Chain of Thought

Managing Inventory in the Cloud

Nearshoring has become a popular trend (perhaps more popular as a concept than an actual practice) for companies looking to gain more control over their extended supply chains by bringing work that had been offshored to Asia back closer to home. One small Midwest-based manufacturer of precision metal stampings, Chirch Global Manufacturing, has adopted a strategy that it describes as onshoring/offshoring –maintaining a presence in China while keeping jobs in its native Illinois backyard. This strategy has been made possible thanks to Chirch's adoption of cloud computing.

Cloud computing is the latest trend in software solutions, even though it's not necessarily all that new. It's just become a lot more common, especially as the mainstream has made Internet-based repositories of software applications so ubiquitous and so easy for users to share the same app. Google, for instance, has made its software packages available via the cloud for years. Similarly, anybody who has uploaded or shared a video on Youtube or a photo on Shutterfly has experienced the power of cloud computing.

Evangelizing its applicability in business apps, particularly supply chain apps, has taken a bit more persuading, but Christine Hansen, product marketing manager at Epicor Software Corp., makes a compelling case. Speaking at the Design & Manufacturing Midwest trade show in Chicago this week, Hansen referenced a study by analyst firm IDC that predicts cloud computing to become a $9.5 billion market by 2015.

In fact, in an MH&L article earlier this year, IDC analyst Simon Ellis predicted, “We expect 2011 to find an increasing number of manufacturers exploring how they can use cloud computing to address technology gaps, most often for communication but also for collaboration. Business relationships in the value chain can be increasingly supported online, using a social business framework for support with the intersection of Web 2.0, Enterprise 2.0, and collaboration platforms and applications.” So clearly, cloud computing is gaining more adherents every day.

Hansen likens the differences between traditional server-based computing and cloud computing to buying vs. renting a house. When you rent, you don't have to pay a hefty down payment up front, nor do you have to know anything about maintenance. Adopting cloud-based applications on a software-as-as-service model is very much like paying a monthly utility bill, she says.

So a company like Chirch, for instance, can leverage the inventory management capabilities of Epicor's software to manage and monitor its operations both domestically and overseas, in a shared environment. The software, for instance, helped Chirch identify instances when its suppliers were shipping too much product, leading to excess inventory. That led Chirch to institute a policy where it would only accept less than 10 percent overage.

According to an Epicor case study, “improved information access has empowered Chirch's employees, giving them more confidence in their decision making. From monitors across the shop floor, they can view all the following: open sales orders, due dates, quantities, finished and on-hand inventory, and ship location. They can also view material purchase orders, so if the required material is not on hand, they can see when it is due to arrive. If the material for a specific job is not arriving for another day or two, the shop can move to the next job in line so a machine doesn't stand idle for days.”

While cloud-based applications are certainly not appropriate in all situations (there are obvious competitive advantages to having robust, customized solutions), the speed with which companies can deploy solutions, even across borders and continents as Chirch is doing, will help ensure we'll continue to hear more about this buzzword trend. Though the terms sound vaguely alike, cloud computing is most assuredly not vaporware.

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