Efficiency and Risk Management Models for Cloud-Based Solutions in Supply Chain Management

Efficiency and Risk Management Models for Cloud-Based Solutions in Supply Chain Management

Dothang Truong (Embry-Riddle Aeronautical University, USA)
DOI: 10.4018/978-1-4666-9466-8.ch074
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Abstract

Cloud computing has been proven to have numerous benefits for organizations, especially in supply chain management. More and more organizations have adopted cloud-based solutions to be their primary sourcing applications. Nevertheless, this technology is not without challenges, and in order to deploy and implement cloud-based solutions successfully with minimal risks organizations need to have practical guidance on this emerging technology. Despite the rapid growth of cloud computing in supply chain areas, the existing literature is still conceptual, inadequate, and mainly focused on the pre-adoption stage of this technology. This research examines the post-adoption stage of cloud-based supply chain solutions from the decision science perspective and intends to provide organizations with practical guidance on how to ensure the efficiency of a cloud-based supply chain system and control risks associated with cloud-based solutions.
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1. Introduction

Cloud computing is changing the way industries and organizations do businesses. Industries are undergoing major transformations enabled by information technology (IT) and the Internet, and cloud computing is emerging as one of the major enablers for industries in transforming their business models. The National Institute of Standards and Technology (NIST) defines cloud computing as ‘‘a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.’’ (Mell and Grance, 2009). Thus, cloud computing can provide on-demand computing services with high reliability, scalability and availability in a distributed environment (Xun, 2012). If used properly, cloud computing can become a valuable and inimitable resource that enables organizations to create and sustain their competitive advantages (Truong, 2010).

As cloud computing is expanding and being adopted in various business domains, it starts drawing the attention of supply chain practitioners. In a dynamic business environment, flexible IT-based solutions become an increasingly important part of the supply chain design. Supply chain management focuses on the inter-firm collaboration that requires massive levels of information sharing and process automation that can adjust to the changing demand. This is where cloud computing comes into the picture. Supply chain management can benefit greatly from using cloud computing. As a flexible IT-based solution, cloud computing promises to enable a wide and powerful range of capabilities in supply chain management including: reducing the startup costs, increasing the supply chain visibility, reducing the lead time, enhancing the inter-firm collaboration and supply chain integration, and reducing the response time to customers (Shacklett, 2010; Schramm et al, 2011; Marston et al., 2011). By adopting cloud-based solutions for supply chain management, organizations can improve their supply chain performance (Truong, 2010). Cloud-based solutions are particularly helpful in business-to-business integration, customer-supplier collaboration, and other areas that require the multi-organizational collaboration. Organizations that use cloud computing to facilitate collaboration are twice as likely as those that do not have formalized procedures in place to succeed in term of return on investment (Ostrow, 2011).

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