The Cloud Solves Those Lingering Supply Chain Problems

When consumes ship FedEx packages they get a reliable, impressive IT experience as part of that $10 service. Yet many of the world's biggest corporations still only dream of having FedEx-like technology to support their global supply chain operations, but cloud-based services promise to change that.

This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter's approach.

When consumes ship FedEx packages they get a reliable, impressive IT experience as part of that $10 service. Yet many of the world's biggest corporations still only dream of having FedEx-like technology to support their global supply chain operations, but cloud-based services promise to change that.

Despite massive investments in infrastructure, software and networks to automate the supply chain, there have only been silos of success. The majority of companies have failed to produce a system capable of providing a real-time monitoring and control system that stretches across their supply chains, incorporating every partner in their network.

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In today's globally outsourced business environment, most of the data that companies need to run their supply chains resides with partners, and typically in the systems of those partners. These partners are often very large companies with their own proprietary technology.

Companies struggle to get a get a unified picture of their supply chains because the information systems they have been buying for the past several decades were designed to operate within a single company, not across a network of companies.

Cloud is changing everything. Virtually every traditional software company is racing to deliver cloud versions of their on-premise software to meet exploding customer demand for better IT economics, faster path to value, without the headaches and risk that have come with traditional software deployments. Cloud is no longer fringe. It's proven and it's big.

When it comes to supply chain, however, where the focus is on intercompany coordination and collaboration among hundreds of companies on a global scale, cloud becomes more than just very good IT economics. It becomes the means by which entirely new information sharing models become possible.

In the same way that social networks like LinkedIn or Facebook inverted the traditional models of personal contact systems by giving each person in a network just one profile page to which all friends could point (and thus allow everyone in the network to be updated immediately the moment that single page was changed), next-generation collaboration platforms are designed to support trading partner networks that must operate on a daily basis around "single page" instances of common supply chain objects like purchase orders, or shipments, or SKUs, or milestone events, or commodity codes and city names. Imagine the power of an information model that allows an object to be updated once, in one place, for everyone who cares about that object to get the full news immediately.

In some circles they call that a Single Version of Supply Chain Truth. A platform that makes that truth available to an entire trading community in an economic and scalable way is transformative.

A key driver in supply chain management is the ability to see across partners, across the value chains. Supply chain practitioners call this visibility.

While supply chain visibility remains a top operational priority for corporate leadership, the enterprise business software that is installed at most companies comes up short because the data that these software applications must have to be useful is far from complete.

EDI service providers have been tapped to supply the B2B infrastructure to connect companies with their partners but they have not delivered on data quality. EDI VANs enable secure and robust electronic file exchange between partners, but they have left the heavy lifting of rationalizing, linking and creating a complete supply chain picture to each and every one of the many stakeholders in a modern commerce network.

In other words, the prevailing technology for B2B integration has not gone far enough in helping companies rationalize and transform this incredibly complex, dynamic and highly variable data into useful information.

They have also not taken advantage of the enormous economic and scaling benefits that newer cloud-based deployment models provide across entire trade communities.

Cloud supply chain platforms invert the traditional EDI HUB equation by moving the data processing and linking logic from the partners at the ends of the spokes to the center hub. In this model, the entire value chain community leverages a common core technology utility so all partners link to a single version of supply chain truth across the entire network.

The power of such a model is further increased when the technology "smarts" at the hub relies in part on partner specific content and rules that the partner community itself develops and maintains for the good of all.

Not unlike crowd-sourcing models (think of Wikipedia or Jigsaw, for example) that engage the community to improve the common service, Cloud platforms for B2B information exchange engage industry participants to actively improve their own connection and content so that data quality levels increase for any receiver as a matter of course, with or without you. The community is working for you.

Remember the old adage about how the companies of the future will compete? They'll not compete company to company but value chain to value chain. They'll compete as networks. Not silos.

The future has arrived. Cloud Supply Chain is here.

GT Nexus offers a cloud-based platform that the world's biggest companies use to drive efficiency and agility across the global supply chain. More than 15,000 organizations from all areas of the value chain are on GT Nexus today. For information, visit

This story, "The Cloud Solves Those Lingering Supply Chain Problems" was originally published by Network World.

Copyright © 2011 IDG Communications, Inc.

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