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Both promise, issues abound when supply chain partners share the cloud

Many businesses are migrating business processes to the cloud, but what does that mean for their supply chain partners? Here's what you need to know.

Companies of all sizes are moving their enterprise systems into the cloud, and with good reason: Cloud-based business processes are easier to access, cheaper to maintain and often more efficient. Benefits aside, however, cloud migration is typically a challenging undertaking, even for in-house, standalone business processes. When those processes are shared with other companies, as they are with supply chain partners, the challenges can be greatly magnified.

Migrating business processes in-house is tricky enough. Moving all processes into the cloud at the same time necessitates an evaluation on time, cost and return on investment (ROI). This evaluation must establish priority, potential for improved performance and a viable timetable, while also identifying existing process weaknesses, incompatibility issues and potential process bottlenecks.  When those processes are supply chain-specific -- supporting manufacturing, logistics, billing and payment systems and more -- then the complexity of cloud migration can increase by an order of magnitude.

But while that increased complexity is daunting, cooperative cloud deployments in the supply chain can also increase the benefits by an order of magnitude. It then becomes a matter of understanding the potential pitfalls and advance planning to deal with them.

Cloud sharing benefits abound

What benefits are found in deploying shared cloud resources between supply chain partners? Depending on the architecture of the deployment, the list is long, for example:

  • Easier mutual access to critical logistics data;
  • Improved timeliness and transparency;
  • Centralized analytics sources;
  • Shared messaging channels between partners;
  • Shared security and administration models; and
  • Shared metadata taxonomy.
Stronger companies in a supply chain partnership might consider donating resources or covering costs for smaller ones.

Not all of these benefits can be realized in every deployment. Hybrid cloud deployments, for instance, with different partners in different clouds, may hinder rather than help the ease of data transport, depending on the platform. And it can make centralization of shared logical data a power struggle.

Shared security and administration models can be implemented physically when partners share data in the same cloud, but otherwise, can only be agreed-upon standards. Common messaging channels across different clouds are possible, but these can be as expensive as on-premises implementations.

Some benefits, on the other hand, can be realized regardless of architecture. Increased transparency is a universal benefit for partners, no matter how it's accomplished. Moreover, a shared metadata taxonomy -- metadata used by all partners for the same in-house processes -- can be accomplished and made useful, regardless of whatever cloud architectures are used.

Options for deployment

What are those differing architectures, and how do they expand or limit a supply chain's opportunities? Choosing the right architecture is as much a political challenge as a time, cost or ROI question, so it's important to open up discussion of options earlier rather than later. Here are some of the obvious options from which companies could choose.

Shared central deployment in which most or all supply chain partners cooperatively develop a single cloud resource for sharing data between the partners and share in the design process and cost.

Coordinated cloud deployment in which all partners agree to migrate shared processes into the cloud according to a long-term plan agreed upon by all. Each partner pays its own bills, but only proceeds with specific migrations in synchronization with the efforts of other partners.

Shared process governance in which all partners migrate processes into the cloud according to their own needs and schedule, expecting others to adapt as necessary. When a migration includes shared supply chain processes, the partners maintain agreed-upon standards in messaging, formatting, security and so on.

Supportive independent deployment in which participants agree to migrate data of interest to the cloud simply for ease of access as they can, letting interested partners know the data is available, providing documentation, and offering support in getting connected.

A change in perspective

Consideration of ROI for cloud migration within the enterprise is pretty straightforward: Does migration of a process save money, improve performance, increase accessibility and so on? Put another way, the CIO is asking, "How does moving this process to the cloud help my company?"

In contrast, when a process is shared with one or more partner companies, or produces data upon which a partner's process depends, evaluating a cloud migration must include the question, "Does moving to the cloud help my partner?"

Example: A supplier's warehousing logistics -- capacity, geolocation, manpower -- can have as great an impact on product availability as inventory itself. That supplier has no strong impetus to move such in-house data out to the cloud; but it's potentially of great importance to a buying partner who would benefit from knowing far in advance that a particular product will be limited in availability, near term, because there isn't any place to store it.

And there's an additional way to be that kind of partner. Stronger companies in a supply chain partnership might consider donating resources or covering costs for smaller ones, as shared processes go to the cloud, to accelerate deployment and ease the burden of transition. This is a lesson learned from Wal-Mart, which foolishly tried to strong-arm hundreds of smaller suppliers into adoption of item-level RFID, one decade ago -- a move that brought down international ill will upon the pushy megaretailer.

Vendor assistance

Finally, it's important to note that no supply chain need take these steps alone. This kind of migration is now commonplace enough that there are vendors specializing in hybrid cloud and multicloud migration. Skytap, for instance, can build a custom private cloud that integrates easily with existing ones; CloudSwitch can migrate on-premises VMs to selected commercial clouds. Making use of such a vendor can bring objectivity and order into a shared migration process.

Next Steps

Bleak thinking for better supply chain management

Guide to supply chain management

Traceability in the supply chain a must

This was last published in October 2016

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