IMPRESSIONS from a Cross-section

Traditional software and technology resides within the four walls of the enterprise. Most companies today still rely on emails, spreadsheets, phone calls and portals to communicate with trading partners in the supply chain. Similar to the challenges many companies faced internally years ago prior to Enterprise Resource Planning (ERP) solutions, companies today are struggling with those same challenges in the supply chain: 

- lack of a single version of data

- errors and inaccuracies due to manual processes

- inability to collaborate effectively

- lack of visibility into what is really occurring 

  

Today, more than 80 percent of supply chain data resides outside of the buyer’s four walls. That means information is scattered amongst the various trading partners that exist: manufacturers, factories, raw materials providers, logistics providers, financial institutions, agents. This can be a major challenge to all parties involved.

 

The cloud model breaks through many of the barriers that previously existed between trading partners. Unlike traditional ERP and other on-premise tools that deliver a hard-wired supply chain, cloud brings flexibility by connecting all of the supply chain nodes to a single instance of data. This allows for a single version of information to be viewable by all parties involved. If one node in the network makes an update, all other parties see it instantly. In this sense, the model is similar to Facebook or LinkedIn. Cloud allows all parties to have visibility to what’s occurring throughout the production lifecycle. The ability to quickly add new partners with ease is a major benefit as well, as more companies shift production to new sourcing locales such as South Asia. 

 

In fashion, where seasonal goods are being provided within a short time window, retailers and brands are seeking ways to hold off on making decisions until as late in the lifecycle as possible. And once they make final decisions on the cuts, colors and sizes to ship, they are asking factories to do more. “Doing more at the source” is a growing trend in clothing. It requires factories to mark goods for store, ship direct to the store or the consumer, and deliver packing and shipment building capabilities to promote cross docking and other DC bypass programs. Some brands are also relying on factories overseas to power the customized goods. Customization at the local factory in Asia and then direct shipping to the consumer shaves significant time and cost off of the production lifecycle. Factories that can deliver these services have an advantage today. 

 

Cloud based commerce networks will continue to change the way global supply chains connect and transact. For instance, right now there’s a tightening of liquidity in Asia that’s impacting many exporters there. As they search for alternative capital sources, some are at an advantage due to their connection into cloud based networks. For example, companies that are connected to the GT Nexus network have access to financial services offered by more than 25 financial institutions. This eliminates capital related risk and often can lower capital costs for Chinese exporters. 

 

Plugging into the network provides many other opportunities similar to the financial services example. For small factories in emerging regions, connecting to the network means you’re instantly plugged into the global supply chain. You’re on the same platform used by the world’s biggest brands and retailers, with access to the same resources. Cloud will continue to drive change in the global supply chain, removing barriers and friction that previously existed between trading partners.