Supply chains are moving onto cloud-hosted platforms. In these environments hundreds of thousands of partners on a supply chain can share inventory, shipping information and invoices. Here are seven reasons why platformisation could be the future for supply chain management
1. Total visibility
A platform gives enterprises the ability to see far beyond their own walls. It becomes possible to receive automatic updates from suppliers, stockists, logistics partners and financial service providers all within a single environment. The best platforms offer a global community of users,The best platforms offer a global community of users, which newcomers can join and plug into. Avon, the cosmetics company with $10 billion in sales, uses E2open’s platform to manage its supply chain. At any time, the company has 80,000 stock keeping units or SKUs. The platform helps Avon to see the see the inventory from component suppliers through to resellers. If stock moves outside agree parameters then alerts are triggered. It gives Avon a unified view of operations across a whole network of partners.
2. Uniformity of data
A basic problem of supply chains is that data is held in umpteen formats. Incompatible systems try to talk to each other, leading to errors and malfunctions. A platform acts as a single source of data for all parties, eliminating duplication of effort. It also converts data to a compatible format at source. For example, The Edge, a platform made by Virtualstock and used by Tesco, Argos and John Lewis, offers a suite of tools for newcomers to convert data. It validates data before ingestion: errors are flagged and the bad data is quarantined. The Edge is also flexible, able to pull in data from a variety of other systems, converting where needed. As a result, all participants on the platform enjoy correctly formatted, up-to-date data.
3. Less bureaucracy
Platforms are designed to automate actions and remove manual processes. This frees up staff to concentrate on more important matters. For example, the GT Nexus platform is used by CAT, Pfizer and Levi Strauss to share information and auto-create documents. Orders feed into packing lists, and packing lists auto-feed into invoices. Customs invoices and supplier payments are generated instantly from a single data prompt. Accounts are updated in real time, giving users of the GT Nexus platform a clear overview of their financial position. Compare this with non-platformed supply chains, where data is entered manually, invoice information emailed or sent by post, and data is replicated multiple times on multiple systems.
4. Better invoicing, better credit
The benefits of using a platform to send invoices are obvious. What is less appreciated is how a platform can improve credit ratings. Lenders are able to more easily see the financial status of credit applicants more quickly via a platform, they can see inventory pipelines too. Michael Walker, global head of corporate banking sales enablement at Finastra, a provider of finance software, says platforms can “integrate provenance data to provide improved visibility to banks across an entire supply chain, allowing more effective judgement of transaction risk”. Cash flow can be boosted a second way, by offering discounts to early payers. Platforms make the offer and acceptance of discounts simple, and give vendors an automated way to track who is taking advantage of the deal.
5. Make use of the app store
Just as with iPhones and the App Store, supply chain platforms really come alive when apps are added to the main service. The Tradeshift platform is teeming with commercial apps which enhance the service. There’s PayPal for payments and a connector app for Sage 50 accounting software. There’s an app for supplier onboarding, for conducting surveys of partners, and for digital document signing. It is even possible to obtain a business loan via an app. The advantage is that the apps are built specifically around the platform, so offer slick integration with other functions. Non-platform users may find the same functionality offline, but will struggle to find the same degree of data continuity across their systems.
6. Pre-built, so just sign up
It is possible to build a proprietary supply chain platform, but you’ve got to be big to do it. Denis Baranov, principal consultant at technology consultancy DataArt, says: “Tech-savvy Ocado is a great example of the platform-as-a-service strategy. The company created its own e-commerce platform, the Ocado Smart Platform, which it sells to other retailers, like M&S and Kroger.” But Mr Baranov stresses that this is only for the big boys. Small companies can join a platform knowing it is developed and battle-ready. Even multinationals often prefer to join a pre-existing structure. Carmaker Volvo opted for BluJay’s supply chain platform to manage the distribution of vehicles worldwide. With 26 existing IT systems, 35,000 routes to market and 30 existing carriers, it was a huge job. In five months the supply chain was up and running on BluJay – something implausible with an in-house strategy.
7. AI and forecasting
The holy grail of supply chain is to see the future with perfect clarity. A platform can contribute to that mission by providing rich pools of clean data, which an artificial intelligence (AI) or machine-learning (ML) engine can consume. A new platform, JDA’s Supply Chain Management, aims to deliver AI and ML as part of the cloud-based service. The logic is clear. By including variables such as supply partners’ inventory, plus traffic conditions, weather, port congestion and other data, forecasts can be made accurate to previously unattainable levels. The AI engine at JDA is created by BlueYonder, originally founded by a team of particle physicists who wrote the algorithms for the Large Hadron Collider, where the Higgs boson particle was discovered. Once again, companies are entitled to go it alone, and build in-house solutions, or adapt standalone forecasting applications, but the appeal of moving to a platform with integrated AI and ML will be hard to resist.