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Industrial Application of Information Systems Cloud computing-(Answered)


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Industrial Application of Information Systems


Cloud computing applications in logistics and supply chain management



Done by : Mounir EL HANBALI ( 4561909)


Submitted to : Dr. Balan Sundarakani


Subject Name : TBS 933 ( Logistics Information Systems)



Table of Contents








































































The organizations around the world have adopted cloud-computing services for sourcing


their applications because the data or the information is available at anytime it does not need to


be stored in a local system. Hence, the senior executives of the company want to analysis the


methods of adopting a cloud computing service in the supply chain industry. The supply chain


management includes the transfer of goods or products from a supplier to a manufacturer and


finally to the consumers? .The process in supply chain management involves lots of information


sharing and needs a distributed system so adopting cloud-computing service will help to


maintain an efficient system.


The sharing of supply chain information needs a scalable distribution system rather than a


centralized one because by nature it is demand driven and it is globally increasing / decreasing.


With the cloud services the supply chain and logistic analysts are able to track every step in real


time, enabling them to make decisions and forecasts for capacity management and risk


management. Nowadays the Organization?s cloud platforms are more flexible and responsive


compared to the previous generations of supply chain and logistics tracking tools.



1. Introduction


In the highly competitive world the organizations have been thinking of ways to reduce cost and


increase their productivity in an effective way so most of them are relying on cloud computing


services. Cloud computing can provide on-demand computing services with high reliability,


scalability and availability in a distributed environment (Xun, 2012)[5].


In Supply chain management adoption of cloud computing is a great advantage since it allows a


huge and strong range of opportunities by reducing the initial expenses, increasing the visibility,


reducing the time between the initiation and the completion of production (Lead Time) , and


enhancing the inter firm collaboration and supply chain integration, and reducing response time


to customers (Shacklett, 2010; Schramm et al, 2011; Marston et al., 2011)[3]. Usage of Cloud


services for supply chain is rapidly booming in a recent research conducted by Garner Inc.


depicts that in the year 2013 there is 40 % increase in the usage of cloud service when compared


to the year 2011 (McCrea, 2013)[2].


The cloud computing service is still a new concept it does not provide answers as of how this


technology can help in reducing the risk involved and increase the products supply. Integration


and application of cloud supply chain solutions into an organization can be demanding and needs


strategic decisions (Truong, 2010)[4].


Cloud technology enables a collaborative model for the supply chain to enable all parties to


communicate and transact in real time since a transactions involves 5 to 15 different parties in


different countries and time zones. The organizations may only experience extra and unexpected


expenses on training an employee, setting up new regulations and adaptation process. The cloudbased solutions usually increase the reoccurring costs and reduce the start up cost. These Issues


affect the organization?s productivity within a supply chain. The improper function of a cloud


supply chain solution would have a strategic reflection on the entire supply chain productivity.


Cloud-based solutions can also create some new risks to the supply chain. For example


installing an application of an organization , and customer data on a remote server at a vendor


location can be worrisome and raise questions about security and privacy issues (Truong,


2010;Durowoju et al., 2011)[4]. Cloud-based systems are able to provide real time visibility of



inventory and shipments and improve logistics tracking. Consequently using common software


systems, they should own the necessary database for the whole year in order to respond to the


excessive demand just for a short period. In supply chain Organizations share important and


specific information about the products, payment, orders, customer?s profile, etc. Privacy, data


leakage, and legal issues are not permitted in the cloud systems and applications. Supply chain


executives have the privilege of assessment and control of risks that are related to the use of


cloud computing in supply chain management. With the emergence of cloud technology,


companies are basing the adjustment of their capacity accordingly on the needs to their needs


and scaling their computations and forecasting by taking into consideration the fluctuation of


demand. These leads to two major questions:


1) How the productivity of cloud supply chain could be improved?


2) How the associated risks and limitations could be controlled?


Existing researches and literatures are mainly focusing on the benefits and advantages of cloud


computing so these problems have not been discussed. The users should have practical


guidelines after adopting cloud-based solutions to reduce the risk.



2. Background


The cloud supply chain represents a network of many interconnected organization. ?Lindner


et al. (2010)[1] defines a cloud supply chain as ?two or more parties linked by the provision of


cloud services, related information and funds?. The resources of cloud computing are centrally


managed centrally which allows the services and delivery information tracking. Too much of


load on datacenter may lead to congestion in network so various load balancing techniques are


required to be implemented. The Cloud for supply chain is managing financials and information


movement in both directions across the cloud supply chain. The components involved in cloud


computing are represented below












Cloud Service

























The above figure represents cloud services like Software As A Service Platform As A Service


and Infrastructure As A Service, which offer cloud supply chain solutions, among these Service


as a Solution which is exponentially growing and many organizations are adopting this service.



Software as a Service are mainly virtual machines that are delivered through the medium of the


Internet instead of having the software itself. This type of cloud service is covering all the


functionalities like customer and Resource Management or enterprise resource, some of the


examples are the SaaS ERP, Google Office Productivity application, Sales force for Customer


Relationships Management system (CRM), the NetSuite, and HRMS Shacklett, M[3]. SaaS is


provided as a service and the end user does not own it. Reports indicate that 44% of the most


successful organizations in terms of ERP (enterprise resource planning) are generally considering


the deployment of SaaS ERP.



3. Usage of cloud based service in Supply chain


a. Predication and Planning


Cloud-based services help the organizations to unite the supply chain partners like the


customers, suppliers and distributors who play a major role in estimating the quantity of the


product or service that consumers purchase and help in improving the service levels of the


organizations. These clouds based platforms basically get the data or information from the


Internet and then perform basic operation like analytics and gives more exact demand forecast


for all supply chain partners. This helps the chain partners to be aware if there is any


unpredictable demand.



b. Source and Procurement


In an organization sourcing includes purchasing of products, receipt and checking of


incoming materials is of right quality as well as the purchase of goods or services from the


external source. Cloud applications use database, which contains multiple data from different


suppliers, which provide well-organized and different benefit for companies that handle


thousands of data or information. It also helps the organizations to select between supplier that


which of them are able to provide appropriate product or services as their requirement and within


time. Cloud based platforms also enable companies and suppliers to mutually develop contracts


and enhance contract management.



c. Management of inventory


In many organizations management of inventory is increased by the usage of bar coding


technologies and wireless services. The RFID (radio frequency identification system) is a process


by which a digital identity uses a set of protocol which helps to transfer information from a


device (RFID) to reader by radio frequency waves, this technology combines with the cloud


based centralized data management system to deliver the global identification and helps in the


tracking of any items or goods across the global supply chain management lifecycle



d. Development of the Product


The advancement in development of information technology, the Internet network


transmission technology is improving gradually, in terms of the security and safety of service,


compatibility and all the application are expanding gradually. The development of a product


includes the use of product design and development techniques across many departments of


same organization or between different organizations. All the process involved in development is


shared over a secure network between different organizations. These processes include the


specific information of the marketing firm, the result of the test and the design changes if any as


well as feedback from the customers.



e. Management of Logistics


The organizations involve the process of acquiring the material then storing of those goods


and then the transportation of goods process. The Logistics information management system


keeps track on the inventory information by using the cloud service and offers the following




Service provided by the cloud computing vendors


Without any human direct interactions with the provider of the service the consumers can use the


Internet access to communicate with the service providers by using the computing capabilities by


means of client?s platforms like mobile phones, notebooks or PCs.


Service provided to multiple clients


The organizations in order to fulfill the demands of many consumers use the cloud computing


service providers?, which helps by grouping the resources of multiple consumers. The service



provider allocates or reassigns the resources to consumers. Consumers on the other hand have no


knowledge about the location of resource, which is assigned to them by the providers.




In cloud computing it depends on the capacity of the providers to quickly add or release the


resources as soon as it matches the demands of the consumers.




Scalability is the ability of the system to handle large number of data in an effective manner. A


flexible system adds or release more resources dynamically when the service of demand increase


or decreases .So the elasticity of a system serve as a dynamic part to scalability.



4. The impact associated with cloud based services


The Cloud computing system in association with the supply chain information uses a lot of


technology for implementing the standards, by creating a system, which remotely manages the


allocation and use of resources, the management of data or information and the platform


management technology. The cloud computing service has the ability to increase or decrease the


computing power according to the requirement of the users. Scalability makes sure that


computing services is available to the users at any point of time and this is a highly important


issue in supply chain management system. Because supply chain is distributed in nature and each


company wants to grow its supply and distribution of product or services, there should scale the


need for IT services of supply chain at a big level.


The cloud provides on demand services by which a supply chain user uses when it is


required. If the supply chain of any firm is distributed across the world then it requires a separate


infrastructure of cloud for each of its branches. Sharing of information between different supply


chain users must be valid and secure in a private cloud. The private cloud helps by storing the


information?s or data within an organization. So besides using a centralized Cloud data center, a


company should use data center that is disturbed under the private cloud. The greatest risk


companies have to face is security and privacy of data.



Cloud computing systems as software products cannot always ensure confidentiality and as a


result run increasing risk of being invaded by hacking systems Xun, X. (2012)[5]. One of the most


concerns is the system crash down in a situation where the service provider is not able to deliver


the company service on the specified time. Supply chain operations are critical for one


company?s financial welfare and as a result any delays due to cloud systems failure to perform


has normal can be proved fatal. At the same time, the issue of availability is also crucial (McCrea,


B. (2013))[2]. Users worry that they may not have always access to the cloud, for example due to



poor Internet connections around the world. Finally, companies have to consider about the


individual specification. Most of the times cloud computing offers standardized services that do


not fit exactly to their specific supply chain operations. For example, manufacturing, which


consists of special processes, is difficult to be boosted with cloud services. More specifically, the


fear is that lacking customization will lead to slow market response or even worse loss of


competitive advantage Shacklett, M. (2010)[3].





Cloud computing is a revolutionary technology that will change the organizations


behavior in terms of doing business and linking with partners. Because of its abilities this new


technology is promising to have the same impact as the Internet. Because of its growth Cloud


computing and its solutions have been adopted and deployed by several organizations to


optimize their sourcing and Managerial methods. There are various types of architectures


available in cloud and these utilization needs to be explored fully. Forecasting of goods or


services on the cloud helps to reduce the manipulation of demand when moving away from the


real customer?s demand. Furthermore, cloud-based purchasing of goods or services enables


companies to manage different suppliers in one database. Finally, cloud systems can provide


tracking of goods in forward and reverse logistics in one closed-loop supply chain model.


Therefore, companies that are willing to improve their supply chain activities are recommended


to adopt cloud technology. Cloud providers should attempt to reduce the disadvantages in the


service either by strengthening the system?s protection or by offering individual specifications


options for their customers in order to motivate them to buy and apply the cloud services. One of


the major drawbacks that companies need to overcome when applying cloud technology is the


change over from the traditional working concepts and methods to new innovative modern


practices. In practice, cloud-based models have already been implemented by leading


international 3PL companies with great success so far, firstly at private and later on at public


cloud structure. The Quantitative models as well as analyses of cost involved in companies, have


already implemented cloud technology, could document more exactly the benefits of cost in


cloud when compared with the traditional enterprise resource planning systems. Finally, more


academic research can help to develop new advanced integrated cloud models for supply chain







1) Lindner, M., Gal?n, F., Chapman, C., Clayman, S., Henriksson, D., & Elmroth, E. (2010). The


cloud supply chain: A framework for information, monitoring, accounting and billing. 2nd


International ICST Conference on Cloud Computing (CloudComp 2010).



2) McCrea, B. (2013). Analysts Report that Cloud-Based Adoption Increased 40 Percent this Year


for Supply Chain Software. Supply Chain 247, June 2013. Retrieved from




3) Shacklett, M. (2010). Is supply chain management emerging from the clouds? The short answer is


'yes,' and now's the time to take a more serious look. World Trade, 23(4), 34-37.


4) Tsao, H. J., Parikh, S. ; Ghosh, A.S. ; Pal, R. ; Ranalkar, M. ; Tarapore, H. ; Venkatsubramanyan,


S. (2010). Streamlining grain supply chains of India: Cloud computing and distributed hubbing


for wholesale-retail logistics. 2010 IEEE International Conference on Service Operations and


Logistics and Informatics (SOLI), 252-257


5) Xun, X. (2012). From cloud computing to cloud manufacturing. Robotics and


ComputerIntegrated Manufacturing, 28(1), 75-86.




Paper#9209961 | Written in 27-Jul-2016

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