How Super Retail Group Improved their Supply Chain with the Cloud
Read other articles from the June issue of Business Review Australia
As businesses continue to connect and interact on a global scale, companies need to focus on growing their communication capabilities. This is especially relevant when considering your supply chain – companies are reaching farther and farther away for services, making any lack in up-to-date information potentially disastrous.
Countries like the United States and many places in Europe are turning more to outsourcing; and while this is a cheaper alternative, it often adds another level to the supply chain, and makes the process harder to manage. To avoid or patch already-existent holes in your supply chain communication, look to cloud computing for getting all involved parties on the same page.
Significance of the Cloud
Just like a cloud in the sky, the cloud is not tangible and can be difficult to understand for some people. But when applying the technology to your supply chain, the possibilities for improvement and efficiency are nearly endless.
Having the correct amount of a product at any given time will help a business run smoothly. The cloud can be used in forecasting and planning to not only improve service levels, but to have key partners in the supply chain – retailers, suppliers, distributors – collaborate.
The management of your inventory is further made simpler with the application of bar coding technologies and wireless services. Radio frequency identification (RFID) can be integrated with a centralised data management system via the cloud to provide up-to-the-second knowledge of where your product is, how much inventory you have, when it will get to its destination and when you need to restock.
The cloud can also contribute to sourcing and procurement, as it enables companies to mutually develop contracts with suppliers, and could enhance contract management with real-time updates.
Before shipping your product out though, you have to have the product. The cloud can help with the design and product development stage by opening up the creative process to be, again, more collaborative. This does not necessarily mean reaching out to countries across the globe, but to the different departments in your own building. Any relevant data can be shared across secure lines throughout your company; this way, test results, design changes, and then marketing information and customer feedback can disseminate through the company through natural channels.
As with many types of technologies, there are usually concerns about security. The cloud’s purpose is to offer a different, secure location for your data besides the computer towers in your office. There are also questions about network congestion. Be sure to consider these detractors before making the switch.
Benefits and advantages
Perhaps the biggest advantage to utilising the cloud in your supply chain comes from where it operates – through the Internet. Infrastructure, platform and software solutions for your entire supply change can be provided over the Internet, which simplifies a company’s business plan immensely.
Since the machinery that houses the cloud is off-site, your company forgoes a large chunk of the cost for on-site infrastructure.
Visibility within the supply chain is paramount to keeping a company running smoothly. The companies involved in the supply chain can not only coordinate each of their operations, but they can also manage several different customers with less hassle. Through this visibility and the increased ability to collaborate, there is also more platform scalability and flexibility. Cloud-based systems also provide real-time visibility, so there is no delay in information.
The simplicity the cloud offers is hard to pass up. Compatibility problems are nonexistent, and, again, the ease of collaboration is a huge draw. Each member of the supply chain can be given a login ID and password to update and view relevant information.
Super Retail Group’s cloud success
Between 2012 and 2015, Super Retail Group had made the commitment to invest over AU$50 million into their supply chain and improving inventory management. Among their goals were centralizing distribution centres, consolidating procurement from Asia and strengthening the collaborative efforts with other members of their supply chain.
SRG knew that handling the upgrades and changes alone would be expensive and take longer than the time they allotted for the investment. The company brought in JDA Software to not only assist with the planning, but the implementation and the management of their cloud systems. A large factor in this decision was the cost-effectiveness of a cloud-based system versus running the necessary software themselves.
“We estimate that it would have cost AU$20,000 per month in electricity alone to host our own software. Those are the costs you often overlook, and they can make it hard to get a business case going," said Keith Harrison, solutions manager for supply chain.
Demand planning was another driving component of the upgrade and investment – with so many different brands and products going to several different stores all over Australia, having the correct amount of inventory was a make or break part of the business.
JDA Software’s solutions
Solutions by JDA Software like JDA Demand and JDA Fulfillment (whichincluded “a forecasting and replenishment solution that could handle its geographic complexity, as well as the stock-keeping unit (SKU) complexity and demand variation across its seven retail brands”) were live within a year, mainly due to SRG’s choice to go with a cloud-based system. The platform sped up implementation and minimized the company’s risk exposure and financial investments.
The benefits from the switch to the cloud are still rolling in. The cloud services model was created to be scalable across SRG’s huge product pool, and the system has been unfalteringly reliable. The downtime has been near zero percent, which is huge when considering the amount of data SRG consistently is adding to the JDA applications.
There have also been tangible results as well. "I'm very happy to say that the reduction in inventory has been significant, about a 20 percent reduction in inventory holdings and safety stock," said Nat Cooper, programme manager of supply chain and inventory management. "We're continuing to pilot JDA Demand and JDA Fulfillment in other business units and are realizing similar results. So we've been really happy with that."
With the success Super Retail Group has had with these pilot programmes, all future applications are planned for the cloud.