Supply chain performance is the linchpin for how successfully manufacturers and wholesale distributors can compete in today’s volatile markets. Rising customer expectations, reduced product lifecycles, tenuous margins, demand variability and global competition are among the factors pressuring organizations to rethink supply chain processes and systems.
Supply chains have matured to become faster and more interconnected, but they’ve also grown more complex. More suppliers mean more points of integration across supply chain infrastructures. Multiple layers of complexity render many supply chains vulnerable to disruption, while adding cost and risk.
The Balkanized systems and processes typical at many companies obscure visibility and insight. They conflict with objectives to increase agility, reduce cost and risk, and drive innovation through collaboration internally and with partners. In fact, 63 percent of supply chain leaders surveyed by Aberdeen Group indicated that improving supply chain visibility is a top priority.
To borrow from the retail world, it’s time to think in terms of the omnichain, an integrated, demand-driven environment that makes possible new levels of flexibility and transparency on a global scale. An omnichain extends across all processes and stakeholders, utilizing a unified data set that improves demand sensing and responsiveness while minimizing guesswork.
The Cloud Omnichain
Cloud software is a distinguishing characteristic of the omnichain. As manufacturers and distributors using cloud technology attest, the cloud is delivering quantifiable advantages compared to the disparate data, high costs and rigidity of traditional systems. Market research validates strong momentum for cloud ERP as companies reshape supply chains.
For instance, the analyst firm Mint Jutras found that just 24 percent of manufacturers would consider a traditional on-premise system for a new ERP, while 48 percent would consider software as a service (SaaS). An IDC study found that 69 percent of manufacturers were using, implementing or planning to use cloud software within several years.
“Cloud computing is poised to transform the way supply chain organizations consume and use IT services,” IDC said. GoPro, Anisa International, iAutomation, CMP Corp., Hestra USA, Liberty Bottleworks and others are among the companies achieving objectives of supply chain modernization with cloud technology.
Limited visibility foils efforts to increase supply chain efficiency, assess supplier performance, rationalize spend and optimize inventory. By modernizing around a unified architecture that enables on-demand visibility into real-time data, companies can sense and respond to demand and synchronize operations with suppliers.
In our hyper-speed digital world, fortune favors those that can react swiftly to challenges and opportunities as they emerge. Organizations in the cloud eliminate the substantial time and cost required to launch new ventures with traditional in-house systems.
The cloud allows these organizational leaders to distinguish themselves with greater agility while strengthening their resilience to change.
Reduced Cost and Risk
It’s no longer sufficient to track costs in the aggregate. Leaders are more closely monitoring costs on logistics and fuel, tariffs and contingency expenses to identify savings. Top performers are slashing inventory costs with demand-driven insights through real-time data in the cloud while mitigating risk and strengthening compliance.
The cloud omnichain lets data flow seamlessly across extended networks. Organizations and trading partners can communicate with uniform data and share container, pallet, location, forecasting and scheduling information. The common platform lets manufacturers and distributors capture ideas from partners for innovation in product quality, features and logistics.
Allied Valve has realized bottom-line gains through a cloud supply chain. The Iowa-based distributor of valves, repairs and field service to industrial installations in the Midwest reduced inventory costs by $1 million (30 percent) since adopting cloud ERP. Real-time data access from anywhere has enabled the company to place and fulfill orders faster than competitors, helping fuel double-digit revenue growth. “Cloud ERP has allowed us to just grow,” Allied Valve CIO Jodie Schwirtz says.
By thinking in terms of an omnichain — covering all supply chain processes in a single, unified system — manufacturers and distributors are positioning themselves to replace complexity with fluidity, and educated guesswork with real-time transparency. These ingredients will define success.