Microsoft eyes new market with supply chain platform

Microsoft used to run its supply chain operations on Excel spreadsheets; now it's providing the building blocks for companies to collect data from various applications.

Microsoft has entered the supply chain arena with a new offering designed to help organizations understand and act on supply chain issues.

The new Microsoft Supply Chain Platform aims to enable organizations to orchestrate data from their disparate supply chain systems and make decisions on it.

The new platform uses Microsoft Cloud infrastructure and applications, including Azure, Dynamics 365, Microsoft Teams and Power Platform, as the building blocks for customers to orchestrate the data, create workflows and improve supply chain operations.

A core component of the new platform is the Microsoft Supply Chain Center, which serves as a control tower for supply chain data and analyses, according to Mike Bassani, general manager for supply chain at Microsoft. The Supply Chain Center can take data from a company's existing supply chain systems, including ERP systems Microsoft Dynamics 365, SAP and Oracle, as well as standalone supply chain applications, and discover where they may have issues.

The Supply Chain Center includes connectors to logistics and supply chain applications providers C.H. Robinson, FedEx, FourKites and Overhaul.

Microsoft Supply Chain Platform is available now as an open platform with capabilities from Dynamics 365, Azure and Microsoft 365, which are individually purchased and priced, according to Microsoft.

Supply Chain Center is in public preview, with licensing and pricing information to be determined at general availability. Dynamics 365 Supply Chain Management customers will automatically have access to Supply Chain Center with their existing licenses.

The Microsoft Supply Chain Platform
The Microsoft Supply Chain Platform enables companies to use data from various systems to get better visibility on supply chain issues.

Supply chain challenges are ongoing

Supply chain disruptions have become a constant problem for organizations in the last few years, which requires new applications to identify and mitigate issues before they affect business, Bassani said.

Companies are vulnerable to supply chain disruptions because they lack visibility to see what's coming, as data is not current and can be trapped in various disconnected systems, he said.

The new supply chain platform originated from Microsoft's own supply chain disruptions and the lack of applications to deal with them, said Panos Panay, executive vice president and chief product officer at Microsoft, during Supply Chain Reimagined, a virtual conference that introduced the platform on Wednesday.

Five years ago, Microsoft's supply chain was run on Excel spreadsheets.

"It worked, but once you start getting into the nuances of all the challenges, that's not an effective way to do it," Panay said.

In the last five years, Microsoft moved from Excel to a homegrown cloud-based system, including 15 Azure products, which served as the basis for its new supply chain offering, he said.

Kraft Heinz gets better supply chain insights

Consumer goods giant Kraft Heinz Co. has been using the new platform for the last two years, said Mitch Arends, senior vice president and head of operations for Kraft Heinz North America, at the Supply Chain Reimagined event.

Several issues, including a drought in California that affected the supply of tomatoes Kraft Heinz sources for the Heinz ketchup brand, put pressure on the supply chain, Arends said. The pandemic changed consumer behavior to more in-home consumption, leading to changes in how Kraft Heinz delivers products to market.

All of this led to Kraft Heinz needing a more agile and resilient supply chain so that the company could, for example, forecast disruptions before they happen, he said.

"[Microsoft Supply Chain Platform has] helped to increase our scalability and reliability, and it's enabled us to see insights and trends faster," Arends said. "We can assess risks faster, which enables us to have a greater level of collaboration, not only internally, but across the supply chain."

Filling demand to connect supply chain applications

Microsoft's new platform may succeed because it offers something companies are looking for and it doesn't require them to give up on their existing technology investments, said Dan Newman, principal analyst and founding partner at Futurum Research.

Microsoft isn't raising its hand and saying they're going to solve all of it, they're saying they want to be a conduit to bring together and provide a centralized set of tools to improve supply chain management.
Dan NewmanPrincipal analyst and founding partner, Futurum Research

"Microsoft isn't raising its hand and saying they're going to solve all of it," Newman said. "They're saying they want to be a conduit to bring together and provide a centralized set of tools to improve supply chain management."

An advantage for Microsoft is its widespread exposure in almost every enterprise, but other vendors with established supply chain offerings such as SAP, Oracle, IFS and ServiceNow will make for a competitive market, he said.

But Microsoft doesn't appear to be looking to compete as a standalone supply chain platform, according to Simon Ellis, vice president at IDC. Instead, the software giant's platform operates more like a hub, with plug-and-play capabilities so that companies can connect data from various supply chain systems together.

IDC research suggests manufacturers are looking for orchestration tools, better network connectivity, and better connectivity and integration between on-premises tools and the cloud, Ellis said.

"This aligns with what Microsoft has done here and there's certainly stated interest, but whether that turns to purchasing interest is another story," he said.

Customer demand, particularly from large enterprises, is driving every vendor is trying to pull together a data orchestration platform, said Balaji Abbabatulla, an analyst at Gartner. Microsoft might succeed where others don't, he added.

"They don't have a supply chain customer base, so they don't have to stick to what the customer base is telling them in designing an open data integration platform," Abbabatulla said. "Also Microsoft's ecosystem capability is built out from Azure and the partnerships they have matured over time, which none of the other vendors have. Microsoft knows how to pull ISVs together to build an integrated solution. They have the experience with the Azure marketplace to do this."

The new offerings are appealing to customers because they can meet different needs: Supply Chain Platform for more complex and Supply Chain Center for less complex requirements, he said.

For more complex scenarios, the supply chain platform enables customers to orchestrate data from different systems and build workflows using predefined templates. Supply Chain Center connects the underlying data to pre-connected partner applications like C.H. Robinson and Overhaul, making the connections immediately available to customers.

"You can bring all the data together, but you then use Supply Chain Center as the gateway to hook into the other applications that provide the execution capabilities," Abbabatulla said.

Jim O'Donnell is a TechTarget senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.

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