Exponential Technologies: Cloud Computing for Procurement

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This is a third post on a series of posts on exponential technologies (see part 1 and part 2).

Why Manufacturers Need to Ditch Purchase Price Variance

Cloud computing is not only an exponential technology but also one that will act as a platform for information sharing and collaboration, allowing other exponential technologies to grow thanks to its connectivity.

Does Anyone Know What The Cloud is?

Understanding what this technology is might seem complex, but cloud computing is simply the union of billions of computers into a network that can be accessed remotely.

Cloud computing is 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.

In other words, cloud computing is allowing machines to be infinitely faster; store and share data; work remotely; be scalable and react smarter.

Simultaneous Use of Unlimited Resources

Cloud computing can also provide the ability to run a program on many connected computers at the same time. Have you ever used gmail or some other webmail program? You’re, essentially, using cloud computing when accessing your mail from Google’s, Yahoo’s or Microsoft’s servers via their webmail programs.

Adobe moved its entire creative suite of software products to its Creative Cloud delivery system in 2013 and gave up selling boxed software thanks to the new platform.

Ongoing computing progress has allowed cloud delivery to go from expensive to common and scaled and priced toward more users and, in some cases, free.

Just a few decades ago, if you wanted to access thousands of core processors from one computer you’d have to be the secretary of the US Defense Department or Batman’s butler.

Today, however, the picture is completely different. A problem that used to take one computer 36,000 seconds (or 10 hours) to solve, now can be solved in one second by simultaneously applying 36,000 computers, with the same cost. Amazon Web Services has built an entire business out of selling the computing power of Amazon.com’s hundreds of networked data centers. Cloud solutions are, essentially, Turing machines with a lot more number-crunching power.

The cloud gives nigh-infinite storage capacity and, more importantly, allows connectivity among devices. With processing chips becoming exponentially cheaper, it won’t be much later until most physical items incorporate a device with sensors and RFID tagging capability to track all information related to the item and upload that data to the cloud. This is what the experts call “the internet of things.”

How Does This Affect Procurement/Supply Chains?

Well, consider now all the companies that are moving their data and tools to the cloud. Moreover, sooner or later every aspect in the supply chain will be tracked by devices and uploaded to the cloud. Your computer will have (if it doesn’t yet) instant access to information such as inventory levels, ETA of materials, costs, new orders, etc.

Now, once we have a rigorous way to continuously upload all of this data, computing power will start killing jobs in the supply chain. Such elimination of tasks is inevitable.

Cloud computing power now brings an entirely new way to approach problems and innovation. Say you need to figure out which materials you need to buy, where, when and from which suppliers. You could try to build an elegant mathematical approach to come up with a good solution or you could ask your computer to try every possible combination of numbers to then select the one that works best.

The later approach is the one that cloud computing is moving us toward. In the near future, you can ask the cloud to run simulations, experimenting with every possible cost, quality of materials, locations, delivery times, etc. resulting in not just a good solution, but the best solution. Cloud computing makes experimentation free, today you can try all the options with no cost.

The sky’s the limit and although to really have this power, we still need to properly collect the data and code some algorithms to analyze it. But what if we didn’t? What if we could just tell a computer what our needs are and the computer understands them, gathers the data and analyzes it in a way to answer our questions? This is the capability we’ll explore in our next post of exponential technologies: artificial intelligence.

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