August 2011 | Commentary | IT Matters

Cloudy Days Ahead for Global Logistics

Tags: Cloud Computing

Doug Waggoner is CEO, Echo Global Logistics. 800-354-7993

Cloud-based systems are innovating the way businesses connect by optimizing functionality and establishing networks that serve as global business process hubs. They bring order to the chaos created by the hundreds of processes that occur within a supply chain each day, coordinating real-time information being shared across relevant trading partners.

Without a standard business-to-business communications layer, supply chain visibility, efficiency, and velocity suffer, resulting in unnecessary costs and additional human resources needed to manage the inefficiency.

The ease and immediacy of connecting to a cloud-based network is its most significant benefit. Shippers can connect to a pre-built cloud-based network in two to three weeks. In comparison, the timeline to implement and on-board all necessary trading partners within an on-premise or Software-as-a-Service (SaaS)-based system can extend for years and cost millions. The ongoing need to on-board new partners results in additional costs.

The connection established by the cloud is more than just a link between businesses. Rather, it creates a virtual community where all relevant business partners have visibility to the information they need to execute efficiently as part of the network.

The cloud automates processes that occur between companies across the network, resulting in smooth inter-company collaboration and optimized efficiency.

Cloud providers are also able to pool their buying power, resulting in lower freight costs for shippers.

Data-Driven Business

In an age where information is power, companies are hungry for data and the cloud can feed the demand. Cloud-based logistics providers can connect directly to a shipper's enterprise resource planning (ERP) system to analyze and benchmark the performance of their internal operations, which helps identify opportunities for cost savings.

During execution, the direct ERP connection helps automatically recognize customer orders and immediately identify transportation solutions at an optimized cost. This is done using pricing, service and available capacity data derived from the network, historical transaction information, and external market sources.

Cloud-based systems also provide sophisticated analytics that allow shippers to track individual shipments via customized data and reports. Real-time shipment monitoring allows users to take immediate action when problems arise en route. Users are empowered with necessary data to enable preventive or corrective action.

Most importantly, data can be shared across business partners. The data is standardized so all users see the same data in the same format, ensuring fluid communication of information across the network. Capabilities that the cloud enables inherently are nearly impossible to achieve via an on-premise system, and difficult and expensive to achieve via a SaaS-based system.

Cloud-based logistics systems are continually growing in significance as more businesses begin to understand their unique benefits. On a macro level, these systems hold the key to a quantum leap forward in efficiency and cost savings for the entire industry.