Proceed (With Caution) to the Cloud
Written by Gerard O'Neill, Marketing Director for BT Global Services
Twentieth-Century supply chains were characterised by rigid integration. Relationships between raw-material suppliers, service providers and manufacturers were hard coded and systems based. Systems vendors, with product suites and modules that touched most of the departments around which businesses typically organised themselves, promised end-to-end visibility of information and with it, business agility.
The reality was different. The nature of these systems meant that onboarding new partners was slow and complex, requiring the support of expensive IT consultants. The more partners in the supply chain, the more systems there were that needed to be integrated. Feature-rich though they were, these systems also had many limitations. The limitations of individual systems compounded by the number of systems involved meant that the ability to access and exchange timely, accurate information across the supply chain remained elusive.
It wasn’t only a matter of limitations. Basic differences in the architecture of systems meant that the status of operations and transactions could be reported differently, depending on which system was integrated. In sectors such as manufacturing, reconciling the differences between systems is compounded by the fact that many of them will sit outside the four walls of the company, in the hands of suppliers and business partners. The sentiment in manufacturing that business was successful because of its growth. Cynics suggested, with some truth, that IT served as much to hinder as to enable supply chain operations.
Outsourcing as a solution
As 21st-Century business cycles accelerate, the trend towards outsourcing operations to specialist third parties is evolving and morphing. A more flexible, transaction-based supply chain model is appearing – characterized by tight but flexible couplings between partners – that allow businesses to onboard and offboard partners more easily and thus enter and exit markets earlier and faster than ever before.
This new model finds its ultimate expression in the cloud. Internet-based cloud services enable businesses to connect to new partners and manage operations using the latest software available. This software (and the computing platforms that support it), is subscribed to on a per-use basis, managed and maintained by specialist providers with enormous resources and technical expertise at their disposal. They not only enable partners to connect painlessly to one another but can also provide them with systems and support for order management, billing, shipping, warehousing and other critical processes. And most importantly, with all transactional data captured in the same cloud, a single version of the truth is available.
Choose your system carefully
Cloud-based business and supply chain management are still relatively new concepts. When exploring a cloud-based system integration, it is wise to tread carefully. Much of the literature – particularly in the IT world – seeks to make a case for the cloud based on cost. It is certainly true that the use of cloud services necessitates that a business buy its own IT infrastructure. However, relative to the cost of big-ticket functions such as logistics, businesses tend to invest little in IT and many will find the cost case to be less than compelling.
The efficiencies that cloud-based services can undoubtedly bring to standardised processes need to be balanced against the risks. The collapse of a cloud-based supply chain service provider could prove ruinous for its clients. As could any lapse in security that saw the release of confidential data into the public domain. The opposite – a scenario in which all runs well – may be equally risky. This author recalls his blood running cold at the realisation that the third party to whom he outsourced certain operations would soon become the only entity capable of answering any questions on those matters, and would likely – indeed, did – levy additional charges for that “support.” That is, with process enablement outsourced to a third party, skills once considered core to the business can disappear quickly. Once lost, they may be very difficult to replace or bring back into the enterprise.
Make sure you weigh up the risks
Explore the claims in a measured way. Engaging the service providers and working with them to identify routine, non-critical supply chain operations might be supported by cloud-based systems. Avoid exceptions-laden activities, and those that call for creative work-around. The one-size-fits-all nature of many cloud services will disqualify processes requiring the support of heavily customized systems. Processes that confer competitive advantage are unlikely to make good candidates and, most importantly, involve those business partners likely to feel the impact of any changes to the way that you run your operations.
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany