Last year, Mexican manufacturers surpassed the Chinese to become the US' top trading partner. Manufacturing footprints and supplier networks, which were previously curated to leverage differing production costs, are now moving closer to their target markets. However, depending on the shape of pandemic recovery, adaptability will be a crucial element of supply chains that will survive in the time to come. According to a BCG report, supply chain complexity leads to loss of value. Simultaneously, cloud and data-based solutions have helped manufacturers bring their business continuity plans into action, carry out large scale transformations, and bring agility and responsiveness to their supply chains. Moving forward, the cloud will be the key to masterfully managing this complexity and turning supply chains into entire value chains for manufacturers. Let's deep dive into eleven such compelling reasons behind this much-awaited massive shift.
1. Smarter responses to the volatile marketplace
Manufacturers now operate in a marketplace where supply and demand no longer move in identifiable patterns. Add to this, the increasing need for customization across capital-intensive production environments, and a high-precision response to production planning and inventory management becomes critical for staying lean and avoiding loss. Moreover, capturing fluctuations in demand effectively and turning them into growth waves for the enterprise's bottom line will be a crucial business continuity motive for most. Migrating their supply chain management operations to a data-based cloud platform can help enterprises tackle these challenges by leveraging big-data solutions that capture every movement within and beyond the enterprise and turning them into high-level insights for cutting-edge decisioning.
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2. The growing need for simplicity and convenience
In an increasingly regionalizing production environment, enterprises with a global presence must mask complexity in their operations and manage it effectively to minimize operational hassles. Migrating the supply chain management function to the cloud can help standardize processes, enforce an intuitive and collaboration-oriented end-user experience, enable anywhere, anytime, any-device control, and embed end-to-end process ownership at scale. This also opens up the possibility of outsourcing supply chain management, which concurrently frees up resources for innovation and scaling up fast. Moreover, building centralized control can help enterprises respond to critical situations and disruptions at the speed of information.
3. Keeping the costs down
Cloud-based solutions bring a significant advantage over traditional, on-premise supply chain focused ERPs and systems of engagement in the form of minimal upfront costs, zero infrastructure investment, and operational variability expenditures - which form the foundation of a lean operating model. With easy upgradeability and subscription-based pricing, cloud applications can help enterprises shift from a CapEx model to an OpEx model, thereby simplifying cost-value relations and lifting pressure from the bottom line. Cloud-based supply chain solutions also reduce the cost of staying up-to-date with the technical developments of the ecosystem by releasing new capabilities. Manufacturing enterprises have shown strong confidence in driving cost reductions and bottom-line improvements at the back of cloud adoption.
4. Driving business impact at scale
Cloud solutions can help align strategy and execution across the distributed enterprise. By seamlessly integrating applications and data from all geographically dispersed sources to a centralized cloud platform, senior management can strategize and create cross-organizational and cross-functional impact and enforce standardization across processes, systems, regions, and people. McKinsey reports that a global electronics manufacturer managed to reduce maintenance costs by 90% with service-oriented cloud architecture, for example.
Cloud-based supply chains support varying levels of digital maturity and scales of operations. By migrating their operations to the cloud, supply chain leaders can efficiently and seamlessly scale up and down, depending on the economic conditions and market trends. This agility will be crucial to surviving disruptions like the COVID pandemic. Many suppliers have gone extinct due to their inability to thrive in the changing market dynamics and fluctuating scales of demand.