Supply Chain Management in the Cloud

Is the cloud in your future? According to this year’s survey by Harvard Business Review Analytics Services, the top business drivers for adopting cloud and hybrid-cloud technology are:

  • Business agility/flexibility – 49%
  • Cost reduction/maximize IT investment – 43%
  • Improved security – 37%
  • System reliability/availability – 35%
  • Ability to analyze/act on data – 34%
  • Better customer experience – 34%
  • Ability to innovate – 30%

By taking advantage of cloud adoption, organizations can tap into the “generic” benefits of quick implementation, operational flexibility, pay-as-you-go services, automatic and regular upgrades, as well as updated security measures. But, beyond the overall benefits, a cloud or hybrid approach to supply chain solutions can offer so much more:

  • An integrated approach – A more robust integration API enables technology to seamlessly connect with on premise or cloud-based applications for comprehensive supply chain automation.
  • Speed – Processes and order fulfilment can be managed at a much faster rate and eliminate processing errors.
  • Visibility – A cloud-based solution that is integrated with multiple partners can store all transportation-related data in one central location, creating better visibility and impeccable customer service.

Cloud Solutions and the Parcel Market

There’s good reason for organizations to consider the benefits –- agility, scalability, extensibility, affordability –- of cloud-based solutions. Especially when considering the growth and trends within the parcel market:

  • Parcel growth is increasing: Parcel shipping volume is predicted to grow two percent (from five to seven percent) through 2018. While this figure may seem low – it is predicated on a large base figure. In 2015, the United States shipped 11.8 billion parcels followed by Japan (9.4B), Germany (3.0B), UK (2.2B) and France (1.5B) – so the growth of the number of parcels is huge.
  • Carrier dynamics are increasing: IT organizations are forced to keep up with the constantly changing requirements of parcel carriers, as they add new services and update rates to reflect ever-evolving business models.
  • Market complexity is increasing: One of the leading areas of parcel growth is cross-border parcel shipping. If you consider that China represents the fastest growing retail e-commerce market — with expectations to be 47% of all retail e-commerce sales by 2020 — cross-border parcel shipments will continue to rise.

Based on these trends, it’s clear that organizations need support to keep up with these demands coming from customers and the industry itself.

All On Premise, All Cloud, or a Mix?

One of the central questions raised is should a solution be all on premise, all cloud, or a mix? The reality is that in the inter-related and inter-reliant world of supply chain management, an “either-or approach” doesn’t necessarily work. A successful approach can require a blend of cloud and on premise technology in order to enable shippers to manage higher volumes, reduce costs and cycle times, enforce compliance, and improve customer service.

Companies can gain further benefits when cloud solutions are combined with a more modern approach to supply chain — moving away from a traditional logistics model and embracing a macro-optimized, global trade network model –- where supply chain partners are connected through one technology platform.

The technology of yesterday was on premise, deployed behind a firewall, which makes participation from the outside world very difficult. Cloud technology does not inherently have the ability to support a connected global network. The network needs to be able to flex and adapt to all of the participants connecting through a variety of means. In this model, the focus is on interactive collaboration among carriers, shippers, forwarders, suppliers, third-party logistics providers (3PLs), and even customers. It drives a powerful network effect with the benefits of universal connectivity among participants. This connectivity creates a number of benefits to help companies streamline their global supply chain management. In addition, advanced analytics delivered in the cloud can bring value to a supply chain that a premise-based solution cannot.

Organizations are wise to consider the amount of actionable intelligence a global trade network model can provide to help make better business decisions. It eliminates black holes and guesswork by providing real-time data on what is happening in the supply chain. Companies can use the analytics to enhance optimization opportunities so they can look beyond micro-optimization and expand to macro-optimization within the network.

No matter how it’s deployed, the cloud delivers the benefits of transparency, end-to-end visibility, and the maximum potential from partnerships. By moving away from merely on premise technology that is hard-wired, companies can enjoy the freedom and power of choice, a boost in productivity, and ultimately, a positive impact on a company’s bottom line.

Doug Surrett is Chief Product Strategist for BluJay Solutions, where he oversees the company’s product convergence and expansion strategy. He has been in the logistics industry since 1988, serving in leadership roles focused on transportation management, warehouse management, operations, and global trade

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