As we hurtle towards what is sure to be a busy holiday season and the end of another year, what have we experienced? Well, 2013 has certainly been marked by challenging economic conditions… again and especially by a tough investment climate. The figures are sure to follow, accompanied by copious analysis, but our experience in the market is that capital expenditure in the supply chain is low again, but with some signs for cautious optimism.
Without tempting fate with the old “green shoots” chestnut, 2014 looks like being a better year across the board in supply chain. But 2014 is unlikely to herald a mad dash for CapEx approvals. On the one hand, the investment climate will improve, but it is likely that any investments made will have strict ROI conditions attached and that costs and revenues will have to be increasingly closely linked.
On the other, it is also likely that supply chain companies, especially manufacturers and specialist services providers will want to lock in the hard-won savings and efficiencies made during the recent economic downturn when business volumes kick in again in 2014. And they will want to do this in a sustainable manner, adding cost in line with volume increases, but being able to decrease costs in case of volume reductions. How to achieve these apparently conflicting goals?
2014: the year of the Cloud.
The answer to this question is; with Cloud-based solutions. The last couple of years have seen significant interest in Cloud solutions in the supply chain. Companies are moving beyond taking a close look at this new technology and initial proofs of concepts to deploying Cloud solutions in their operations to increase customer service levels in the face of ever-changing customer requirements and business volumes, all whilst maintaining control of operational efficiency and costs. This balancing act is likely to continue into 2014 and for the foreseeable future and Cloud-based solutions have a key role to play.
To summarise the key benefits, Cloud solutions enable:
• Rapid start up and unmatched speed to benefit: because a Cloud-based solution is already loaded on servers and ready to go and because the rapid deployment approach focusses on fit rather than gaps, a fully working and workable solution can be deployed within a few weeks (as few as two!), immediately delivering on the benefits detailed in the business case.
• Costs to match business volumes: Cloud-based solutions are paid for like household utility bills: a single monthly fee – covering access to the features and functions, help desk support, software upgrades and the hosting/data centre fees – based on the actual usage. As business volumes increase (usually measured by number of users, suppliers, orders or some other such metric), monthly fees increase. If system usage decreases (e.g. after a seasonal peak), the monthly fees will be commensurately reduced.
• Business continuity: Cloud-based solutions typically are subject to continuous up-grade programmes which are implemented invisibly to the user, meaning that the user is always on the latest release of the solution. There is no periodic up-grade cost associated with on-premise solutions – servers, operating system, business process re-engineering, etc. – nor business interruption as what is effectively a new implementation project is carried out.
• Temporary contracts or operations: Cloud solutions can be extended to operations or contracts typically beyond the scope or cost of traditional warehousing and supply chain systems due to a combination of the “rapid start up” and “costs matching business volumes” benefits.
A solution for a, say, 6 months contract can be deployed in a matter of a couple of weeks and switched off again after the termination of the contract. You only pay for the start-up and monthly usage related to that contract.
The drive for continuous improvement and innovation.
With business and investment confidence increasing in 2014 and with Cloud-based warehouse and supply chain solutions set to play their part in increasing customer service levels, whilst at the same time maintaining operational efficiency and cost control, the future, as they say, looks rosy. But there is more…
We are all looking for improvements within our operations, to drive innovation for our own operations and for our clients. Cloud solutions have a significant role to play here as well. Most Cloud-based warehouse and supply chain solutions are well-equipped with many personalisation and self-configuration options, which can be accessed by a suitably knowledgeable user (caveats do apply here!) In many areas, the behaviour of a Cloud-based system can be changed simply by amending parameters or checking/unchecking system flags. These amendments and changes can be trialled and then either rejected (go back to the previous settings) or accepted, enabling new processes or operations to be introduced with little risk and virtually no cost.
An unexpected and unforeseen benefit for Cloud-based solutions in the supply chain is emerging in the form of the actual Cloud platform itself. Designed to be light and easily deployable, Cloud technology is also the ideal platform for new product innovation. Using the inherent network capabilities of the World Wide Web, Cloud platforms are perfect for the development of new, light, easy-to-deploy and fully integrated supply chain collaboration, visibility and execution tools within previously impossible time scales. Functionally rich, process-specific solutions can be developed, piloted and rolled out within a few weeks, extending collaboration and visibility to even the smallest and least sophisticated partners in our supply chains. This is an exciting trend which we will be following closely in 2014!
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