
There are countless moving parts of an enterprise that need to be in harmony and communicate relentlessly with each other. Forecasting, planning, manufacturing, distribution, warehousing, logistics, finances, post-sales services, the list is exhaustive. The supply chains are the backbones of enterprises that connect all these functions. The backbone needs to be resilient, nimble, and flexible. To ensure that, enterprises must integrate data, processes, and experiences across cloud apps through cloud-first integrations and automation.
Key impact of using cloud apps in supply chain management
Demand planning: No longer can demand planning be based on just historical data or internal views of Sales & Operational Planning (S&OP) or Integrated Business Planning (IBP’s). They need to take cognizance of external influencing factors. Cloud Applications can help unleash AI/ML capabilities through integration. This approach delivers the desired efficiencies in the supply chains.
Online vs instore: One of the biggest changes in the post-pandemic times is the emergence and growing popularity of virtual stores. Cloud Applications built on AR/VR concepts have the inherent capability to capture, convert, and facilitate the fulfillment of omnichannel demand.
Visibility and traceability: Inventory visibility will gain importance in warehouses, in-transit, and distribution centers and in stores. Alternate storage facilities will be created. Cloud apps can provide at-a-glance overview of the entire supply chain contributing to optimization of inventory management costs and calculation of promised dates and delivery timelines.
Supplier risk strategies: Alternative sources of supply, local suppliers, visibility into supplier’s inventories will become more prominent. Cloud Applications can integrate and provide visibility to multiple enterprises.
Logistics networks and planning: Organizations will invest in logistics networks and planning to mitigate supply chain risks. They will create digital supply chains that are flexible, agile, real-time, connected, accurate and data-driven, and will precede the physical movement of goods.
Multi-device support: With cloud apps, there is no need to create or install a trust structure every time a customer seeks access, which was mandatory with on-premise infrastructures. This helps an organization assist with seamless exchange of data leading to cost optimization and process automation.
Sustainability: High-quality forecasting and big data analytics can optimize processes to reduce resource wastage and be more sustainable.
Navigating the next of the supply chains
In the Industry 4.0 era, cloud apps will enable machines to send out data in real-time and have systems that can crunch that data and derive actionable insights. From an organization’s perspective, these advantages may help its supply chain tide over any future disruptions with ease.