When it comes to the latest developments in software technology, logistics and transport managers are usually at the end of the queue. There are many reasons for this – and one common reason is that manufacturing and ERP applications take precedence – and when these wishes were fulfilled, the logisticians who wanted to make the operation more efficient had relatively little budget left
However, this is changing now. The current hot technology is internet cloud computing. Not only will this change the way we use all computer technology at work and at home, but supply chain operations are among the earliest beneficiaries.
What is cloud computing and how does it revolutionize our business processes? And how new is it really? The concept of the cloud has its roots in the beginnings of the Internet as a business tool – and we sometimes forget that these days are not that long ago.
In the late 1990s, IBM introduced the concept of e.business – the internet for companies and not just as a gaming and surfing tool for young people. There was a time when presentations, articles, and articles on the Internet were incomplete without a diagram of a cloud that represented the ether in which the information was exchanged. During my ten years with IBM EMEA’s Global Services Management Consulting Group, all of my presentations had at least one cloud appearance.
In the past ten years, the internet cloud concept has undergone several developments – and finally closed the loop and has returned as “cloud computing”. In the meantime, it has seen life as web-enabled technology; web-enabled applications; On-demand computing; Internet services; and utility computing.
The concept was developed and with the advent of Web 2.0 technology – and more recently Web 3.0 – the improvements were quick, leading to Software as a Service (SaaS) and eventually cloud computing.
What’s in a name Quite a lot in the case of cloud computing. All other services struggled to gain traction. Non-IT managers just didn’t understand it and IT managers hesitated to promote technology that could undermine their role as technology administrators.
In fact, there is no significant difference between cloud computing and its predecessor (in the name) Software as a Service. The cloud terminology appears to have been created by Microsoft – as a marketing term that makes the concept more understandable (and helps people like me to recycle my old slides and diagrams!). The term has been accepted by other industry giants such as Oracle and IBM, as well as all major IT consulting companies.
So what is different about the concept? Cloud computing moves computing from the desktop to remote computers. Various computer devices such as personal computers, personal digital assistants, handheld devices and mobile phones connect to remote computers via wired or wireless connections. The investment in licenses, maintenance of the infrastructure and upgrades lies with the application service provider, not with the user. The service is usually paid for from the operating budget – since no investments are made. This makes approval quicker and easier.
This simple explanation shows why the cloud is so important for supply chain management. and also why there is more development and acceptance in the supply chain than in manufacturing. It also explains why budgets aren’t the overwhelming constraint they used to be – service is often paid for from an operating budget, making approval quicker and easier.
For supply chains to work effectively and efficiently, real-time knowledge sharing and the ability to work with external and internal partners – suppliers, customers, logistics companies – to manage events in real time is critical. However, this has never been achieved before. The cloud offers this function – without investments and with costs that are directly related to the level of business that you operate.
Manufacturing processes do not benefit to the same extent as supply chain processes. The ability to share event information with partners in real time is not normally required in supply chains, although it is critical in supply chains. In addition, manufacturing processes can often only be found in product lines and often in individual companies.
Processes in the supply chain and especially in logistics are shared in many industries and most product lines. They follow the same basic principles and goals and use similar resources. Although there are differences, they are not as radical as in manufacturing.
Where did cloud computing or software as a service (SaaS) find willing users? The first breakthrough was with SalesForce, and success was quick when this sales and lead management application moved from the desktop to the Internet. Since then, CRM, personnel management and email services have quickly migrated from the desktop to the cloud.
What about supply chain applications? These are developing rapidly and it is good to see that British companies are among the world’s leading companies. A leading example of this is Deltion, based in Feltham, http://www.deltion.co.uk – provider of CarrierNetOnline (CNO) software as a service.
CNO is a logistics and transport management system that is only available on the Internet. Users pay on a transaction basis and only for the features they need. The transaction costs increase with the growth of the business. Users who find that current market conditions mean less freight carried will pay less until the business turns.
CNO users include industry giants such as UPS and TDG. The most recent contracts include a well-known food producer and one of the country’s largest suppliers to the construction trade. Smaller fleet operators are also users who benefit from low transaction-related fees.
Logixcentral is an internet-based solution from the traditional British company DPS International in Birmingham. This is a cloud computing version of the long-established LogiX routing and planning solution from DPS. It has proven to be successful not only for logistics companies and internal freight companies, but also for companies in the service sector that offer services based on cars and vans.
Another success story of the cloud hosted supply chain is OmPrompt in Oxford, UK – http://www.omprompt.com. OmPrompt was founded to create 100% truly networked trading communities regardless of the technical skills of the trading partners, to provide more efficient EDI solutions and to automate manual processes or message flows. OmPrompt is characterized by its ability to quickly include trading partners in trading communities.
So is the technology cloud here to stay? Industry analysts Gartner believe in it. In a survey published in December 2008, they reported that almost 90% of the companies surveyed assume that they will continue to use or expand SaaS. The companies cited cost efficiency and simple and fast deployment as the main reasons for the introduction of SaaS.
More than a third of respondents said they had plans to move from local to SaaS. In addition to changes in the procurement strategy, the main drivers included total cost of ownership and unfulfilled performance expectations with local solutions.
What does the cloud have in store for supply chain applications? I believe that cloud computing managers across the supply chain have the opportunity to catch up with the technological advances that other businesses have enjoyed for many years: at a lower cost; without investments; Avoid business disruption; and without significant consulting and implementation fees. We are entering a new era of supply chain and logistics technology – and this cloud has a silver lining.