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The cloud, it must be said, is a godsend for supply chain partnerships. Supply chain operations create some of the most challenging but rewarding relationships in business and have served as a crucial technology driver in data exchange since the digital era began. And the advent of the cloud offers an unprecedented boon for companies whose processes are critically dependent upon one another's performance, and the sharing of data in particular.
Migrating supply chain operations into the cloud, then, is a natural step for partners in such relationships. But there are right ways and wrong ways to undertake that transition.
The strategy for cloud migration for any company -- supply chain partner or not -- includes a number of standard questions: How fast can we realistically migrate? Are we moving everything to the cloud or maintaining some processes on premises? How much risk are we taking on in migrating? Are we migrating all at once or gradually?
These standard questions are important, even critical, in crafting an effective migration strategy, but there are other questions -- more subtle, infrequently considered -- that are just as important. Here's one: Can we do this together?
Moving supply chain operations into the cloud has many benefits. It simplifies access to shared data; it creates, and then leverages, shared infrastructure and process; and it offers the opportunity for shared standards in message formatting and data transfer at a lower cost than was previously possible.
But when the decision to migrate a supply chain system is made many strategic challenges emerge:
- Is a cloud system being considered for the entire chain or are individual partners migrating independently?
- If the migration is partner-by-partner, are hybrid solutions being considered? How does this affect operations?
- If the migration is collective, who is in charge?
The answers to these questions affect not only the local cost of the migration, but the governance. A shared cloud system for a complex supply chain is, by far, cheaper and more efficient than local solutions shared between partners, and potentially easier to implement. But the trade-off includes collective governance, which is time-consuming and intricate.
Hybrid solutions, on the local level, make the complexity of sharing partial processes more expensive to individual partners. And when the technology system is shared, the final word on design and implementation are politically complex.
My strategy ... or our strategy?
Migrating to a supply chain system shared with partners is, if possible, the best of all worlds: The system will be arrived at collectively, so the design will benefit all parties. But it's not always doable, for economic and political reasons.
When a solid group partnership can migrate en masse, that's a golden opportunity: It radically reduces costs and simplifies operations, and is a hedge against what competing supply chains can achieve. But it requires political solidarity, uncommon economic flexibility and well-established trust.
More common is the partner-by-partner cloud migration, with each company migrating according to its own needs, resources and schedule. This introduces an assortment of new strategic questions.
Gradual migration or all in?
There are a number of robust, feature-rich cloud-based B2B platforms out there, and many allow for rapid migration from on-premises legacy systems. Almost inevitably, however, the idiosyncrasies of one or more supply chain partners will require customization of some components or processes, adding time, expense and some degree of risk to the migration.
If the entire platform is to be home-grown, the question of sustainability arises. Can a cloud-based solution be well-supported, long-term, and designed with robustness and scalability in mind?
In either case, yet another question arises: Can the cloud system be implemented all at once? Or can risk be better mitigated by migrating more slowly, one process at a time?
A turnkey strategy can potentially be the less expensive route, especially when migrating to a third-party solution. But a gradual migration, while more expensive and time-consuming, can result in a deeper understanding of shared processes, bolstered by comparative metrics gathered once they go into service.
Finally, hybrid solutions -- committing critical shared processes to the cloud, while maintaining more independent processes on premises -- can be deployed with redundancy in mind. This may be the safest and most flexible course of all, reducing risk across the board. The best supply chains in the world are those that don't break, and well-distributed functionality is the key to mitigating disruption. Strategically, that's a move that's both safe and progressive.
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