Where are the cloud computing supply chain execution solutions?

May 15, 2014

Though many experts predicted that cloud computing would be the development that brought modern supply chain execution software solutions (SCEs) such as warehouse management systems (WMSs) within the reach of the small or medium warehouses that could not afford the initial adoption costs for these products, they have been very slow to arrive, and even slower to be adopted. Cloud based WMS options have been available for years, but have accounted for only a tiny fraction of the UK WMS market in 2013. To put that in perspective, cloud based CRM software accounts for nearly half of that market now, and the supply chain management sector looked at a s a whole is more than 20% cloud based.

Warehousing and cloud based warehouse management systems

The adoption demographics aren’t what we expected, either. The warehouses and distribution centres that use cloud based warehouse management systems seem to be the less sophisticated, or at least the least heavily computerised ones.

One explanation why is that it isn’t the smaller facilities that demand these services, but rather those that do not desire a great deal form their WMS, and therefore do not wish to make a large initial investment in it. Another theory is that warehouse management systems are very transaction heavy and internally oriented, so few managers are willing to trust cloud delivery. They don’t trust the reliability of cloud delivery with such critical functions.

There is definitely the feeling among logistics managers that cloud solutions are ill-suited to large facilities. The producers of these cloud based WMSs struggle to reassure potential buyers that they have overcome these shortcomings.

But how are cloud based SCE solutions really different?

From the end user’s point of view, a cloud or SAAS solution offers a lower initial cost for several reasons. First and most obviously, they aren’t buying the software upfront, just renting access to it. More importantly, they are not installing the infrastructure that runs the software themselves, all of that is operated centrally by the vendor.

While these systems are seen as less reliable (the internet still goes down from time to time, even at the best facilities), they can offer increased reliability because they are not generally truly bespoke systems. Most suppliers provide access to a mature and well-understood base code, and a separate layer of code to interface with the customer’s systems that is highly personalised.  

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