Sales of the Unexpected – the Role of Cloud-based Supply Chains

By Terry Storrar, Managing Director, Leaseweb UK

E-commerce accounted for over one-quarter of all UK retail sales in April 2022, according to the Office for National Statistics, and more than half of UK customers now purchase online more frequently than they did just a couple of years ago. As a result, retailers are working hard to satisfy increased customer demands, despite ongoing supply chain challenges.


In fact, dealing with the unprecedented operational challenges seen in recent years has underlined the significance of having highly resilient supply chain networks that can efficiently adapt to any incident. The impact of supply problems is very real with research showing that out-of-stock scenarios meant lost sales for nearly half of UK retailers last year. In addition, just under one-third said supply chain problems resulted in increased overheads and narrower profits.


To cope with challenges that are difficult or impossible to anticipate, many retailers are focusing on updating legacy supply chain IT infrastructure to reduce disruptions, improve stock inventory management skills and respond more quickly to critical customer trends. In many of these situations, the cloud is offering an ideal route to achieving these important objectives to deliver the agility they increasingly need.


Cloud control


For online retailers aiming to improve their manufacturing line and allow smarter supply chains that provide real-time visibility to better serve customers, the cloud opens up a wide range of possibilities.


This includes enabling businesses to handle massive amounts of data from many sources across the supply chain at breakneck speed. In particular, today’s cloud services deliver access to the powerful computing capabilities required to produce insights and respond to events in near real-time – and to do so without having to allocate major capital investment to build infrastructure in-house.


In addition, the cloud also allows for improved supply chain connectivity, making it easier for online merchants to interact with suppliers and manufacturers and overcome information silos that often stymie collaboration and agility. These capabilities also extend to managing a variety of supply chain activities, including forecasting, planning, logistics, and procurement, by harnessing the cloud's elastic and scalable computing capability.


For the supply chain to run smoothly, data must be available, and the cloud allows retailers to exchange previously compartmentalised data among internal teams and external partners without the need for complex interfaces. Retailers can then more effectively track their inventory and verify that it has the goods that were promised to customers by bridging this information gap.


They can use the cloud to enable and centralise data integration and provide 24/7 access to data that is critical for enabling real-time visibility of supply chains, such as shipment records from suppliers, tracking information, and more, by partnering with the right cloud hosting provider, information interchange with supply chain partners becomes faster and more effective, making stock management, forecasting and fulfilment optimisation easier.


Increasing cooperation


The modern supply chain functions best when all stakeholders, from producers to retailers and customers, work together from beginning to end. By looking for ways to shift workloads between private and public cloud resources in a secure and cost-effective manner, online retailers can seamlessly integrate data from all trading partners, regardless of geographical boundaries or variations in demand.


In practical terms, the cloud offers seamless and real-time connectivity between supply chain players, ensuring that everyone can collaborate quickly around changing demand signals and make proactive decisions 'on the fly,'. These capabilities can be enhanced further by implementing automated rule-based judgments for basic processes.


Using this increased visibility and communication, brands can create fully customer-centric supply chains while also enhancing collaboration and trust amongst business partners. This includes tracking the status of each order from collection through fulfilment and making this information visible to customers, as well as recording real-time data on returns to help optimise inventory and costs.


Dealing with unpredictability


The ability of a store to deliver products in a timely manner is critical to creating a positive online shopping experience. Unexpected circumstances, however, can cause a delay in shipment or manufacturing timeframes.


In the last 18 months, for instance, online retailers have had to deal with a number of supply chain interruptions caused by a variety of challenges such as logistics partner driver shortages, raw material availability in manufacturing and a potential energy crisis.


But, by optimising their supply chains with cloud-based intelligence, online merchants are well placed to implement continuous intelligent planning methods. By doing so, long-term forecasting decisions can be fine-tuned and supply chains can be made more adaptive to avoid potential loss.


In an era where retailers increasingly rely on supply chain agility and efficiency to meet customer expectations, cloud-based infrastructure can deliver the storage, computing and communication resources needed to stay competitive. Operating in an increasingly uncertain world with volatile trading conditions, these are essential requirements for retailers focused on the needs of a digitally-centric generation of shoppers.


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