Other Voices: The supply chain moves to the cloud
Editor’s Note: The following column by Keith Phillips, president and CEO for Voxware, is part of Modern’s Other Voices column. The series features ideas, opinions and insights from end-users, analysts, systems integrators and OEMs. Click here to learn about submitting a column for consideration.
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For warehouse operators and supply chain managers, the adage that the only constant is change is truer now than ever before. E-commerce has radically and forever changed the way businesses across sectors fulfill orders. For starters, shipping speed expectations have increased to their fastest limit. Major retailer Target is just the latest brand to experiment with same day shipping, having just introduced the service to three test markets. Additionally, customers are increasingly visiting brick and mortar stores not to shop but to use them as showrooms where they can decide whether they want to purchase an item before going home to find the best deal online.
Also, as consumers grow more confident shopping online, they also grow more confident that their experience will be perfectly seamless. Recent research indicates that as many as 29% of consumers will abandon shopping with a retailer after a single incorrect delivery, regardless of which channel processed their order. Nearly two thirds of respondents in the same survey also reported that orders arriving more than two days later than the expected ship date would cause customers to stop shopping with that company altogether.
Meanwhile, many warehouses are struggling to navigate this new omni-channel environment with outdated and cumbersome solutions at their disposal. Some companies still rely on paper-based systems to manage their entire supply chain, which practically guarantees errors. Companies that do use some form of technology are often relying on an entrenched system that they’ve long since outgrown.
Fortunately, there is now a bevy of tools designed for warehouses of the future. Not only do the most innovative warehouse technologies offer automation and management that can increase accuracy and efficiency during fulfillment, they also offer something more: nimble scalability and radical affordability, all made possible thanks to the cloud.
The shortcomings of self-hosted solutions are causing many smart warehouse operators to move to the cloud. For starters, cloud-based solutions are easier to implement than on-premise solutions, which frequently require that warehouses also build supporting tech infrastructure and databases. From there, things only get more cumbersome. Making any adjustment or upgrade requires companies to take the entire system offline. Project managers must coordinate and schedule costly downtime that increases the likelihood of delayed shipments. On the other hand, the cloud makes it easy for companies to be fully operational in as little as 10 days and all software updates are handled automatically.
A second benefit of cloud-based technology is that the technology’s easier implementation and maintenance are actually more cost-effective. Every company, no matter how large or how small, faces the reality of limited IT resources that can be stressed by managing on-premise solutions. Implementing the software, building supporting tech infrastructure, managing staff that maintains databases, and taking systems offline for upgrades all contributes to the inordinately high total cost of ownership (TCO) of on-premise software. While certain types of applications always need IT support, voice is among those that don’t need it. Instead, a cloud-based voice solution makes it possible for companies to divert limited IT staff to other applications and to their core competencies.
Additionally, cloud-based technology is inexpensive to scale. If companies want to expand their warehouse, build a new facility, or change locations, self-hosted solutions require them to make similar capital investments to build new technology infrastructure. In the case of adding new facilities, making a large investment based only on the company’s best estimate of future needs can be a worrisome prospect. With the cloud, new service can be added as needed and paid for on a subscription basis.
As omni-channel distribution takes hold and customer expectations continue to rise, the cost of sticking with risky old technology likewise increases. Fortunately, many warehouse operators have already begun to overhaul older solutions, many of which were installed in the early to mid-2000s. Thanks to the cloud, warehouse technology is far more likely to enable companies to prepare for a retail environment that promises to change more in the next five years than in the previous century.
For those on the fence, here are four things all supply chain leaders should know about the value of warehouse technology in the cloud.
Easy setup and integration: Implementing a cloud solution takes as little as ten days to install and just hours to train staff. Providers of cloud-based solutions build all of the necessary supporting infrastructure and databases so that individual warehouses don’t have to worry about them. The process is so quick and painless that companies can even get online without trained IT staff.
Rapid ROI: The cloud makes it easy for technology providers to offer their software on a monthly subscription basis so that technology is accessible to retailers of all sizes. Companies can realize the benefits of new technology rapidly and reach ROI in as little as 60 days.
Stress-free maintenance: The cloud banishes the lengthy and costly downtime required to maintain self-hosted tech. In the cloud, software providers handle all maintenance and make updates available via download over broadband connections. At a time when the CTO and warehouse operator are facing pressure to shrink tech budgets at organizations of all sizes, the cloud offers easy-to-maintain solutions that don’t require IT staff to manage them.
Real-time data and reporting: Believe it or not, many companies are still toiling about the warehouse with paper-based picking systems. Almost any technology will offer tracking benefits unavailable with paper systems, and the cloud makes real time data and reporting even more accessible to warehouse operators. It’s easier to track shipments and catch errors before they leave the warehouse, which helps companies achieve accuracy levels above 99.9%.
