Cloud-Based Warehouse Management - Is It Right For You?

Cloud-computing technology has revolutionized many business models and means of delivering business value more efficiently. As networks increase their data throughput and as the cost of processing power continues its decline, clients find they can reliably run applications from the cloud. Huge success stories by major ERP companies like SalesForce.com and SAP have legitimized the delivery of cloud-based software solutions globally.

Warehouse Management Solutions (WMS) are no different than any other mission-critical software application that is core to a company's operational survival and success. With cloud-delivery now having a variety of architectural options (private, public or hybrid), the architecture to support a stable and robust system now exists in most data centers.

From a WMS perspective, the "cloud" has now allowed Tier 1 and Tier 2 organizations to more effectively deploy sophisticated supply chain functionality globally without maintaining a repetitive and costly on-premises footprint. Advantages may also exist for smaller, geographically diverse and growing Tier 3 organizations who wish to realize a hosted, subscription-based cost model.

Reducing The Cost of Deployment

The most common advantage cited for any cloud-based deployment is that the implementations are faster than a traditional on-premises deployment. Configuration and set-up aside (which must occur with any WMS), the IT manpower and computing architecture are provided by the solution provider in a hosted model, managed on an on-going basis and hence provide a faster return-on-investment.

Up-front costs of deployment maybe be deferred when items such as licensing costs are spread over the period of a multi-year contract and become an operational expense as opposed to a capital expense. In addition, a reduced capital cost can offer cash-flow benefits to an organization and reduce investment risk when deploying a warehouse management solution.

A Concentrated Skill-Set and Dedicated Monitoring

Back-ups and disaster recovery are also included in a fully managed, hosted service, which again, eliminates the need for company IT resources to support a WMS server environment and local back-up systems. Often running a warehouse management system requires a special skill-set (knowledge of a particular ERP interface, data tables, critical transactions, changes in product SKU data etc.), that must be maintained by the client, which represents additional time or cost.

With the WMS in the cloud, the customer can rely on the solution provider's Help Desk that has dedicated expertise and visibility to the software 24/7. The provider can pro-actively monitor the host environments, perform seamless back-ups and upgrades, examine databases increasing the systems overall reliability and reducing the cycle-time for problem resolution.

A cloud-based offering will typically come with a service-level agreement that out-lines the terms and conditions of the secure offering with service level agreements and guaranteed performance. This acts as a guarantee to the organization and provides a degree of risk mitigation against exposures that sometimes companies have not put in place internally.

Easier Access and Information Sharing

Unlike spreadsheets or desktop applications, a cloud-based solution doesn't tether a user to a desk in the warehouse office. Web-based inventory management gives your personnel anywhere, anytime access to real-time data, whether on the road with a mobile device or receiving alerts at other warehouse locations.

With cloud-based WMS, information sharing and B2B integration becomes simpler as well. Cloud-based inventory control systems that have the ability to "federate" modules with down-stream suppliers permits the management of consignment inventory, the order of parts directly to store or the pre-printing of ASNs and other bar-code labels before shipping to main distribution or store locations.

Access to Product Releases and Upgrades

Cloud-based solutions also offer the advantage of regular software updates and maintenance routines, available 24/7. Larger version upgrades and new modules can be fully tested in emulated production environments, with much better access to variable test environments that may utilize different processors, operating systems, storage and transport fabric. All of these activities can be handled in ways that do not interrupt day-to-day business services.

With access to best-to-breed integration tools, a cloud-based deployment is well suited to provide standard integration architecture and support for EDI mapping and bi-directional communications between multiple partners. As well, small organizations can leverage the economies of scale when it comes to the licensing costs involved in databases, particularly when moving from express versions to larger databases that support increasing data demands.

Other traditional costs can be avoided as well. Costs such as managing firewalls and providing VPN architecture for system access (and the installation of VPN clients on lap-tops) are now handled by up-to-date web tools that provide secure single-sign on functionality.

Not Always a Fit

Cloud-based solutions are not a fit for all organizations, although the reasons against taking advantage of the economies of scale and subscription-based pricing are becoming less defensible, as evidenced by the increase of cloud-based WMS adoption year over year.

For instance, if an organization has a strong IT department and long-standing expertise with the WMS and hosts other in-house applications, the costs for an additional system may already be distributed, and not perceived as an area of concern.

In other cases, internal and service provider networks are still not up to par to provide the kind of dedicated bandwidth needed by radio-frequency scanners and voice systems to provide the sub-second response needed by the mobile worker. Most Wi-Fi solutions, when properly installed using a professional site survey as a guide offer more than ample coverage and band-width in the warehouse. More important is the Internet bandwidth and quality of service available to the user. Latency, jitter and interruptions may slow down data requests from RF devices and affect worker productivity. The data pipe that supports RF scanning in the warehouse has to be dedicated and monitored to prevent drops and slow responses.

Meeting the Criteria

In consideration of the above, here are some key points to consider when thinking of a "cloud-based" WMS:

• Do you require anytime, anywhere access to your inventory positions?

• Are you rapidly growing organization that will spread over a wide geographical area?

• Is your business seasonal or go through periods of low or little use where you could you benefit from a flexible monthly pricing model?

• Do you have limited IT capabilities as an organization and would prefer not to invest in additional computer resources to support your warehouse management environment?

• Do you anticipate that your warehousing needs may be temporary in some cases, requiring the migration from one logical warehouse or physical location to another?

• Is your business cash-flow sensitive and prefers financing in the form of operational expenditures?

• Do you have a diverse set of user-groups that need to see the same set of inventory data between multiple locations?

• Do you need to see dashboard type metrics and KPIs on other form-factors such as smart-phones and tablet devices?

• Do you have the need for vendor-managed, customer-managed (consignment) inventory or a return materials (RMA) process at the distribution or retail level?

• Are you running an operation that can do well without radio-frequency scanners and wireless infrastructure, ie. paper-based?

• Do you have other vendors or suppliers that may use your WMS to prepare purchase orders, print carton labels, and create ASNs in order to increase supply chain visibility and standardization?

• Do you have data security requirements that go beyond what you can afford or offer locally on-premises? (Data centers offer strict security standards that meet government criteria)?

• Is it important that your technology vendor is responsible for 100-percent responsible for upgrades, maintenance, and 24-hour support?

• Do you have diverse or on-going training requirements for warehouse staff that may be simplified by web-based delivery over multiple locations? (Certifications, safety and quality assurance requirements can be embedded in warehouse management processes to fulfill insurance and safety policies)?

If you answered "yes" to any of the above, you may be a good candidate for a cloud-based warehouse management system and should begin to work on a business case that compares the costs of on-premises equipment, up-front licensing and IT resources to the distributed monthly costs of a cloud-based WMS solution.

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