Companies of all sizes need to look to cloud-based supply chain solutions. Tier 1 and Tier 2 companies have the opportunity with multi-tenant cloud-based solutions to operate more cost effectively. Another advantage of multi-tenant cloud solutions—over installed or private-hosted solutions—are free upgrades and the constant opportunity to leverage current functionality without the time or cost impact reinstalling new system versions or patches. Tier 3 companies have the opportunity to finally afford the same business solutions as their Tier 1 and Tier 2 peers. Software as a Service (SaaS) means monthly usage pricing without capital outlay for hardware, no up-front licensing costs and no annual maintenance fees. Tier 4 and below companies can afford to get off spreadsheet and manual processes to better control their business too.
Myth: Companies cannot run automated facilities using cloud-based supply chain solutions (that integrate and control data collection, voice technology, automated material handling equipment, etc.).
False. Vendors of licensed, customer-installed solutions would like you to believe this. As cloud-based vendors dispel this myth with their proven automation successes, there will be an accelerated migration away from licensed and/or hosted solutions to the more cost-effective multi-tenant cloud-based environment.
Myth: The internet and cloud-based supply chain solutions eliminates the need for Electronic Data Interchange (EDI).
Not completely true. While much of the data traffic may be communicated in secure packets using the Internet as the communication vehicle, industry-standard EDI transactions are and will continue to be an excellent way to communicate standard data between systems and trading partners throughout the supply chain. Cloud-based supply chain solutions should come with standard integration architecture and fully support EDI mapping and bi-directional communication.
Myth: All cloud hosted solutions are the basically the same.
False. “Cloud” is perhaps the most misused word in the industry today. A secured-public multi-tenant cloud solution has a very different value proposition over a private “hosted” solution in the cloud. Unless the solution was built from the ground up supporting a secured multi-company, multi-tenancy structure, at best you will only get the benefits of shifting where your system is located—possibly in someone else’s data center—and who runs it for you. Multi-tenant solutions provide for faster more cost-effective implementations; the lowest total cost of ownership; automatic free upgrades to new capabilities; and low monthly subscription pricing.
Myth: Paying monthly for cloud systems will be more expensive over time than buying traditional licensed systems.
False. Multi-tenant cloud-based solutions have a near immediate return on investment (ROI) and lower total cost of ownership.
Overall value points
Multi-tenant cloud based solutions provide a great opportunity for companies now and in the future. The value and benefits, beyond the total cost of ownership value proposition include greater flexibility and agility for business change; and leveraged expertise and innovation and reduced complexity—all the while allowing you to focus more on your business. If your company hasn’t made the move to the cloud with your supply chain solutions, you need to put a plan of action in motion today.
Diego Pantoja-Navajas is Chief Executive Officer of LogFire, an innovative cloud-based extended warehouse management solution and services provider for retailers, manufacturers and 3PLs worldwide.