DC Velocity - March 2017

50 DC VELOCITY MARCH 2017 www.dcvelocity.com
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For that kind of operation, one option might be to take a selective approach to cloud computing, running some components of a warehouse software suite on the premises while sending others to the cloud. For example, the DC might run the systems that control its high-speed sortation equipment on its premises, but rent cloud space for more forgiving operations like slotting, receiving, and inventory. “We very much agree that the future is in the cloud, but some percentage of the solution needs to be on premise, at least for our biggest tier-one customers,” Wallingford said.

Another concern that’s deterring companies from taking the cloud-based WMS route is security. Whether the facts support it or not, many perceive cloud-based data exchange to be less secure than the on-site alternative.

That can be a deal-breaker for today’s retailers, which typically have a low tolerance for risk. Some are concerned about protecting customer data—due to the explosion in e-commerce, warehouses increasingly handle personal customer data such as home addresses. Others want to keep proprietary market data—like details on the type and volume of SKUs (stock-keeping units) they handle—close to their chests. Either way, they’re unlikely to embrace the cloud computing model if they think it will put their data at risk.

“A certain number of CIOs are saying ‘I’d never want my information in the cloud, with the proprietary information about the SKUs we handle.’ They feel more comfortable on-premise, in terms of security and privacy,” said Craig Moore, vice president of sales for North America at HighJump Software Inc.

However, cloud proponents argue that remote servers are actually a safer option than on-premise computers. A cloud provider is likely to have specialists on staff who can devote their full attention to security, they argue. That’s a big step up from having to rely on an IT jack-of-all-trades who also has to tend to an array of office hardware.

What all parties can agree on is that there’s a lot at stake. “The execution of [the tasks this software enables] is crucial to the bottom line. Activity in fulfillment channels determines the success of the business,” Moore said.

SMALL DCs LEAD THE WAY

Despite these concerns, plenty of businesses are following the siren song to the cloud. Among them are retailers seeking 24/7 visibility of their goods as they move through the supply chain. As the retail industry shifts to an everything-is-a-warehouse mentality, retailers increasingly want the capability to pinpoint the whereabouts of their inventory at all times, whether it’s in the DC, in transit, or in the store.

That’s where the distributed nature of cloud technology can be an advantage, according to Guy Courtin, vice president for industry and solution strategy in the retail and fashion division at Infor, the parent company of logistics information services provider GT Nexus. An isolated, on-premise WMS cannot provide data needed to track goods through the entire supply chain, he said, but a cloud-based WMS that can be integrated with other software systems could provide that capability. Even better, that type of networked system would make it easier for retailers to make adjustments to shipments on the fly, such as diverting goods to cross-dock-ing or redirecting them for drop-shipping, he said.

Regardless of the industry, it has largely been the tier-two and tier-three players—not the multimillion-dollar enterprises—that have led the charge to the WMS cloud. That’s partly because cloud computing is seen as a less risky proposition for the smaller players. The little guys aren’t likely to be using the kind of advanced warehouse technologies and high-speed automated systems their larger counterparts do. As a result, they face less risk of disruption in the event of a hiccup in computer response time.

Another part of it is economics. The cost advantages of cloud computing are a particular draw for small and medium businesses (SMBs) that don’t have big IT budgets. Because they have limited resources, many don’t want to manage “the iron”—industry shorthand for computing hardware, said Scott Fenwick, senior director for product strategy at Manhattan Associates Inc. They want to focus on using the software, not managing the software, he said.