How Cloud is Reshaping Logistics & Supply Chain Management
The true potential of the Cloud has been unraveling in the past decade drastically, and its positive impacts on specific industries are becoming more evident than ever. Logistics is one of the primary sectors that benefit the most from cloud technologies and digitization.
In the past couple of years, the logistics sector has had severe issues mainly due to the Covid-19 pandemic and disruptions in the global supply chain caused by world politics, wars, and sanctions, despite the unprecedented growth.
Shifting global demand and the rise of e-commerce and online shopping in recent years also played a significant role in supply chain management. During the past decade, giants like Amazon and Alibaba have reshaped the logistics environment by minimizing shipping time (ex: same-day prime delivery), increasing autonomous delivery/packaging/storage options with high tech (drone deliveries, Amazon’s Proteus robot), and setting higher standards for both consumers and competitors. Retail models like dropshipping push organizations to rethink their supply chain strategies and adopt more flexible and cost/time-efficient solutions to fulfill high customer expectations, avoid bottlenecks, and maintain scalability over the long haul.
KPMG predicts the major supply chain challenges in 2023 that will shape the industry as:
1) Nations will be skeptical about cross-border trade cooperation
2) Cybercriminals will ramp up activity
3) There will be key material access turmoil; manufacturing footprints will change shape
4) Retail and distribution supply chains are morphing rapidly
5) Supply chain technology investments will accelerate
6) For ESG efforts, scope 3 emissions will be scrutinized by investors and regulators in addition to the environmentally conscious consumer.
To face these challenges and gain a competitive advantage, companies must have:
Capability: A mature supply chain planning capability to always be a step ahead and ready to tackle supply chain risks and opportunities
Agility: Making sure the supply chain is responsive and agile to manage the unexpected and to deal with these threats and disruptions appropriately, efficiently, and profitably
End-to-end forward-looking visibility: Having ‘control tower’ visibility on key real-time indicators, being able to maneuver your supply chain beyond your business borders, and building real-time collaboration with your ecosystem of supply chain partners will likely be critical – all done using digital capabilities. The ultimate goal is to enhance collaboration across the supply chain ecosystem.
And the affiliated strategies that can assist companies amid these challenges are as follows:
1) Operations should be flexible and resilient to adapt and adjust in real-time to changes in trade flows, new regulations, the impact of COVID-19, climate change, trade tensions, and other geopolitical movements.
2) Technology should be effectively utilized to help reduce operating costs, provide visibility, and diversify the way customer needs are met.
3) The capability to adapt to digital operations and drive actionable improvements from data is important.
4) Fleet management and supply chain networks should be responsive to increasing customer requirements.
5) Collaboration, supplier partnerships, and ongoing risk monitoring are needed to de-risk the supply chain.
Organizations must understand cloud transformation and how it modernizes logistics at every step of the supply chain, from suppliers to retailers, logistics firms, and consumers around the world.
Throughout this article, we will take a closer look at how the Cloud reforms the global supply chain management and logistics industry by highlighting some of its key benefits.
1) Optimize Routing Plans
In logistics, route optimization is everything. Creating an efficient routing plan can be extremely complex and time-consuming for operation managers and dispatch, even for supercomputers, especially if there are numerous stops on the route. A poor routing plan means higher costs in felt management, increased hours of labor, and decreased operational efficiency for organizations, which are some of the key components of maintaining a competitive advantage in the logistics sector. Tight delivery time windows, last-minute changes, emergencies, and insufficient drivers/storage facilities/equipment also bring new challenges to today’s supply chain management. Therefore, effective route optimization possesses excellent importance for logistics firms’ asset optimization, cost reduction, time management, and operational efficiency. This is where cloud elasticity kicks in. Cloud elasticity refers to the system’s capacity to automatically adjust and rearrange resources, such as CPU cores, memory, VMs, and containers, in real time. This adaptability allows the system to respond instantly to fluctuations in workload demands by seamlessly adding or removing resources depending on operational needs. Cloud elastic solutions are essential for tackling such challenges in a business environment that has constantly changing workloads and a high level of uncertainty. The cloud enables logistics firms to integrate real-time data into their operations, whether it is purchase orders, GPS data, weather forecasts, or customs clearance status, allowing them to effectively rearrange routing plans and company resources, automate workloads, and increase the agility of the company during times of crisis.
2) Maximize Efficiency
Efficiency is a tough nut to crack in supply chain management. Logistics managers are always under constant pressure to maximize efficiency with limited resources. Last-minute changes and delivery issues are an indispensable part of the nature of business; therefore, maintaining operational efficiency is never easy to accomplish. Cloud computing paves the way for operational efficiency by increasing automation in daily tasks with abolishing manual data entries. Real-time data allow managers to make informed decisions for smoother operations. Organizations can seamlessly automate daily tasks using routing software/guides, policy management, and customized workflows that already exist in the cloud. Cloud solutions make use of managed automation and data analysis, resulting in efficient resupply of needed goods and raw materials. Workload automation also leads to accurate data analysis based on the data available. By unlocking the full potential of the cloud, logistics specialists, drivers, warehouse managers, and management teams can collaborate in real-time and improve their overall productivity tremendously.
3) Manage Data in Real-Time
A lot of parties are involved in today’s highly complex supply chain infrastructure, from vendors to suppliers, and freight companies, which means that the immense data collected is vastly scattered among these organizations. That is why it is relatively hard to gather and analyze the immense data from different parties to make effective managerial decisions. According to a 2022 Deloitte Research, companies with advanced, unified digital strategies are currently at a significant advantage as an industry that still suffers from data fragmentation rushes to close the gap. Nearly half (48%) of survey respondents expect data to improve visibility into assets and goods in the next three years. Over the same time horizon, many say data will help improve customer relationship management (44%) and workforce optimization (35%). Cloud solutions specifically possess great benefits to data management. Seamless integrations with 3rd party apps allow organizations to gather all shipment data that can be used for improving the crucial steps of delivery. By analyzing immense amounts of data, companies can gain valuable insights regarding consumer behavior, supply chain efficiency, seasonal fluctuations, and performance KPIs. This data-driven approach helps identify opportunities for improvement and optimization. For example, as per a Deloitte study, companies like General Electric are creating predictive models for train shipments as a consequence of cloud data analytics. These models help the management team to optimize trip velocities by taking into account weight, speed, fuel burn, terrain, and other traffic conditions. These models enable faster-rolling trains, pre-emptive maintenance cycles, and the ability to expedite the staging and loading of cargo, contributing to enhancing efficiency within. Cloud solutions enable robust data analysis practices, which subsequently increase production, collaboration, management, and innovation in almost all parts of supply chain management.|
“Creating standardized, structured data for the supply chain will empower the most impactful innovations in the industry. When truly structured data is widely available, many other innovations are enabled by leveraging tools such as APIs and integration technologies.” – Deepak Chhugani, Founder, Nuvocargo |
4) Reduce Costs
The logistics sector is notorious for its low-profit margins. There are so many additional costs that can arise due to customs clearances, port congestions, and insufficient storage/personnel (truck drivers, warehouse workers). These additional costs can be very frustrating for all parties involved and even jeopardize the delivery of the shipment from time to time. Therefore, having an effective cost-reduction strategy can determine the survival of a company in a highly competitive business environment that is under constant change. Logistics companies and vendors can effectively cut down hardware and IT costs by migrating to the cloud so that the subject capital can be used to make investments in other aspects of the business. Since cloud solutions enhance operational efficiency throughout the entire supply chain, related operational costs can be minimized. Cloud solutions generally offer a wide range of payment options that are highly scalable and customizable based on supply chain needs that are suitable for cost optimization. Moreover, enhanced collaboration/ communication between parties enables enhanced productivity, efficiency, and time management throughout the supply chain, which helps reduce operational costs to the bare minimum.
5) Increase Scalability & Growth
According to Report Ocean, the cloud supply chain management and logistics market was worth around $4.4 billion in 2020. It is now registering an impressive compound annual growth of 20%, meaning the market size is expected to reach $27 billion by 2030. Seasonal fluctuations in demand play a big role in supply chain management, and companies must be flexible/agile enough to allocate/rearrange their assets, labor force, and routing plans effectively to stay competitive in the game as well as to implement a steady growth strategy in the long run. Cloud solutions offer a variety of benefits to logistics firms for their scalability and growth efforts. It allows organizations to allocate their resources flexibly by providing on-demand cloud computing tools. Omnichannel cloud tools allow companies to scale up and expand their operations into new territories swiftly and with ease, without the need of investing in on-premise hardware and IT personnel for their new branches. Therefore it helps tremendously to optimize hardware, labor, and other related upfront costs during the expansion phase. Because of the seamless scalability of cloud infrastructure, employees face no challenges adjusting daily operations in a new market so that they can use their time to focus on productivity, collaboration, customer relations, and innovation.
6) Improve Customer Experience
As previously mentioned, the rise in online shopping and e-commerce and companies like Amazon with fully automated shipments took customer expectations to new highs. In this new day and age, customers want to receive accurate delivery status, track their shipments in real-time and get 24/7 customer support when there is an issue with their delivery. According to Maersk, a 2022 study found 62% of consumers expect their orders to arrive in three days when they choose free shipping, and 56% abandoned their purchases when they did not like the delivery options. Because, as we all know, at the end of the day, customers are always right! Cloud solutions provide real-time, 24/7 shipment tracking for customers and provide detailed updates on shipment status. Customer inquiries receive quick responses from customer service representatives, and automated notifications ensure that customers stay informed regarding shipment updates and possible delays. This transparency allows customers to arrange their schedules/assets/time management accordingly, building customer trust and loyalty. Another major benefit is that cloud tools can analyze and make personalized recommendations based on collected consumer data. Highly personalized services increase customer satisfaction and loyalty staggeringly, enhancing the reliability of your services and improving your brand image in the eyes of customers.
7) Monitor & Manage Risks
Everyone who works in the logistics sector knows that inefficiencies and bottlenecks come with the territory. So many things can go south at almost any stage of the supply chain, and it is quite hard to foresee these risks along the way. Usually, there are many parties involved in the supply chain, even in a relatively simple delivery, and so many single-point failures can emerge, causing a domino effect that can bring operations to a halt. However, this doesn’t mean that affiliated risks can’t be managed. On the contrary, with the emergence of cloud solutions and new tech, the possibilities seem endless. With cloud-based supply chain management, organizations can track suppliers to get a better understanding of production-related risks. Collected data allows logistics firms to assess supplier reliability and affiliated risks in a given sector so that risk managers can make more accurate predictions about single-point failures in the supply chain. Operation managers can also get a better insight into logistics risks (customs, port congestions, driver/resource availability) so that they can adjust their operations to minimize risks and maximize operational efficiency. According to McKinsey Research, 67% of respondents have implemented digital dashboards for end-to-end supply chain visibility. And those companies were twice as likely as others to avoid supply chain problems caused by the disruptions of early 2022. Furthermore, cloud systems provide enhanced security against data breaches, data loss, and system failures, which is a crucial aspect of risk management in logistics. Increased security help organizations save immense time, effort, and money respectively and create a trustworthy environment for all parties involved.⭐⭐⭐
As logistics professionals, creating an omnichannel delivery experience, building strengthened customer loyalty, building consistent and reliable supply chain distribution, having solid data granularity, and investing substantially in a reliable infrastructure are pertinent. As Kartaca, we’ve assembled an unprecedented level of hands-on talent under one roof to create perfect solutions for our customers. Our team of 30+ software, network, and data engineers makes precise touches to our customer’s pain points and offers lifelong solutions. Our team is trained on Google Cloud products, concepts, use cases, etc. Their technical skills to solve real-world challenges are validated regularly through certifications. Kartaca provides you with the tools and technologies you need for leveraging your competitive advantage with loyalty solutions, omnichannel marketing tools, e-commerce infrastructure, unified data solutions and segmentation, and consultancies to help you make the right choices in your IT ecosystem. If you would like to know more about how Google Workspace and Kartaca can add value to your business and your daily logistics operations, please check this page and contact us.Kartaca is a Premier Partner for Google Cloud in the Sell and Service Engagement Models with “Cloud Migration” and “Data Analytics” specializations.
TL;DR
Why is effective route optimization crucial for logistics firms, and how can cloud elasticity help in this regard?
Effective route optimization is crucial for logistics firms as it directly impacts operational efficiency, cost management, and competitiveness. It allows them to minimize costs in fleet management, labor, and fuel while maximizing on-time deliveries. Cloud elasticity comes into play by providing the capacity to automatically adjust and rearrange resources in real-time. This adaptability enables logistics firms to integrate real-time data into their operations and effectively rearrange routing plans and company resources, resulting in increased agility and automation during times of crisis or changing workloads.
How does cloud computing contribute to operational efficiency in supply chain management?
Cloud computing increases operational efficiency in supply chain management by increasing automation in daily tasks, eliminating manual data entries, and providing real-time data for informed decision-making. Cloud solutions offer managed automation and data analysis, leading to efficient resupply of goods and raw materials. With enhanced collaboration and communication between parties, cloud solutions enable logistics specialists, drivers, warehouse managers, and management teams to collaborate in real-time, improving overall productivity tremendously.
How can cloud solutions assist in managing the vast amount of data scattered among different parties in the supply chain?
Cloud solutions possess great benefits for data management in the complex supply chain infrastructure. Seamless integrations with third-party apps allow organizations to gather all shipment data and analyze it to improve delivery processes. By analyzing immense amounts of data, companies can gain valuable insights into consumer behavior, supply chain efficiency, seasonal fluctuations, and performance KPIs, leading to opportunities for improvement and optimization.
How can logistics companies reduce costs by migrating to the cloud?
Logistics companies can effectively cut down hardware and IT costs by migrating to the cloud. By leveraging cloud solutions, organizations can optimize hardware, labor, and other operational costs. Cloud solutions generally offer scalable and customizable payment options based on supply chain needs, leading to cost optimization. Enhanced collaboration and communication between parties also lead to improved productivity, efficiency, and time management throughout the supply chain, further reducing operational costs.
How does cloud scalability benefit logistics firms in achieving growth and expanding into new territories?
Cloud scalability benefits logistics firms in achieving growth by providing on-demand cloud computing tools. Omnichannel cloud tools allow companies to scale up and expand their operations into new territories swiftly and with ease, without the need for investing in on-premise hardware and IT personnel. This seamless scalability optimizes hardware, labor, and other upfront costs during the expansion phase, allowing employees to focus on productivity, collaboration, customer relations, and innovation in the new market.
Author: Cem Cetinguc
Published on: Aug 4,2023
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