Cloud systems can be one more link in your supply chain
Greater visibility seen as a key to smoothing out the process and reducing costs
When your supply chain is humming, materials arrive just in time at the front door and head out right on time through the back door. If only it were always that easy.
Today there is a increased emphasis on supply chain management, and new tools, including cloud-based technology, are changing the way we communicate across that supply chain. Plant Engineering discussed some of these changes, and the strategies behind successful supply chain management, with Bryan Nella of GT Nexus (www.gtnexus.com), a cloud-based business network for global trade and supply chain management.
Plant Engineering: What’s the biggest mistake manufacturers make in supply chain management?
Nella: In today’s global business climate, manufacturers must maintain a delicate balance between sourcing from cost-effective production regions and minimizing excess costs that occur along the supply chain. One major misstep is failing to calculate total landed cost of goods, from production to shipment through delivery.
Another mistake as a manufacturer’s supply chain becomes increasingly complex and increasingly global, is failing to obtain true visibility into supply chain activity, from sourcing to customer delivery. Working with suppliers globally doesn’t have to mean exposing the business to supply chain risk due to lack of visibility. In fact, maintaining it is crucial to smooth operations and must be always-on.
PE: Why is it important both operationally and financially to keep better control of supply chain issues?
Nella: Several reports have been published recently touting the impact of supply chain delays or disasters upon a brand and its stock price. The ability to manage the physical and financial supply chain is crucial today. Having the right tools in place to manage the financial supply chain enables buyers and their suppliers to free up working capital, reduce risk, and increase order fulfillment capacity through order and invoice financing programs.
Automating order and invoice payment enables buyers to take advantage of early payment discounts and suppliers to speed up receivables. In the face of complicated global supply chains with many partners and financial institutions, managing your financial supply chain in the cloud provides visibility into transactions for everyone on the platform.
Operationally, having control over supply chain issues enables manufacturers to achieve the following specific benefits, to name a few:
- Ensure customer order on-time delivery: Gain early visibility into delays of outbound customer orders to ensure on-time and in-full delivery.
- Increase inbound supply visibility: Minimize inventory and expediting through detailed, real-time visibility to inbound inventory.
- Improve landed cost visibility: Automatically collect, assemble, track, and measure global supply chain costs as they occur in real time.
- Reduce transportation spend: Optimize and manage the integrated lifecycle of freight rates and service on a collaborative platform.
PE: How will the emerging cloud solutions in supply chain management help make things better for medium- to large-scale manufacturing operations?
Nella: Generally speaking, manufacturing organizations are managing business not just inside their own companies, but across their global networks of suppliers, logistics providers, financial institutions, and customers. Having a cohesive view via the cloud of the entire supply chain provides increased visibility, agility, and operational efficiency that would otherwise be near impossible to achieve with siloed views of global trade operations.
The technology helps companies navigate from single-silo insular organizations to globally connected agile business networks. Cloud-based networks, where all parties and resources are connected, enable smaller companies to plug in and have access to the same resources and partners used by the world’s largest companies. In this sense, cloud helps level the playing field for users of the network.
PE: In what kinds of operations are such systems most effective?
Nella: Any manufacturing business that operates a global supply network can see real benefits from a cloud supply chain solution. The GT Nexus customer community, for example, is well represented by leaders across the following manufacturing segments:
- High Tech
- Consumer Goods
- Industrial Products
- Life Sciences
Cloud solutions are becoming more prevalent across many parts of the organization. But one area that is being particularly impacted by cloud is supply chain and global trade. Traditional solutions and tools are built to connect people and departments within the four walls of the business. Cloud is not. Cloud is a perfect fit for connecting disparate parties that reside in different regions and time zones.
Just as Facebook and LinkedIn became the online hub for individuals and their contact networks, cloud becomes the central hub that connects hundreds or thousands of businesses and partners in one place. This is very powerful when applied to global trade.