In the world of Software as a Service (SaaS) and cloud technology, supply chain software has been one of the last enterprise software types to enter the arena. Until fairly recently, on-premises installations were still the only ways an organization could adopt supply chain software. Enter the cloud, and now many vendors offer transportation management systems (TMS), warehouse management systems (WMS), demand and replenishment systems, supplier relationship management (SRM) and purchasing systems via cloud supply chain software.
In some cases, cloud supply chain management (SCM) has surpassed other enterprise software in cloud-readiness. For example, cloud SRM and much supply chain execution functionality can easily be installed, configured and ready for use in a fraction of the time that the on-premises versions require. The easy point of entry has even spurred spending on SCM software; while these systems were very expensive in-house, the cloud versions are often much more affordable.
More vendors have emerged with a cloud SCM model, thereby lowering the massive cash outlay that these systems once required. The market has opened up for even SMBs to capitalize on supply chain and logistics execution software. Many smaller ERP vendors have more than adequate cloud logistics and supply chain functionality. In some cases, these SMB-targeted ERP systems have WMS functionalities that are advanced beyond traditional inventory control.
While small cloud SCM vendors have opened up the SaaS market for SMBs, medium and enterprise organizations are still prone to adopt the larger names because of more complexities within their businesses requirements. These larger cloud supply chain software systems have supply chain execution suites that cover the entire supply chain process from sourcing of material, supplier interaction, partner trading and collaboration. In addition, inventory levels, order tracking and shipping, and even recall information can all be traced using cloud-based supply chain management software.
What's next for cloud SCM?
The cloud SCM market is still much segmented. This category of enterprise software, more than others, has a more pointed approach rather than incorporating everything into an entire suite. The supply chain execution market consists of many types of software and includes areas of manufacturing that are not part of a greater encompassing software package.
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The supply chain cloud market is segmented further as subsets of supply chain functionality, such as supply chain analytics within industrial engineering software that measures labor, time and motion KPIs.
Organizations need to scrutinize their operations and pinpoint the areas in which the greatest gains can be made with cloud SCM. Gaps identified within the supply chain -- such as not having a system to track, trace, produce and deliver products to customers -- should be targeted to bolster the cloud supply chain system's functionality. Since most of these are point solutions, many packages have pre-built connectors to other software packages such as ERP, WMS, TMS and SRM and play nicely with existing systems. This approach is namely for medium to larger-sized organizations, as their supply chains are usually more complex and already established. For larger supply chains, one software component may not be as critical as with smaller organizations.
Smaller enterprises with less sophisticated supply chains that require more encompassing functionality should investigate end-to-end functionality like supply chain execution software. Many smaller packages for cloud supply chain are usually bundled into an ERP system for the lower market, with slightly deeper supply chain and inventory functions.
Smaller organizations must walk a fine line as these cloud SCM systems rapidly escalate the monthly payment when more functions are added to the suite. Lack of users for smaller organizations may result in a more complex software evaluation procedure and entails a greater degree of risk.
About the author:
Dylan Persaud is managing director at Eval-Source. His 20 years of IT experience are highlighted with 14 years at the enterprise level. Past positions include business systems analyst, implementation lead, project/product manager, enterprise architect, configuration specialist, market analyst and a manager of research, which has allowed him to examine organizations from the ground up and has given him a high-level overview of the enterprise software market. Working for companies such as IBM, IDC, Indigo and TEC, he has focused on how businesses can run more efficiently.
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