While IT professionals around the world are embracing cloud computing, many executives are taking a wider view of their businesses to determine whether the freedom of cloud-based functionality can extend beyond the realm of information technology and into other business functions.
Cloud-based computing is pretty simple to the lay person; using word processing, spreadsheet, or e-mail programs that are installed somewhere other than on the computer upon which you are currently typing. Simply put, the applications live “in a cloud” on the Internet rather than being installed on your computer hard drive. This approach frees you from having to continually update the programs yourself. It also stores your information in a place that makes it more secure than having it saved only on your computer. And, as anyone who uses cloud-based tools everyday knows; it’s completely scalable. It’s big when you need it, and it’s small when you don’t. Moreover, it has reduced the cost of computing to virtually (no pun intended) nothing.
Less is more. Systems are stored in one hub or ‘cloud’ not connected to outside networks, reducing cost and increasing security and efficiency. R&D investment, excess capacity is shared; the highest level professionals work behind the scenes wherever they are needed, but you only pay for what you need and what you actually use. Some great examples that make it easy for us all everyday: Gmail, Amazon, Google apps, Salesforce and Windows Azure.
In more professional parlance, cloud computing combines virtualization with other technologies to provide dynamic scalability and agility. Applications can run on private clouds (on premises), on public clouds (off premises) or both (hybrid clouds). The concept generally incorporates combinations of Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS). The benefits of cloud computing are defined as leveraging economies of scale in computing. This makes a lot of sense. Rather than build your infrastructure one hardware server at a time, you can leverage a pool of resources (e.g., networks, servers, storage, applications, and services) to maximize efficiency and lower your overall operating costs.
The benefits are easily identifiable in the IT world:
1) Lower Costs. Cloud computing pools all of the computing resources that can be distributed to applications as needed.
2) Cap-Ex Free Computing. Cloud computing delivers a better cash flow by eliminating the capital expense associated with building a server infrastructure.
3) Deploy Projects Faster. Because server capacity can be launched and shuttered in a matter of minutes, the time to deploy a new application drops dramatically.
4) Scale as Needed. As your applications grow, you can add capacity; meaning you can buy “just enough” and scale as the application demands grow.
5) Lower Maintenance Costs. With an outsourced cloud, you don’t need to keep server, storage, network, and virtualization experts on staff full time. You get economies of scale of those expert resources through your cloud provider.
6) Resiliency and Redundancy. Cloud deployment provides automatic failover and immediate disaster recovery services.
Now, some companies are applying the same concepts to non-IT functions; even something as asset heavy as warehousing and transportation.
At CaseStack, we have collaboratively built a transportation and warehousing model to enable customers to use services as needed without investing in buildings or trucks; almost as though their logistics services were handled in the cloud. Many of CaseStack’s key business partners could easily be misconstrued as competitors, but they are actually its closest allies. CaseStack’s most-important service platforms have been developed with very large retailers who are not customers, vendors, or even partners in a legally-documented sense; they are co-collaborators. Through collaboration, CaseStack is outgrowing the industry by focusing on collaboration instead of investing in heavy assets.
One of the most notable collaborative programs that CaseStack has pioneered is its use of retailer-driven consolidation programs. In a normal environment, many consumer packaged companies use age-old methods to fulfill orders from retailers from their warehouses. In simple terms, a purchase order comes in; the supplier stages the products on pallets, and finally they contact a trucker to deliver it to the retailer. Often times, that shipment does not completely fill a truck, so they use less-than-truckload services or partial trucks; either way more wasted miles, time, diesel fuel and more greenhouse gas emissions.
In collaboration with large retailers, CaseStack cultivated something very different called retailer-driven consolidation. By developing technology and processes with retailers, CaseStack facilitates ordering and consolidation of multi-supplier full truckloads. So, again in simple terms: The orders for many different products from distinct, unrelated companies come as one. Then, they are shipped out on full trucks together. Transportation costs less, resources aren’t wasted, on-time delivery rates are higher, and even the Earth’s environment is better off. Retailers get exactly what they need when they need it; reducing potential obsolescence and inventory carrying costs. Without the programs, retailers would need to order larger quantities, but now they can get the benefits of full truckload economics with orders as little as one case. The average CaseStack truck is carrying 16 independent loads; replacing up to 16 separate trucks pulling into the retailers’ distribution yards. That reduces operating expenses. Many mid-sized suppliers have actually stated that they may have gone out of business without such a program, and retailers have benefitted by being able to add variety to their shelves.
CaseStack’s collaborative model is expansive. For example, although it has focused primarily on business-to-business (B2B) logistics; it has recently developed state-of-the-art B2C capabilities through a new business alliance. It is working with its current customers to use empty backhaul trucking capacity for other clients; creating mutual benefits for various clients. It has shared its collaborative approaches with community service projects, worked with universities, non-governmental organizations (NGOs) and state entities on more efficient trading platforms, and it has even used its methodology to play a leadership role in sustainability initiatives. d
Dan Sanker is CEO of CaseStack, a leading provider of supply chain solutions. For more information, visit www.casestack.com.