Industry Insights

Your Supply Chain’s Moving...to the Cloud

Author
David Markowitz, Product Marketing Director

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Not to infinity...and beyond.  Just to the cloud.  

Supply chain challenges are everywhere. One of the biggest obstacles faced by any company moving physical product today is a multitude of incompatible and distinct third party logistics (3PL) providers. Getting a coherent overview on everything is a nightmare.

This old school model is broken.  Moving to a cloud supply chain model is the only way to drive efficiencies, simplify operations and reduce costs.

Automating Supply Chain Processes

Many industry sectors have - and are - undergoing radical digital transformation; supply chain & logistics is certainly beginning to do so. Forward thinking companies have moved from inefficient, manual processes and communications to automated procedures.  (However, according to McKinsey, 50% of the US’ largest importers still use spreadsheets to manage their complex international supply chain.)

As highlighted recently by investors Bessemer Venture Partners (BVP), much of systems that have been deployed are ‘systems of record’ rather than ‘systems of engagement’ which is why it’s excited about entire new software categories emerging in the supply chain & logistics sector.  In particular, these new categories will take advantage of cloud-based technologies as seen elsewhere like in healthcare, human resources and financial services.

The logistics sector has seen large investments in ERPs, warehouse management systems (WMS), transportation management systems (TMS) and others.  However, most of these applications simply address the symptoms at hand, rather than delivering a cure.  While these can certainly bring some benefit, using new technology while following an outdated approach isn’t the answer.

Often, such technology deployments can lead to a different set of issues with disparate systems from different vendors and 3PLs leading to even more confusion and opaqueness as to what’s really going on across your supply chain.

As many businesses realize, whether B2B, B2C or omnichannel, more incompatible technologies can impact business results.  When you have supply chain connection bottlenecks, whether in transportation, warehousing or fulfillment, customer satisfaction and revenue suffer.

Cloud-based Supply Chain Technologies

BVP sees “the supply chain and logistics sector entering an auspicious time where entirely new categories of software will come to market” and “...new products that address the unmet needs of supply chain professionals.”

Other points they raise include:

  • The next phase of supply chain SaaS companies will leverage clever integration hacks to get up and running quickly and design their interfaces to be easily used by industry veterans, not specialist consultants

  • Despite the gains in visibility, data connectivity remains one of the top needs among enterprise shippers. In particular, [it sees] demands for better data at common bottlenecks and pain points within supply chain operations, such as procurement, first mile, drayage, customs clearance, and last mile.

The winners in the space will be those that embrace a model that solves core inefficiencies and supply chain problems, rather than just the symptoms.  That’s where cloud supply chain technology comes in. According to BVP:

"The biggest opportunities in this industry will come from cloud-based systems that can tap into existing data wherever it resides, harmonize it, and make it accessible across teams. This foundational level of digital infrastructure is a prerequisite for the exciting, intelligent supply chain planning and optimization solutions that the industry has long been striving for.

A new generation of software tools will help companies solve these issues, especially considering the rise of cloud-first supplier relationship management platforms that enable accurate and automated communication, more dynamic supplier monitoring tools with increased visibility and data granularity, and real-time collaboration software to streamline work between OEMs and their upstream suppliers."

So when will this next phase of logistics tech be ready and available? While BVP believes “we are still just in the earliest innings of this transition to digital supply chain infrastructure,” cloud supply chain software platforms are addressing the unmet needs of supply chain professionals and driving significant business value today.

How a Cloud Supply Chain Platform Can Transform Logistics

Cloud computing has become commonplace.  Companies today no longer buy, operate and maintain server farms to access the compute power needed to run their business.  They rely on Amazon Web Services, Microsoft Azure and other cloud computing providers to get access to scalable computing resources, as needed, on demand.  Huge IT budgets allocated for computing power infrastructure and integrations is a thing of the past.

This same model now works for logistics - with a cloud supply chain platform.  But beyond simply addressing your pain with a cloud-based supply chain tool, there’s a shift at hand that combines the power of cloud computing with logistics services and expertise.  

What does this mean?  Simply, you can now manage your supply chain requirements on a similarly scalable, flexible, on demand variable-cost basis.  

Importantly, there’s no need to guess how much freight, inventory capacity and fulfillment services you need and where, let alone committing to it ahead of time, for years.  

And one of the biggest problems when relying on a myriad of 3PL providers and their systems is eliminated.  How?  

Today, with every new 3PL provider, there’s yet another system or supply chain tool to which you have to connect.  This puts you in the neverending (as well as expensive and time consuming!) system integration business.  This leads to more siloed data, preventing any kind of visibility across your operations.

With a cloud supply chain approach, companies gain elastic capacity, pre-connected logistics partners and a single software platform by wrapping all the logistics services and technology needed as one flexible solution.

This way, supply chain management is finally simplified. You can easily access the services and capabilities when and as you need them. You get to market faster, improve your operation efficiencies and better serve your customers.

As cloud computing did, cloud supply chain is transforming how companies do business. We’d welcome the opportunity to explore how you turn your supply chain into a competitive advantage. Contact us today.

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