To Win in the New Delivery Economy, Go to the Cloud

As Amazon sets consumer expectations for rapid delivery to the home, companies in nearly every industry have been recognizing that they must move to the cloud to keep pace. This means revamping their transportation and logistics systems to meet their customers’ escalating delivery expectations.

These rising demands have been fueling the growth of a new generation of cloud-based, Software as a Service solutions to provide end-to-end product delivery and fulfillment capabilities more cost-effectively. They also have been forcing nearly all software vendors in this market to expand their functional capabilities to address the full lifecycle of supply chain management requirements — from fleet to financial management.

All you have to do to recognize the changing face of the consumer retail market is pay attention to the growing number of packages piling up on your neighbor’s front step. The explosive growth of the home delivery business also has been influencing the industrial, business-to-business world.

Getting the right package to the right place at the right price has become a fundamental requirement to remain competitive in today’s on-demand world. Whether you’re selling pizzas or industrial products, shipping them on time at a competitive price is essential to ensure customer satisfaction and success.

Although the growing competition among the major retailers in the consumer world has been getting the bulk of the attention, B2B companies targeting specific industry requirements also have been facing greater logistics and delivery challenges.

These challenges have been compounded by the redefinition of transportation services, thanks to Uber and Lyft. Just as Amazon has set the bar for rapid delivery in the consumer world, Uber and Lyft have set new rules for the employment and management of workers in the delivery business.

The Supply Chain and the Cloud

Of course, none of these innovations would be possible without the connectivity and analytics powered by the cloud. The cloud has provided new ways to connect and track the vehicles that transport products from warehouse to residential doorsteps and industrial loading docks. The cloud also has delivered a new generation of software applications to manage every piece of the supply chain management lifecycle process.

Supply chain and logistics requirements have been driving savvy B2B companies to move to the cloud.

For instance, approximately three-quarters of the cloud workloads through 2021 will be enterprise-driven and will employ SaaS apps to get the job done, Cisco Systems’ latest Global Cloud Index survey report indicates.

Database/analytics and the Internet of Things will be the fastest-growing applications within the enterprise segment, experiencing a 21 percent CAGR from 2016 to 2021, or a 2.6-fold jump over the five-year period, the Cisco survey report predicts.

Given the more complicated and demanding nature of fulfillment and logistics, the supply chain management market will jump nearly 50 percent over the next four years, from US$13 billion in 2017 to $19 billion by 2021, Gartner has predicted.

During the same period, SaaS-based SCM sales will grow substantially, while on-premises licenses will decline significantly, according to Gartner.

A Closer Look

However, today’s logistical challenges also have been redefining how SCM systems operate.

Two-thirds of companies surveyed believed advanced analytics would be critically important to their supply chain operations in the next two to three years, Hackett Group researchers found.

These expectations have been driving the global connected logistics market to grow at a compound annual growth rate of approximately 30 percent through 2020 according to Technavio.

Satisfying today’s rising logistics and supply chain management needs means more than just addressing day-to-day fleet management and fulfillment requirements.

Forty-four percent of supply chain leaders have undertaken enhancements of their enterprise resource planning systems to gain greater supply chain-wide visibility, based on the Hackett Group survey report, in order to track and control every aspect of their supply chain operations more easily.

In response, the software vendors have been trying to expand their product portfolios to provide a full lifecycle of solutions and become strategic sources for their customers.

All Aboard

Descartes Systems Group is one example of a software vendor that has been contending with these challenges.

The company provides SaaS solutions to improve the productivity, performance and security of logistics-intensive businesses. Descartes’ solutions specifically help companies better route, schedule, track and measure their delivery resources. They also help to plan, allocate and execute shipments. Additionally, they rate, audit and pay transportation invoices; access global trade data; and file customs and compliance documents for imports and exports.

While this would appear to be everything that a company might need from a logistics management standpoint, Descartes recently acquired Aljex Software, a cloud-based provider of back-office transportation management solutions for freight brokers and transportation companies, to help Descartes customers automate their logistics and supply chain business processes.

As the “delivery economy” becomes a more prominent part of every industry, carefully managing every aspect of the logistics process will become equally important.

Cloud-based, SaaS solutions will be the preferred method of managing this increasingly complex and essential business process. Further, the nature of these SaaS solutions has been evolving to address the expanding expectations of consumers and B2B companies alike. The path to successful delivery methods will be to get on the cloud or be left at the curb.

Jeffrey M. Kaplan

Jeff Kaplan has been an ECT News Network columnist since 2009. His focus is on cloud computing, SaaS, IT management, managed services and the Internet of Things. He is managing director of THINKstrategies. Email Jeff.

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