If your business and customers have Internet access, you can reap the rewards of a cloud-based transportation management system (TMS). Offering market-leading functionality, a cloud TMS can streamline supply chain activities, while reducing implementation and maintenance costs associated with a traditional TMS solution.
A cloud TMS minimizes upfront hardware requirements and costs that often restrict the entry of small to mid-sized shippers with limited budgets and information technology (IT) capacity. At the same time, larger companies may find a broader set of supply chain applications such as those that support globalization and greater collaboration with multiple supply chain partners in real time.
As a cloud TMS is enhanced with new features, innovation becomes readily available to users through application upgrades, offering subscribers the opportunity to adopt new functionality should it provide value to one’s operation. While some level of regression testing is required during an application upgrade associated with a cloud TMS, the level of support required by IT is not nearly as intensive when compared to supporting an in-house application upgrade.
If taken advantage by the user, cloud TMS platforms can offer a level of innovation beyond supporting the standard business needs for lower transport costs, improved on-time delivery (OTD) and enhanced carrier performance.
Cloud-based computing enables a TMS to integrate or connect vast and complex groups of trading partners (carriers and suppliers). Carriers and suppliers already established on the cloud provide companies with faster access to data enabling both global and domestic operations. Users and their trading partners can access applications and share data via a secured Internet connection. In addition, a multi-domain architecture offered by many TMS platforms enables local and centralized management of diverse business processes across the globe.
Enhancing the capabilities of a cloud TMS, users can utilize third-party connectivity solutions that offer access to large supply chain networks of trading partners (carriers, third-party logistics providers, forwarders, suppliers and customers), providing an organization with faster access to data than ever before. Shippers plug into the network once and connect to any of the tens of thousands of companies already participating.
According to the latest World Trade Organization statistics, the amount of merchandise traded globally increased by 143 percent in the last 10 years and doubled each decade from 1983 to 2003. Increased global trade and transportation adds a higher degree of complexity to logistic operations. Cloud TMS solutions offer capabilities that allow users to manage global operations from a single integrated system, automate processes associated with customs brokerage operations and provide real-time visibility across the global supply chain. For example, a cloud TMS with global trade management functionality enables an organization to not only manage the global transportation process, but also comply with all trade regulations associated with the export/import processes. Organizations now have the power and ability to perform these processes using one system vs. multiple systems or outsourcing some of the functions to a third party.
Reporting and Analytics
While data reporting and analysis becomes ever more important to assessing and planning business operations, the first step is capturing the data and having access to it. Cloud TMS applications not only support day-to-day operations, but also capture the data associated with these operations. Subscribers can gain access to data based on what is happening now or what took place in the last 24 to 48 hours. Data warehouse or business intelligence capabilities provide the organization with the ability to move from an operational data-driven environment to analyzing historical data and performing in-depth analysis.
Cloud TMS provides multiple options associated with reporting and business intelligence/analytics. While organizations may have more access and functionality in this area than ever before, it should be noted that the cloud can have limitations in the use of standalone business intelligence tools as some solutions do not make it easy to export data to third-party reporting platforms.
Other advantages offered by cloud TMS can positively impact supply chain operations and bottom-line costs.
Ease of Ownership
Cloud computing takes some of the burden of TMS ownership off of the user because the software provider is responsible for provisioning, hosting, maintaining the underlying infrastructure, and ensuring the reliability, availability and security of the application. In most cases, disaster recovery and additional data security measures are offered and managed by the TMS provider.
More Predictable Costs
As companies essentially pay rent for the opportunity to utilize the functionality inherent in a cloud TMS, upfront capital expenditures related to hardware and software are eliminated. Businesses also gain a better understanding of the costs associated with utilizing an application while eliminating the need to employ an internal IT staff dedicated to maintaining and troubleshooting the tool.
By limiting access to key users for specific supply chain operations, and offering advanced security technology and data encryption options, a cloud TMS offers a heightened level of data integrity across different channels. Cloud TMS providers are also responsible for regularly monitoring and testing the network to prevent data breaches, conducting scheduled data backups and employing disaster recovery plans. Always check the recovery point objective (RPO) and the recovery time objective (RTO) options as many cloud TMS providers offer different options.
Disadvantages to Operating on a Cloud TMS Platform
Because the software and infrastructure of the cloud TMS are controlled by the provider, some disadvantages may exist when subscribing to the service.
Even as many companies heighten the need for data security, many cloud TMS applications utilize a multi-tenant architecture in which a single version of the software runs on a server that is shared by multiple customers. This type of architecture opens the possibility for users to view another subscriber’s data, jeopardizing not only data security, but a business’ competitive position in the market. Along similar lines, a TMS solution layered with technology (hardware, software, servers) purchased from different third-party vendors could mean that multiple handlers are involved in supporting the infrastructure. The more parties having access to the technology increases the security risk.
While data security is essential, a common tactic used to protect data in cloud applications is to simply restrict access to the database at the backend. Users converting to or implementing a cloud TMS must determine if they can accept data access limitations.
Minimal System Flexibility
Should a TMS provider only offer a cloud deployment option, a subscriber is locked into the cloud and does not have an opportunity to transition to an on-premise version of the application. Beware of cloud TMS solutions that offer limited configurability or require configuration that can only be completed by the vendor itself. Vendor configurations could come with a price tag. Also, it is important to understand if one’s requirements can be met within the boundaries of the application’s out-of-box functionality. Due to the access restrictions inherent in cloud-based solutions, customizations and extensions to the base product most likely are not an option.
While upgrades are an important element of innovation, many cloud TMS providers force upgrades that can stifle an operation if imposed at the wrong time, such as during a seasonal business high. Cloud TMS users also must stay abreast of the new content within the software upgrade with the goal of capitalizing on the specific features that apply to one’s business process. To fully take advantage of enhancements, a system integrator, involved with the initial TMS implementation, can provide guidance on how to best take advantage of applicable product enhancements.
Layers of Risk
When discussing risk, most companies think about data security first, but vendor viability is important. Look at the history of the company and how long its products were being used. See if you are in good company with other customers. Also determine if the company owns the technology or if it is purchased from someone else. A TMS infrastructure layered with technology from different vendors is at risk to performing sub-optimally if the provider does not fully understand or cannot support the technology on its own.
The type of hardware supporting the TMS application can also determine the performance of the applications. Should a provider invest in commodity hardware instead of a strong infrastructure that offers high processing speeds right out of the gate, companies may find that they need to upgrade hardware at their own cost to achieve more acceptable results.
Pros and cons exist with a cloud TMS infrastructure. While offering innovation, a public cloud TMS typically provides a pre-configured set of applications and user interfaces that are ready to go right out the box. Hosting subscription fees also vary by provider. Shippers should investigate the pros and cons of moving to a cloud TMS to determine if innovation and operational advantages outweigh certain restrictions and disadvantages.
Thomas A. Deakins is the vice president of global business development at MavenWire.