Strengths and challenges of cloud based solutions in SCM

What is Supply Chain management?

Supply Chain Management (SCM) is a term that refers to the process of managing all the steps of production from procurement of raw material required to the delivery of the product at its final destination. It refers to managing the flow of goods, data and finances related to a particular product or service, from the start till the end.

Strengths of Cloud-Based Solutions in SCM

  1. Ensure High Quality- Cloud software can track and report quality levels and provide a 360-degree view of every quality parameter which helps it to reduce costs and increase customer satisfaction. It also gives real-time updates on shipment inspections as well as monitors any assembly, component, or subassembly throughout the entire supply chain in real time.
  2. Reduces Manufacturing Cycle Time- ‘Manufacturing Cycle Time’ is a manufacturing metric that measures the time between the origination of an order and the creation and storage of the product in inventory. Cloud SCM can access data from multiple sources and points across the world and provide this knowledge in real-time while the manufacturing process is going on so that the manufacturer can assess the process and make improvements to it, thus reducing the manufacturing cycle time by providing quick and easy information.
  3. Improve Infrastructure Management- Calculating the performance of a machine manually is a time and energy draining process. Using a cloud-calculation of OEE i.e., the overall equipment effectiveness, certain decisions regarding SCM can be taken quickly.
  4. Automate Compliance- Any business has a lot of government rules and regulations that it must comply with. This affects supply chain management drastically as the reports that a business is required to submit in compliance with certain rules and regulations need to be made with a lot of care and precision. This process ends up consuming a lot of energy and time of the employees and decreases their overall productivity when it comes to doing actual work as part of SCM. Cloud SCM eradicates the burden of spending valuable time cataloging records and reporting them by automating this process.
  5. Optimize Production Planning– Having prior knowledge about inventory levels makes inventory and production planning and management much more efficient. Cloud based WMS (Warehouse Management System) and ERP (Enterprise Resource Planning) systems make available data sets that show trends and patterns over time, thus making it possible to anticipate the demand shifts in the market. This optimizes production and develops better customer relations by helping industries meet the required demand in time.

Challenges of Cloud-Based Solutions in SCM

  1. Security and Privacy- When a sizeable portion of workload is shifted to the cloud, especially public cloud, there are high chances of application and data security being compromised. However, by using encryption and taking necessary security steps and precautions, one can ensure the safety of their supply chain.
  2. Choosing the Right Provider- If and when a firm decides to use cloud-based solutions, it has to ensure that it finds answers questions of which provider does it need, will it be multiple providers or one, etc. Not choosing the right provider or not being able to utilize the cloud-based solutions provided are as good as not using cloud software at all. Hence, firms have to tread with caution in this respect.
  3. Complexity of Cloud Computing- Cloud functions can often be difficult to follow and integrate, thus initially creating some disruption in the normal flow of work in a particular company as the employees now have to be accustomed to and properly trained with regard to cloud applications.
  4. Cloud Integration- Cloud integration takes a lot of time and efforts. In addition, there is a cost of upgrading the old on-site infrastructure to the cloud, unless cloud providers provide compatibility over old versions of operating systems.


Cloud-based solutions are the future of Supply Chain Management and there no doubt about that. 54% of surveyed companies are substantially increasing their cloud computing investment to make supply chains more resilient, according to a report.

Despite some challenges that have been mentioned above, the advantages of using cloud-based solutions are many. It is an effective and practical way to improve the quality and techniques of SCM and paves way for growth and improvement never seen before in SCM.