CIO Review >> Magazine >> December  2013  Logistics Special issue

Benefits Of Cloud In Logistics

By

Wednesday, December 4, 2013

Chuck Fuerst Cloud computing is a hot topic and the basic structure is similar no matter the service: a vendor hosts the software application and hardware infrastructure, and the customer accesses the services via a Web browser. The customer gains the functional benefits of the system without the upfront cost, need for servers or increased workload for its IT team. And because the cloud is elastic and scalable, you can access more power when you need it for seasonal changes or spikes in demand. Any supply chain management service in the cloud – such as a warehouse management system, performance management system or manufacturing execution system – needs to be closely evaluated. This article will discuss the business and technical considerations when reviewing cloud-based vendors for supply chain management applications.

Business considerations
You may be interested in the proven benefits of a cloud-based service, and so the question may not be “Is the cloud right for my business?” but rather “Which cloud vendor and applications are right for my business?” Consider the following when evaluating how far a vendor will go to help you achieve your business objectives:

• Is it flexible? A cloud-based service is only helpful if it’s packaged in a way that is relevant to your company. A service with a flexible architecture that can adapt to your company’s needs today and be ready for future changes will be one of the best ways to ensure a better return on your investment.

• How easily can it grow with my company? The functionality of the service should have the ability to be scaled up or down depending on business needs, allowing you to access more functionality and resources during seasonal spikes or dialing back power during quieter times.

• What is the total cost of ownership? Does the vendor provide an on-premise and cloud option built on the same source code? If the cloud-based solution’s functionality and R&D investment are focused on the same source code as the on-premise solution, you will benefit from the same product enhancements, upgrades and new features regardless of which deployment model is selected.

If not, you might find a limited product roadmap due to development resources being spread across multiple code bases.

• Do you immediately need all of the bells and whistles the system provides? Do you want a solution that can scale with your business? This is an especially important question for small and midsized businesses who may be oversold on all of the capabilities up-front. Consider the features you need to quickly deliver an ROI, but ensure that your service is flexible enough to deliver new functionalities as your business expands. By discussing how a vendor can help meet your business objectives with an adaptable tool that grows with your company, you can feel more confident that your investment and business operations will be optimized.

Technical considerations

In addition to the specific ways in which a cloud-based supply chain management service will address your big-picture business needs, there are several technical aspects to consider when evaluating a service.

• What does your network infrastructure look like? Because the service is delivered over the internet, you will need a strong network. Make sure your provider can offer redundant network paths. In the event that one connection fails, you can switch to the other and avoid system downtime. Or, you may want to use a direct connection to communicate with the cloud, which is more reliable than a VPN, although the cost may be higher. In short, consider the trade-offs and benefits of each infrastructure in conjunction with a cloud-based system.

• How will the vendor safeguard your data, especially in the event of a disaster? How frequently is data backed up and how will it be accessed if the system goes down? A vendor that offers a redundant architecture – one that does not have a single point of failure – will be best equipped to handle possible downtime or data loss by offering a secondary system to continue operation. In your service agreement, you may want to include a guarantee as to how fast the vendor will get you back up and running if the primary system goes down. Make sure to inquire about specific service level agreements around Recovery Point Objective (RPO) and Recovery Time Objective (RTO); these are important parameters of a disaster recovery or data protection plan.

• What security measures does the vendor have? Ensure there are appropriate anti-virus mitigation measures and intrusion detection for distributed denial of service (DDoS) attacks, which happen when a site becomes unavailable due to intruders flooding the URL with more requests than the server can handle, slowing access or bringing it to a halt.

The Cloud in Action: Moosejaw

Moosejaw is a specialty outdoor retailer that sells products under leading national brands and under its own Moosejaw name. To service orders from its website, catalogue and retail stores, the company uses a mixed distribution model that depends on two types of product movement: 1) a central distribution center (DC) that supplies the bulk of inventory for online and storefront sales; and 2) retail stores that double as mini-distribution hubs for transferring sold goods from one location to another and fulfilling e-commerce orders as necessary.

To support its growth, Moosejaw sought a warehouse management system (WMS) to nearly eliminate the probability of lost orders, increase inventory and fulfillment accuracy, and ultimately strengthen customer service. It selected a cloud-based WMS that provided a foundation of best practices for warehouse management, as well as the ability to use configuration tools to build its own processes that address changing business needs.

Moosejawquickly saw significant benefits with its cloud-based WMS, including a 20 percent reduction in labor costs and the elimination of physical inventory counts. The cloud-based system allowed this mid-sized business to access to a Tier 1 solution, without the need for a large IT team to support it.

The Competitive Advantage of the Cloud