As business conditions continue to rapidly change, a lot of organizations are beginning to discover that their supply chains are too rigid to keep pace. Not too long ago, conventional wisdom said to outsource all manufacturing to Asia because the cost of labor was so comparatively cheap. But as the cost of oil continues to rise, many companies are thinking about moving manufacturing back closer to the markets where the goods are actually consumed.
In reality, there is never going to be one supply chain absolute. Greg Johnsen, executive vice president and co-founder of GT Nexus, a provider of a multi-tenant supply chain application service in the cloud, says that as part of any supply chain strategy, organizations need to be able to segment their operations into components that can dynamically adjust to rapidly changing business conditions. That means not just natural disasters, but also changes to underlying economics and even political events.
None of that can happen, says Johnsen, unless the supply chain is being managed in the cloud. It's only when the entire supply chain has real-time visibility into changing conditions that decisions can be made that will make a difference between turning a profit and losing millions of dollars, says Johnsen. That won't happen when suppliers are trying to discern what is in their best interest by navigating hundreds of portals tied into legacy ERP systems running on their customers' premises. Forcing suppliers to make those levels of IT integration commitments to each customer is virtually impossible, never mind actually discovering anything that would come close to being actionable business intelligence.
A cloud-based approach, says Johnsen, allows organizations to identify which suppliers are most critical to delivering their most valuable goods and services, otherwise known as supply chain segmentation. This creates the equivalent of an information bus that not only ads value in a crisis, but also serves to optimize profitability by allowing companies to shift suppliers and even entire bases of operation more easily, says Johnsen.
Johnsen acknowledges that there are a lot of organizations that worry about security when it comes to anything related to cloud computing and their supply chain. But Johnsen argues that cloud platforms such as GT Nexus are more secure, and the reality of a modern supply chain is that it extends well beyond the four walls of any one enterprise.
Business conditions change almost every day. The level of agility that organizations expect from their IT organizations is escalating with each passing day. When you think about supply chains, the conversation may then be about what the organization actually needs to do in terms of IT to actually be competitive.