In the midst of all the hype surrounding cloud computing, Jez Tongue of @logistics Reply explains how there is great promise for the world of logistics as we move towards 2013
For those few who have had their heads buried in the sand the Cloud may be little more than an illusion, but for the vast majority of the business and IT world cloud computing is well and truly underway. As we approach the end of a productive year for cloud technologies, with accelerated uptake across a wider range of business sectors (research from Gartner earlier this year found the cloud to be a top priority for CIO’s in 2012); increased acceptance of cloud computing is beginning to infiltrate the logistics and distribution arena too. It is in this sector that on-demand platforms have the ability to yield serious potential as we move into towards 2013.
The Cloud Dividend report produced earlier in the year by the EMC and the Centre for Economics and Business Research (Cebr) predicts just this. It revealed how distribution and retail sectors across Europe are set to capitalise most from Cloud computing over the next five years, despite being ranked as only the third or fourth largest contributors to GDP in five of Europe’s largest economies. Most importantly, the Cebr predicted that this future profitability would be premised largely on efficiency as opposed to volume growth due to the impact of rising commodity prices and decreased household spending power. The manufacturing sector is also set to have a significant stake with more than half a million Cloud-related jobs predicted to open by 2015, despite being the lowest contributor of macro-economic benefit out of Cebr’s ‘big four’ industry sectors.* Here, it foresees powerful business development opportunities in the Cloud’s ability to support better seasonal-demand management.
With the recession now penetrating the UK retail industry –biting the grocery sector in May this year – retailers are facing increasing pressures to push the frontiers of efficiency in order to gain the best margins possible whilst also allowing for necessary BOGOF’s. And, with the provision and return of goods via multiple channels being ever more chaotic and sporadic, suppliers are under huge demand to meet increasingly tight SLA’s and consumer expectations. It is therefore more vital than ever for supply chain businesses to be increasingly efficient and agile in order to assert their competitive advantage.
Growing consumer caution combined with the ever increasing complexity of today’s retail market poses an extremely challenging environment for logistics and distribution. This is increasing uncertainty in warehouse and distribution activities and prompting a rise in small, temporary logistics contracts which is igniting interest in flexible, low risk applications offering rapid-time-to-value, minimal revenue interruption and the option to be “switched on or off” in line with demand.
Based on an OpEx, ‘pay as you grow’ payment model, the SaaS model boasts the ability to scale as a business grows in capacity and complexity, but more compellingly for the current logistics landscape, it offers downward scalability to both the infrastructure and the commercial model. Where with an on-premise warehouse management solution (WMS), for example, users are required to invest heavily in a fixed number of licenses, servers and IT people, a WMS on-demand aligns the warehouses’ needs to the number of functions activated on the system so ‘paying for what you bought’ becomes ‘paying for what you use’. This is all managed behind the scenes by the solution provider.
Whilst the prospect of migrating cloud-wards presents a ‘silver lining’ for logistics professionals, moving forward requires a pragmatic and open-minded attitude towards processes of collaboration and the sharing of actionable information in order to optimise efficiency, proactively empower the supply chain network and thus reap the true benefits of a cloud solution.
*Cebr’s ‘big four’ are ‘Distribution, retail, & hotels’; ‘Banking, financial & business services’; ‘Government, education & health’ and ‘Manufacturing’. Europe’s five largest economies calculated were France, Germany, Italy, Spain and the UK.
SideUp, @logistics Reply’s SaaS WMS provides complete visibility of the supply chain from warehouse to delivery. It supports all elements from ideal stock placement through to route and fleet management.
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