“In the future, highly functional systems operating as a single application – covering every aspect of operations from pricing, order management, shipping, warehousing and transportation management – will emerge. These will be available as subscription services in the public ‘Cloud,’ accessible via a variety of computing platforms.” Ken Lyon, Managing Director of Virtual Partners Ltd
The functional boundaries between different systems are breaking down as logistics operations evolve into leaner, more agile services. Traditional on-premise/homegrown applications supporting order processing, transportation management and warehouse management are examples of the dedicated solutions that struggle to maintain data and process flows across organisations as they evolve.
A new generation of application services will emerge that perform the same functions of existing applications, but as a continuous service.
Twenty years ago, the Logistics division of UPS in Europe developed a platform combining order management, inventory management and cross docking along with transportation management. This single system was ‘bonded’ by the Dutch Customs authority under an innovative licensing arrangement that had recently been introduced by the EU, enabling any orders or inventory in the system to be effectively ‘in bond’ irrespective of location, including while in transit. This provided tremendous flexibility for UPS clients who were using the system to support their high velocity supply chains. This was very innovative at the time, but illustrated the value of flexible systems that could rapidly adapt to new processes or functions in line with business demands.
As application development technologies have evolved into toolsets that can combine ‘objects’ or blocks of functionality very quickly to assemble new solutions, linking to other systems via standard interfaces or ‘services’ is quite common.
Access to the required computing and storage infrastructure available as ‘cloud services’ is both inexpensive and technically straightforward. They are also accessible across almost any computing device from desktop PCs, tablets or mobile phones thanks to the ubiquity of the Internet.
The question is, can the organisations wishing to exploit these platforms do so without fundamentally challenging the entrenched (and often inflexible) process flows preventing them from competing in the market effectively?
When Apple introduced the iPhone in 2007, it wasn’t the first smartphone, but it was the most successful implementation of a mobile device that could really exploit the Internet for processing information. Now, again thanks to the Internet, mobile devices will be the primary platform for providing, consuming and manipulating data.
Across supply chains this is very powerful, as many of the participants require access to data at almost any point in the chain, at any time. Mobile devices generate data constantly; data related to location, status, and identity are all available and capable of being shared on demand. New applications, or apps, are being developed that can adapt to whatever form factor the recipient’s device requires.
The traditional internal data centres operated by large enterprises have had to expose their databases to an unprecedented degree to support the demand for data from managers and trading partners across the supply chain. If they are unwilling or unable to meet this demand, they are circumvented, with users migrating to commercially available alternatives and paying the monthly usage charges on their credit cards.
Visibility into and across supply chains is the key to efficient and effective supply chain management. Many of the efforts to provide this transparency in the past have floundered due to either organizational or technical challenges in accessing and sharing the data. As consumer technology has encouraged the development of user-friendly and open interfaces, it is now possible to share information in a similar fashion to that exhibited by social media platforms.
The combination of these two developments has addressed many of the technical challenges preventing supply chain visibility in the past. It requires both scale and the interconnectivity of a large population of users across many different and variable organisations. As this trend is exploited, it will become more common to view the entire ‘chain of custody’ as orders move through the supply chain.