Benefits and Drawbacks of Cloud Computing in SCM

supply chain management cloud system

Supply chain management (SCM) is essential to your operational efficiency, customer centricity, compliance, and carbon footprint. Given its significance, your supply chain should improve customer service along with brand reputation in order to boost the bottom line. The problem is, there are many areas of business which changed the rules of SCM operation.

Oracle eBook cited that customers keep expecting more, with products are updated and introduced faster than ever, new companies enter the market daily, etc. There are so many things to keep up but with the lack of agility and scalability the industry has, it can cost an organisation a fortune. That said, organisations need levels of flexibility, integration, and visibility in order to compete with each other.

See also: Right Steps in Selecting Warehouse Management System

To achieve that, moving to the cloud can be the answer. According to Accenture data, cloud computing is now recognised as a real game-changer, providing a route through which supply chain executives can rapidly and efficiently access innovative supply chain solutions. Driven by a growing realisation of the benefits cloud provides, Software as a Service (SaaS) for SCM market was growing by 24 percent in 2014, and reaching to 19 percent compound annual growth rate to become a US$4.4 billion opportunity by 2018.


Cloud computing provides a wealth of benefits including low upfront investment, secure access, faster developments, simplified integration, continuous upgrades and effortless scalability. There are more benefits of cloud computing to SCM such as follows:

  1. Agility – Cloud enables you to quickly and securely deploy new services and capabilities and easily scale to meet demand.
  2. Ease of use – SCM in the cloud can both speed deployments and allow outsourcing of management, maintenance, and upgrades. So, the time and resources spent keeping lights on can instead be directed towards innovation.
  3. Completeness and connectivity – Cloud has a tangible impact on efficiency and productivity as it demands open and seamless integration with all manner of IT solutions.
  4. Security – Cloud provides timely and secure option with a note that your Cloud must support best-in-class security features such as encryption, virus scanning, and whitelist support.
  5. Cost and efficiency – Cloud-based supply chain can offer numerous financial advantages to both established and new organisations.
  6. Fast, flexible, and safe deployment – Cloud will not need you to transform your entire supply chain at once when moving to the system. This flexibility can be the greatest value as you can prioritise your migration and implement at the right pace for your organisation.


While cloud computing offers various benefits to supply chain business, companies need to understand unique risks associated with it. Some of the more impactful risks, according to Attila whitepaper, are unauthorised use, insecure interfaces, multi-tenancy and multi-cloud risks. There might also risk from “Shadow IT” and Bring Your Own Cloud (BYOC).

Here is a brief explanation of the cloud risks.

  1. Unauthorised use which can occur either intentionally or unintentionally. The common cause is that employees might use untested or unauthorised cloud services which will harm the entire SCM system.
  2. Insecure interface if the system in the cloud is accessed via an API (application programming interface). The API can automate almost all intercompany transactions today which can be exposed to the world.
  3. Insufficient access management can occur in two ways. First is through an inadequate credentials policy that does not require strong passwords or frequent updating. Second is through a risk known as Shadow IT, a rogue IT system.
  4. Multi-tenancy issue is a sharing of resources among stakeholders and customers. This can be the greatest risk as resources can vulnerable to leakage.
  5. Multi-cloud issues which stem from several factors such as configuration and deployment of various clouds, lack of investments required to ensure clouds are compatible or enabling more APIs which translates to more entry points for hackers.

Protection from the drawback

Due to the unique risks, the supply chain must protect its system to the greatest extent possible. Therefore, organisations are encouraged to lock-down access to all endpoints, thereby reducing the attack surface. Another recommendation is to mandate the use of a virtual private network (VPN) for all communications. To take advantage of the VPN, follow these key points:

  • Insist that supply chain members use a VPN for all communications and to lock down all IP-enabled devices.
  • Ensure that the selected VPN solution might be securely deployed in a public cloud, a private cloud, and on-premises.
  • Select a VPN with robust encryption, preferably one that is CSfC certified.

Read also: 6 Top-Notch Technologies to Boost Supply Chain

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