Should your supply chains to be in the cloud?

Roger OakdenGlobal LogisticsLeave a Comment

Outsource your logistics data storage.

It can be such a relief for our data to be stored in the cloud, accessible for those who need to know and without the IT overheads – or is it?

The legal firm Gilbert+Tobin reported in The Australian newspaper that the terms and conditions (T&Cs) provided by cloud computing suppliers in their contracts will be of interest to supply chain professionals.

They note the wide gap between what sales reps may promises and what is written in the contract as being the deliverables by cloud computing supplier. The legal firm identified that suppliers may state in the contract that they are not liable for: any loss or damage; if the service is not provided; if they lose your data; if they don’t store your data and if they fail to keep your data.

It appears the only thing the suppliers will do is collect your money!

With cloud computing suppliers being so reluctant to accept responsibility for the main activity of their business (which asks the question whether you should trust your data and information to them), you need to ensure they have some consideration for the other major issues in the relationship.

Cloud computing issues

With more than seventy percent of your company’s data being supply chain relevant, the issues for you to consider are: legal compliance (i.e. privacy) issues, security, technical issues (e.g. cost of migration and support; service level agreement (SLA) and data sovereignty and control (sovereign risk).

Where and how the data is stored is a core business decision. Given that your data and information is likely to be transmitted across borders and stored at locations selected by the cloud computing supplier, privacy laws and regulations within each jurisdiction are critical.

For example, Australia’s privacy regime creates issues for businesses as they move customer data into the cloud. The Privacy Act requires you to ensure that your cloud computing suppliers comply with the Privacy Act when sending your data offshore. Even though the (say) US owned supplier may have opened an onshore data centre, you are still dealing with an overseas legal entity. Other countries have similar provisions.

To mitigate a whole range of the legal problems, it is suggested that your data be encrypted when you move it to the cloud.  This is an example of internal security and compliance policies and activities that you need to implement.

In your Service-level agreement with the supplier you need to clearly define what you want in terms of speed and quality of service and these selection criteria must be included in your evaluation of supplier offerings.

So, going cloud is not the ‘dump it and forget it’ approach that you might have hoped for. The decision is strategic, therefore the supply chain IT approach must align with the overall business and supply chain strategy, for now and in the future.

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About the Author

Roger Oakden

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With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

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