All of us who are into the dynamic business and digital world have heard the term Industry 4.0. Now what is Industry 4.0? The world is transforming continuously since the ancient ages. We are amid the digitization of manufacturing which is called industry 4.0. It has evolved from manual machine operations and production to mass production with electrical machines, to electronics automation and the contemporary cyber-physical systems, involved in decision-making, smart machines, and a lot more (Marr, 2018).
Supply Chain 4.0
Where the Industry 4.0 revolution has impacted the whole world, the supply chain had to become resilient accordingly. Reorganizing the supply chain with advanced technologies, big data analysis, and evolving automatic storage and retrieval systems is referred to as supply chain 4.0 (World Trade Organization, 2019). Supply chain 4.0 uses the Internet of Things (IoT) transforming the model from unidirectional to omnidirectional. Where multiple stakeholders are involved, starting from multi-tier suppliers to consumers and investors, businesses need relevant information on the go. We have two major types of information-sharing models: one is traditional on-premises and the second is web-based or cloud software. On-premises software helps within the organization whereas information available on the cloud is readily available to all stakeholders.
If you are a logistics manager or supervisor in a firm, you’ll have to monitor the inventory and warehouse – anywhere – at all times. With a traditional WMS, you would have to download daily transaction data every evening and transfer it to your computer to analyze it accordingly. This data will be used offline only. However, having PALMS will make it all easy. For whatever requisite data you need, just connect to the internet, log on to the web-based cloud WMS and access all the information at any time.
In the below parts of the article, we’ll discuss the importance of WMS, especially during the COVID situation.
Why Cloud WMS particularly during COVID-19?
Global Warehouse Management System (WMS) market size is expected to reach $3.379 billion by 2027 from $1.88 billion in 2020, at a CAGR of 8.6% (Market Watch Press Release, 2021). The markets anticipate that WMS market will witness substantial growth because large scale companies are rapidly moving to cloud WMS due to the following seven major reasons:
1.Scalability – Limits in Traditional WMS
Traditional WMS is limited in size and resources. The software has limited scalability to owners’ resourcefulness. It withstands heavy cost of hardware and license upgradation. The organizations need to pay separately for on-premises WMS maintenance & equipment through database & upgradation, license management, disaster recovery management, database backups, etc. Whereas the cloud infrastructure delivers all these WMS maintenance and license upgradation factors with 99.9% uptime and automatic backups. During the pandemic, the IT personnel at all firms had limitations to their physical movement following the COVID SOPs. The businesses were disrupted halting the movement of products and individuals. It was difficult for the firms to purchase equipment and install it at their premises. Cloud-based WMS provides high-power servers and licensed software to their customers. So, the use of web-based or cloud WMS has increased since COIVD. Hence, cloud WMS has become more convenient and popular as compared to the traditional one.
2. Accessible at all Times – Anywhere
On-premises WMS usually requires to buy VPN licenses, a leased line for communication and train the staff to configure and maintain those VPNs. The on-premises model also requires sufficient power backup to support the physical production servers. Whereas the service providers of SaaS and cloud computing are available round the clock. Cloud WMS offers an efficient 99.9% accessibility, powerful antivirus software and takes responsibility for resource optimization. The SaaS model guarantees about 10-15 fail-safe mechanism backups on server farms for power accessibility with no question of the production server shutting down. Efficient customer service representatives are also available to guide the customers in a friendly manner. So, being an internet-based service, it reduces complexity for software users. Furthermore, authorized stakeholders can access the information anywhere in the world, with just an internet connection in their own laptops. Being a logistics manager or supervisor, you’ll need a VPN license and leased connection while using a traditional WMS. But if you are using a cloud WMS e.g., PALMS, you only need an active internet connection on your own laptop/system and can resolve any particular issue anywhere, anytime.
3. Faster Processing System
Traditional WMS can utilize the sources available at the user end, whereas cloud WMS utilizes high-tech hardware already acquired by the service provider. Basic functions of a WMS are to process inventory transactions and store/retrieve the stock. Moreover, various organizations started analyzing big-data to evaluate the suppliers and product availability during COVID-19. Firms required large configured servers to store and handle big data. The firms having cloud WMS did not need to upgrade their hardware, as they just had to upgrade processing and storage capacity on servers and start using them instantly. They saved their costs and kept the focus on the core business instead.
4. Data Security System
Nothing is more important than securing sensitive information, and nothing is better than doing it by moving on cloud (Aptean, 2020). Firms show concerns about their data security with the on-premises model. They need to expend separately on security systems like anti-malware, firewall, etc. along with the WMS server & hardware. Furthermore, they need to keep updating the security systems regularly. However, cloud servers have already installed various types of hardware and software for data security and keep updating automatically.
5. Increase Visibility of Inventories During Pandemic
More than 70% of the organizations were analyzing and mapping their suppliers during the first four months of the pandemic. The firms had no clue that how many of their suppliers would be able to dispatch consignments and how many were stuck in the lockdown or red zone areas (Eshkenazi, 2020). Only those firms were able to react immediately who responded proactively and marked their suppliers. So, firms having software access at all levels in the chain responded resiliently with agility.
Cloud WMS provides visibility to all stakeholders across the chain, starting from all tier suppliers to the final consumers. For example, logging on to PALMS online, the supplier can see that how much product balance is available at the retailers’ end. The same information will be available for the manufacturer and distributor. The distributor will ask the manufacturer for production and the supplier will push the raw materials to the manufacturer. Hence, it reduces the chances of bullwhip effects, stock-outs and helps to manage the inventory holdings.
6. Low Upfront Costs
Shipments went to a halt due to limited movements during COVID resulting in an exorbitant surge in global shipping costs. The supply chain had to be operative in food and other sectors. For better communication and ready availability of information, the supply chain needed solutions. We already discussed the importance of information visibility across the chain above, but the question is how to achieve it? The web-based solution became the most practical option for this purpose. Online service providers found it as an opportunity and offered web-based solutions at affordable prices. One of the major reasons is that cloud WMS does not need special infrastructure like installation of a dedicated server, networking, software installation on all terminals etc. It can be used on the existing computers on the existing internet connection.
7. Day to Day Collaboration with Suppliers and Buyers
Working in a network connecting the customers with suppliers through multi-tier links adds value and makes the network more efficient. When all links and participants of the chain work together, they become more resourceful and agile. During the COVID situation, agile and resilient organizations performed more effectively as compared to their rivals (Steinberg, 2020). For an efficient product flow, efficient WMS based on the cloud would be a more viable option. It is integrated at all levels, horizontally and vertically. Horizontal integration means firms either acquire or merge with each other belonging to the same industry, and share information to gain higher market power. Whereas, vertical integration means integration among all tier suppliers, manufacturers, wholesalers, distributors, retailers, and buyers. An integrated supply chain model works more resiliently (Mandal, 2016). So, the suppliers and buyers working together in collaboration makes the supply chain model more resilient instead of them working independently.
Inventory Management had been carried out by maintaining manual records before the computer age. It was quite difficult to analyze, calculate and maintain the records properly. After the introduction of information technology, records were shifted to spreadsheets. But still, analytical errors on manual entries existed. Huge data analysis by humans may incur a lot of errors, but powerful cloud computing makes it more efficient and error-free.
Automation in businesses changed the whole world. Automatic supply chain systems including WMS were introduced. It eliminated the errors in various calculations e.g., Re-Order Point count, inventory tracking, cycle counts, etc. Currently available on-premises WMS are adaptive and customizable. However, they have associated high costs and the implementation is time-consuming. The introduction of a cloud or web-based WMS is more beneficial because of its easy, time-saving implementation and lesser upfront costs. Besides COVID-19 like pandemic crisis brought much uncertainty in businesses. So, it is the need of the hour for firms to adopt & transform to cloud technologies for much efficiency, reliability and sustenance even during uncertain times.
This article has been written by Gurudatta. If you wish to speak to the author on this topic, you can contact him at email@example.com
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- Eshkenazi, Abe. (2020, March 4). “Supply Chain Mapping — an Essential Step Toward Resilience.” ASCM Insights. https://www.ascm.org/ascm-insights/supply-chain-mapping–an-essential-step-toward-resilience/.
- Mandal, Santanu. (2016). “Towards an Integrated Logistics Capabilities Model of Supply Chain Flexibility: A Social Exchange Perspective.” Romanian Economic and Business Review, vol. 11, no. 3, Romanian-American University, Scientific Research Department, p. 44.
- Market Watch Press Release. (2021, April 22). “Global Warehouse Management System (WMS) Market Size Research 2021: Industry Growth Rate with Recent Trends, Share Analysis by Top Players, Latest Opportunities, and Future Prospects with Covid-19 Impact Forecast to 2027.” Global Warehouse Management System (WMS) Market Size Research 2021: Industry Growth Rate with Recent Trends, Share Analysis by Top Players, Latest Opportunities, and Future Prospects with Covid-19 Impact Forecast to 2027. https://www.marketwatch.com/press-release/global-warehouse-management-system-wms-market-size-research-2021-industry-growth-rate-with-recent-trends-share-analysis-by-top-players-latest-opportunities-and-future-prospects-with-covid-19-impact-forecast-to-2027-2021-04-22.
- Marr, Bernard. (2018, September 2). “What Is Industry 4.0? Here’s A Super Easy Explanation For Anyone.” Forbes. https://www.forbes.com/sites/bernardmarr/2018/09/02/what-is-industry-4-0-heres-a-super-easy-explanation-for-anyone/?sh=364cacc19788.
- Steinberg, Glenn. (2020, June 11). “COVID-19: Why Real-Time Visibility Is a Game Changer for Supply Chains.” Build a Better Working World. https://www.ey.com/en_gl/consulting/covid-19-why-real-time-visibility-is-a-game-changer-for-supply-chains.
- World Trade Organization. (2019). “Understanding Supply Chain 4.0 and Its Potential Impact on Global Value Chains.” Global Value Chain Development Report 2019, by World Trade Organization, WTO, pp. 103-119. org (Crossref), doi:10.30875/10529e69-en.