In last month's IDC Manufacturing Insights newsletter, I discussed the notion of cadence mis-matches in the supply chain, and how companies were struggling with how to better align their operations with ever accelerating demand. This month, I'd like to share an example. Before I do, however, it seems increasingly clear that reconciling these speed mismatches across the supply chain will be a key challenge in 2012. How companies manage a demand chain operating at a cadence of hours
The example I'd like to share is the consumption of IT capabilities by the supply chain, which is clearly changing. I made the observation during a recent conference presentation that as the clock speed of business accelerates, multi-year supply chain IT implementations increasingly make no sense – how can you possibly anticipate where your supply chain will be 18 months from now, let alone 3 years? Certainly in some areas, where the pace of change and the inherent business cadence is more extended (financial systems, for example) the urgency to accelerate implementation timeframes may not be as acute. But supply chains do not have that luxury; they are looking for new capabilities along a much shorter time horizon driven by greater demand volatility, requirements for shorter lead-times, and mass customization – and the delivery of traditional IT capabilities is struggling to keep up. Software vendors have done a good job in offering quicker implementation capabilities, however, for many manufacturers, internal IT or line-of-business resource limitations quickly become a bottleneck for the supply chain
One particularly interesting way to help to redress this cadence mismatch is by consuming IT capabilities through the cloud. Yes, cloud is heavily hyped; and, at least amongst manufacturers, the adoption level of cloud (and as-a-service) applications is still surprisingly low at about 12%, but it offers a consumption model that is inherently more agile and flexible. Although total-cost-of-ownership will always be important, it does appear that the conversation about cloud in the supply chain is rapidly moving beyond just cost to also consider capabilities, and the speed with which capabilities can be made available to the supply chain. In that context, perhaps the most powerful ability that cloud can bring is in better aligning the clock speed of the supply chain with the acquisition of IT capabilities. Just as companies need to be able to make quick, intelligent supply chain decisions, they need to be able to support these decisions with agile, flexible IT tools – precisely the kinds of things cloud can bring to the table. But, it is not just about cloud. The vendor community recognize this cadence mis-match, and are developing new capabilities to try to close the gap. Software vendors are also aware of the need to facilitate faster operations across the supply chain. Just this week, for example, Infor issued a press releases for Infor10 Supply Chain Execution, an applications whose 'raison d'etre' is speed and better, faster decision-making. Infor are not alone, all of the supply chain software vendors have been working on better integrated tools and faster processing capabilites (Orcale with technology like Exadata; SAP with HANA), which may well make 2012 the year of speed!