top technology trends in supply chain & logistics industry

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DreamOrbit Softech Private Limited

www.dream-orbit.com

Role of Technology in Supply Chain

Top Technology Trends in Supply Chain & Logistics Industry

This e-book discusses the critical technology trends impacting the present day

Supply Chain & Logistics Industry.

DreamOrbit is an innovation driven software product engineering company that

helps Logistics ISVs and Logistics Service Providers to build enterprise software

products for the Logistics & Supply Chain Management industry.

www.dream-orbit.com 2

Table of Contents

3

Topic Page

Benefits of Technology in Supply Chain 4

Key Technology Trends in Supply Chain 5

Technology Trend – Business Intelligence & Analytics 6

Technology Trend – Electronic Data Interchange 17

Technology Trend – Social Supply Chain 25

Technology Trend – Mobility in Supply Chain 31

Technology Trend – Green Supply Chain 37

Technology Trend – Cloud Solution in Supply Chain 48

Conclusion 53

Benefits of Technology in Supply Chain

Technology in Supply

Chain

Bridged Gaps

Optimized Operation

Increased Visibility

Improved Decision Making

Increased Efficiency

Enhanced Responsiven

ess

Better Customer

Relationship

Added Competitive Advantage

4

Key Technology Trends in Supply Chain

Business Intelligence & Analytics

Electronic Data Interchange (EDI)

Social Supply Chain

Supply Chain Mobility

Green Supply Chain

Cloud Solutions for Supply Chain

5

Technology Trends

Business Intelligence & AnalyticsEmpower Decision Making

6

Business Intelligence & Analytics

A well designed BI application should primarily possess the ability to give anyone in a company a

clear understanding of the various information assets of the company and their mutual

interactions. This aids in the process of better decision making. BI

software enables customers, partners, employees, managers, and

executives of an organization to perform detailed analysis and real

time reporting by integrating the incongruent data sources into a

single rational framework.

BI’s current evolution is focused solely on the aspect of guiding users to the right course of

action than simply allowing them to acquire more and investigate deeper into the data. It can be

said that Business Intelligence is evolving from a set of tools that help users navigate vast

amounts of new information to helping users focus on relevant ones.

7

BI & Analytics Solutions - Components

8

BI & Analytics Solutions - Benefits

Narrow down focus on relevant information: Modern BI systems deliver relevant information

depending on the requirement of the user, and in an easy to use format that the user can use.

Users can get key metrics and KPIs as a simple view inside an existing web application without

having to go through the trouble of using specialized BI tools.

Take structured actions: Access to the right information is

useful only if it prompts a user to take corrective actions. Present

day BI systems not only provide relevant information but also define

the processes and workflows needed to derive a solution.

Automate Information Process: Instead of spending time on

performing tactical tasks, BI solutions allow a user to devote her time on more important work

that will drive better business performances. Automated processes free up more time for the

users as they are not required to manage every step of the process.9

Logistics & Supply Chain Industry

Logistics & Supply Chain Industry is exceedingly diverse in terms of the services it provides,

ranging from simple transportation services to complex supply chain assignments serving both

domestic and international markets. With the advent of asset based and non asset based third

party logistics (3PL) and fourth party logistics (4PL) providers and increase in demand for add-on

services and more integrated solutions among the customers, the need for innovative

Information Technology services has come to the forefront.

Logistics service providers are now viewed as strategic

partners, who are capable of optimizing the supply chain,

reducing the cycle time and providing customer service

that exceeds expectation. The industry leading logistics

providers were quick to identify this changing trend and immediately embraced IT to provide

better synchronization of activities and enable higher visibility into each stage of the supply

chain network. 10

Logistics & Supply Chain Industry- Challenges

Shortening of product lifecycle, volatility of the business environment and rising customer

demands have increased the importance of ‘speed to market’ and ‘flexibility of the supply chain’

manifold.

Challenges

Longer lead time,

High inventory levels,

Lack of control of downstream and upstream logistics,

Lack of supply chain visibility,

No standard modes of data interchange between disparate systems,

Inefficient monitoring and maintenance of data,

High costs of integration,

Lack of adequate technology to handle the complex structures and relationships of purchase, storage, shipments and customer service. 11

Stages of BI Solution for Logistics Industry

KPIs identification

& determination

of BI level required

Stage I

Requirement gathering, proof of

concept & prototype building

Stage II

Solution completion &

integration

Stage III

12

BI & Analytics Solutions - Functions

BI

Reporting

Analytics

Online Analytical Processing

Benchmark

Text Mining

Predictive Analysis

Data Mining

Dashboard

Scorecards

13

BI Solutions for Logistics - Benefits

Improved service capabilities: Logistics & Transportation management, warehouse and

inventory management along with value added services like reverse logistics, track & trace,

packaging are the conventional services that are being offered by a logistics service provider. BI

solutions can help identify the key processes involved with these services and provide a

comprehensive analysis and reports on the identified processes, which in turn aids the process

of attaining improved efficiency.

14

BI Solutions for Logistics - Benefits

Improved decision making: BI can considerably improve the decision making capabilities of

executives by providing them easy access to real time updated information and KPIs. For

example -

•For CEOs - provides real time information which aids in the control and evolution of the

key strategies.

•For CFOs - provides easy access to key financial indicators,

analyzing profitability and costs in a detailed and structured

manner. A BI solution also helps save time in building manual

reports.

•For CMOs – helps find initiatives with higher ROI, educates

about the short and long term trends and compares them with historic data.

15

BI Solutions for Logistics Functions

Logistics Function Business Intelligence Solutions

Transportation • Travel route analysis• Forecast to actual sales comparison• Future expense prediction• Monitoring of vehicle running cost• Tracking of delivery time, revenue per mile• On-time shipping/delivery

Warehouse Management • Inventory Analysis• Track Inventory turnover• Space utilization Analysis• Barcode tracking for inventory and material• Order management

Customer Order Management • Revenue per order• Order information accuracy• Backorder reporting• Order dispatch accuracy• Goods delivery error rate

Reverse Logistics • Analysis of reasons for returns• Analysis of return delivery time• Returns at right order• Value of returns 16

Technology Trends

Electronic Data InterchangeEnabling Real-Time Communication

17

Electronic Data Interchange

Electronic Data Interchange (EDI) enables organizations exchange business information, files,

documents electronically in an efficient and accurate way to speed up business operations.

EDI utilizes a set of mapping tools which converts information into standard EDI format creating

a kind of value added network which acts as an intermediary between organizations.

Businesses integrate EDI technology with their process to increase efficiency and enhance

effectiveness in their supply chain. Not only does it minimizes paper use but diminishes the

possible occurrence of errors caused due to human intervention.

EDI System

Trading Company

A

Trading Company

B

18

EDI – Competitive Advantages

EDI

Reduced Inventory

Cost

Decreased Errors

Increased ROI

Enhanced Visibility

Improved Operational

Efficiency

Increased Accuracy

19

Role of EDI in Logistics & Supply Chain

Receiving merchandise from manufacturing unit to warehouse: The process starts with

manufacturer sending shipment notification EDI 943 (warehouse stock transfer order document)

to warehouse informing about the transfer of shipment. Once the order is received, a

warehouse stock receipt EDI 944 is sent from warehouse to manufacturer.

Transferring merchandise from warehouse to Retailer: When

merchandize is to get transferred from warehouse to retailer,

warehouse receives EDI 940 (warehouse shipping order document)

from manufacturer requesting for shipping the order to retailer. Again warehouse sends back

another EDI 945 known as warehouse shipping order confirmation EDI, confirming the shipment

of order.

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Role of EDI in Logistics & Supply Chain

Vendor Managed Inventory: Vendor managed inventory is characterized by shared risk

between vendor and customer therefore increases potential cost savings. Typically retailer

capture the sales data at point of sale using a PDA, this data is then communicated to Vendor

through EDI 852 point of sale and inventory activity document.

The vendor feeds the data in VMI system based on which orders

are calculated.

Invoicing: In response to purchase orders sent by buyers,

EDI 810 invoice is generated to create request for payment

against each order. EDI implementation in invoicing has significantly reduced errors and

rejections making the entire trading easy and quick in terms of transactions and follow ups.

21

Role of EDI in Logistics & Supply Chain

EDI in Transportation: Trucking companies integrate EDI technology to their current business

processes to fasten the inbound and outbound mobility by availing the benefits from accurate

and quick information required for their operations.

• In this scenario, to let the trucking firms know about the shipment, vendors are required

to send EDI 204 carrier shipping information document

• In response trucking firm send EDI 990 to let the vendor

know if they will pick up the shipment.

• When shipment is picked, trucking firms send Motor

carrier shipment status EDI 214 to let the vendor know

about the shipment status.

• Once the shipment is done, trucking firm again sends EDI 210 Motor carriage freight

details and invoice to vendor.

22

EDI in Logistics & Supply Chain - Benefits

Benefits Reasons

Cost reduction •Less paper Handling•No mailing cost•Less employee wages

High Speed •Computer network enables faster exchange of documents and information.

Enhanced Operational Efficiency •Less Errors •High speed•Real time scenario

Valued Partnership •Timely and accurate information •Trading partners develop trust while doing

business in systematic way together

Accuracy •Direct Communication•No repetition in Data•Correct in time information exchange

Visibility •Real time information•Measure performance at any stage•Trading partner ‘s activity visibility 23

EDI in Logistics & Supply Chain - Limitations

Dependency on trading partners.

High integration cost.

Changing standards.

Changing trends of business operations.

Hardware & Internet expenses.

24

Technology Trends

Social Supply ChainThe Future of SCM

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Social Supply Chain - Challenges

Social Enterprises are the latest buzzword in the market. And social supply chain forms an

integral part of the social enterprises. Offerings like new ways of process engagement,

methodologies, tools, and delivery models to efficiently handle supply chain management

efforts make social supply chain a must have for enterprises.

Present day Supply Chain challenges:

Intense global competition

Constant fluctuations of cost index

Increasing energy & transportation costs

Decreasing product shelf lives

Mass demand for customizations

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Social Supply Chain - Architecture

Social Platform•User Profile•Enterprise Search•BI & Analytics, Social Listening tools

Delivery•Cloud delivery•Mobile delivery•Web Apps, Apps stores, mobile apps

External Engagement•Customers•Industry marketplace•External social media•Business Partners/Suppliers•External social business services

Record Management Tools•ERP•CRM•DMS•Other Business Applications

Engagement Management Tools

•Intranet•Enterprise social platform•Integrated communication tools•E-mail

Integration of ToolsConnection & Utilization of Social Data External Business Services

(Social)

Social Business Architecture

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Social Supply Chain - Solutions

Social Supply Chain Solutions

A competent and wide spread network - A focused social network that can deliver the know-

how of different aspects of a supply chain. This provides a continuous access to intelligent

information and latest trends, thereby allowing the supply chain to tap into those resources to

enable major operational improvements. This aids both the short term as

well as the long term decision making process resulting in improved

organizational functioning.

Social supply chain sourcing – Regular interaction with partner

communities and fresh network management systems are call of the day for the enterprise

social supply chains. These new processes enable real time gathering and controlling of

information and using them to dynamically and efficiently meet supply chain challenges.

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Social Supply Chain - Solutions

Social exception management – Social search, analytics and other advanced tools are integral

parts of the social business model. These tools ensure that all relevant and available knowledge

resources are captured and then put to good use to develop solutions for the emerging needs

and challenges of the supply chain. Every second a lot of information emerges and spreads

across the entire supply chain ecosystem. To get hold of the correct

and most relevant information and then using them for developing

better solutions often proves to be the critical factor differentiating

between success and failure of the social supply chain.

Social supply chain as a business – Not all organizations are willing

to share their internal supply chain details with their external business partner communities. If

such an organization chooses to implement social supply chain, then it will be treated as a

functional capability solely added to the idea of achieving greater profits.29

Social Supply Chain - Benefits

Benefits of Social Supply Chain

Improved feedback mechanisms from varied channels and mediums.

New channels and methods of information flow.

Advanced technological innovations allowing better knowledge/understanding of the products by the handlers.

Real time information flow.

Real time response to supply chain changes.

Improved decision making capability.

30

Technology Trends

Mobility in Supply ChainIncreased ROI and Decreased TCO

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Mobility in Supply Chain

In the past few years implementation of mobile solutions in the supply chain industry have

increased manifolds. Mobility reduces the hidden wasted/lost time in a business process. A

streamlined and leaner supply chain is the requirement of the day to overcome some of today’s

most challenging issues like:

Slender margins and greater competitions.

Reduced product lifecycle.

Increased customer expectations.

Main Benefits of Mobility in Supply Chain

Improved quality.

Reduced cost.

Improved customer service leading to competitive advantage.

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Mobility in Warehouse Management

Warehouses are integral part of a supply chain. Mobility solutions, when applied to all the core

processes of a supply chain, have the potential to convert warehouses into essential cogs for

competitive advantage.

Impact of mobility in warehouse processes:

Receiving process - Automatic identification & instant

reconciliation of incoming shipments; process automation allowing

increased productivity; real time inventory visibility and instant access

to the order system enables reduced handling time and costs, less

dock-to-stock cycle time, and intelligent order fulfillment process;

access to proper processing orders leading to reduction in errors in put-away and cross docking.

Put-away process – Real time access to the inventory management system and automated

data collection together help in identifying the shortest and most efficient route to the put-away

location. Mobility also enables improved throughput and productivity, along with increased

visibility leading to better inventory optimization and asset utilization. 33

Mobility in Warehouse Management

Cross docking & Sorting – Mobility provides instant visibility of order database allowing real-

time information gathering by the staffs. The benefits being:

Improved productivity, order accuracy, and shipping time. Reduced errors, and costs. Increased visibility leading to increased efficiency. Decreased usage time and hence wear and tear of material handling equipments.

Returns Management – Real time access to the inventory, accounting and order systems

enables superior returns management by reducing error counts, order processing time, and

increasing customer satisfaction.

Cycle Counts – Mobility facilitates effective trend analysis

leading to accurate forecasting. This positively impacts the

business by reducing inventory stocking level which in-turn

reduces the funds and space required for inventory stocking.

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Mobility in Warehouse Management

Picking, Packing, Staging & Shipping – The final stages of order fulfillment can be streamlined

by implementing mobility solutions. Implementation of mobility solutions ensures:

Increased productivity, decreased errors and elimination of out-of-stock issues.

Increased order and shipping accuracy, and decreased

packing cost.

Improved order fulfillment, vehicle utilization and driver

productivity leading to better customer satisfaction.

Asset Tracking – Mobility automates the asset tracking

process which leads to instant asset visibility . This enables

better asset tracking resulting in a superior stocking process, longer asset life cycle , reduced

total cost of ownership and increased return on investments.

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Mobility in Transportation Management

Implementation of Mobility solutions in transportation, makes the complex work of

transportation management very easy. Mobility solutions provide real-time visibility of the

entire process and connect all the assets and resources involved in the process with the

business system. This eliminates time consuming paper works and improves the speed and

efficiency of the management. Mobility in transportation management facilitates:

Real time exception management.

Effective load schedule.

Optimized asset utilization.

Reduction in data entry errors.

Increased Energy efficiency.

Improved and efficient safety

management.

Dynamic routing.

Superior container management.

Increased productivity.

Real-time proof of delivery.36

Mobility in Yard & Labor Management

Mobility solutions in Yard management enables:

Improved load sequencing and gate throughput.

Increased productivity.

Superior workforce management.

Better asset management.

Mobility solutions in Labor management ensures:

Increased visibility of workforce productivity and

identification of performance metrics.

Regular automated feedbacks.

Better management and resource planning.

37

Technology Trends

Green Supply ChainThe key to sustainable logistics and supply chain

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Green Supply Chain

In today’s world ‘logistics & supply chain cost’ not only refers to money, it also includes the

external costs of climate change, air pollution, dumping of waste, soil degradation, noise,

vibration and accidents. Reducing this cost is Green supply chain. Green supply chain is quickly

gaining prominence throughout the logistics and supply chain industry as protection of

environment has appeared as one of the top rated objectives among the governing bodies all

over the world.

Drivers of Green Supply Chain

Increasing energy costs.

Global alarm over Greenhouse Gas emission.

Climate Change.

Government and Environmental Protection Agency regulations.

Improved environmental awareness among the community.

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Green Supply Chain - Initiatives

Implementation of green initiatives has emerged as one of the top trends in the Logistics &

Supply Chain industry worldwide. The volatile economic conditions have urged the players of

the supply chain industry to rethink on their strategies and prioritize achieving long term

sustainability as one of their main focus area.

The key drivers of Green initiatives

Increase in supply chain efficiency.

Financial stability by securing greater return on investments.

Improved customer relations.

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Green Initiatives for Better ROI

Transportation Management - Effective transportation management can be considered as

one of the best ways of reducing carbon footprint of a logistics organization. Improved logistics

strategies like efficient routing & scheduling of vehicles, ensuring full truck loads, changes to

receiving policies and loading docks, can enable optimization of the logistics operation

efficiency, thereby saving fuel and increasing profitability. Implementation of a well designed

transport/freight management software can not only help to cater to all these needs but also

helps in effective utilization of the vehicles which leads to considerable amount of fuel saving

thereby reducing greenhouse gas emission.

Advanced Technology – Implementation of efficient warehouse management systems, and

freight management systems, coupled with technologies like RFID and Barcode allows

automation of the logistics processes. These advanced technologies offers greater data accuracy,

reduction of paper work, and easy integration with other tools, thereby ensuring higher green

benefits for the logistics companies.41

Green Initiatives for Better ROI

Reverse Logistics – Proper methodic management of the returned goods can be marked as a

key green initiative which has the potential to yield significant financial returns. Damaged and

unwanted products can be repaired and restored to their original form and placed back in the

market to reduce waste and contribute to the environmental cause.

Reduced Packaging – Logistics and warehousing companies are

becoming increasingly focused to reduce packaging material costs

in their effort to make warehousing and distribution centre

operations more cost effective. Usage of re-usable / recyclable plastic

materials instead of card boards or wood help in reducing their carbon production count and

make them more eco-friendly.

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Green Initiatives for Better ROI

Preventive maintenance & Damage Analysis – Processes like periodical fleet maintenance

and increased driver training improves the vehicles’ cost effectiveness by increasing their fuel

efficiency. At the same time a special watch on the demand forecast can help to reduce the

number of unsalable products. This can be easily achieved by implementing an efficient

warehouse management system which has integrated demand forecasting software. This not

only impacts the economic scenario positively but also provides environmental benefits by

reducing wastage. Also a well managed and safe return of damaged products adds to the

environmental security.

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Green Initiatives – Successes & Barriers

Successes:

Improved energy efficiency.

Usage of more efficient transport system.

Keeping track of emission scorecard.

Usage of green logistics providers by the

3PLs.

Fuel efficient vehicles.

Shipping from nearest warehouse

locations.

Horizontal collaboration with companies.

Reduction of miles travelled through re-

routing of vehicles.

Emission reduction and green sourcing.

Barriers:

Lack of knowledge of the best practices.

High cost.

Lack of customer demand.

Unwillingness of customers to pay more.

No short term positive impact on the

bottom-line, mainly focused on the long

term gains.

Data standardization required.

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Green IT for Supply Chain & Logistics

End to end supply chain visibility aims to provide right information to the right decision maker at

the right time, so that shipments move along the optimal route with the least amount of

handling and at the lowest possible cost. Any gap in this information flow raises freight and

carbon costs. Green IT solutions, driven by cost savings and operational efficiency, play a

decisive role in plugging these gaps and ensure that organizations reap the expected benefits.

Functions of Green IT Solutions

Supply Chain Optimization.

Green Supply Chain Realization.

Improved Usage of Radio Frequency Identification Device.

Green Supply Chain Collaboration.

Identification of Key Performance Metrics.

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Benefits of Green IT

Benefits of Green IT

Cost Cutting

1. Process Optimization

2. Total cost of ownership

3. Decreased energy and waste

4. Improved collaboration, visibility & agility

Innovation

1. Integrating sustainability in product design

2. Design manufacturing

3. Closed loop Product Lifecycle Management

4. Holistic manufacturing

Governance

1. Compliance with regulations

2. Reduction of organization's carbon emission

3. Analysis of organization's recycle, reuse and reduction initiatives

Consumer Perception

1. Social responsibility

2. Client satisfaction

3. Delivery excellence

4. Increased collaboration and communication

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Technology Trends

Cloud Solutions in Supply ChainHarnessing Cloud Technology for Improved Supply Chain

47

Cloud Computing

What is Cloud Computing?

Delivery of computing as a metered service over a network (mainly internet) rather than as a

product.

A general term involving the delivery of hosted services through the internet.

Flexible services allowing users to use as much or as little depending on the requirement. It is

an alternative of the On-premise model. The cloud deployment is controlled and generally

owned by the purchasing organization allowing greater control and flexibility during

configuration.

Types of Cloud Computing services

Software-as-a-Service (SaaS)

Platform-as-a-Service (PaaS)

Infrastructure-as-a-Service (IaaS)

48

Cloud Solutions in Supply Chain

Today’s volatile markets, increasing customer demands, fast moving businesses require a more

dynamic supply chain design. This has made flexible IT based supply chain designs as the call of

the hour. This is where Cloud Computing is generating intense interest .

Cloud Computing has the potential to radically reshape and control the economics of supply

chain IT. Cloud offerings span across four major Supply Chain Management processes:

Plan

Source

Develop

Deliver

The adoption varies, depending on the complexity of the Supply Chain

process, and the size of the enterprise. According to a research by

Gartner, supply chain procurement and fulfillment ranks second only to CRM as a process

targeted for cloud-type software-as-service (SaaS) implementations.

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Cloud Solutions in Supply Chain

Supply chain processes ideal for Cloud platforms

Planning & Forecasting – Cloud based tools capable of planning and allocation, assortment

and space, pricing and promotion, and forecasting and replenishment are now available.

Planning & forecasting are seldom considered as a core function of a company’s ERP system.

This allows the company to use an ERP system internally and at the same time employ a leading

planning & forecasting application through internet. This has led to the increase in the number

of cloud service providers providing planning & forecasting applications. Now a days even the

entire ERP solution is available as a service, e.g. Microsoft Dynamics AX, Oracle, etc.

Logistics & Transportation – Many core warehouse & transportation management solutions

are available as cloud applications. Integral supply chain functions such as network strategy,

inventory management, warehousing, and transportation are either already accessible or will

soon be so through internet using cloud applications. Processes such as global trade compliance,

replenishment planning, order processing, transportation load building, fleet management and

transportation route planning can also be taken care of by cloud applications. 50

Cloud Solutions in Supply Chain

Sourcing & Procurement – The collaborative feature of cloud based tools results in enhanced

contract management, increased sourcing capability including procurement report generation,

database centralization and supply chain visibility. All these together contributes in reducing the

total cost of ownership.

Service Management – Cloud solutions enable companies to improve by employing new

technologies and processes rapidly at a low capital expenditure costs. This equips the companies

with an added competitive advantage. Functions like reverse logistics, returns processing,

dispatch & tracking, spare parts inventory & distribution can be easily serviced through cloud

applications.

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Supply Chain in Cloud – Benefits & Concerns

Benefits

Increased competitive advantage due to significant decrease in the investment on

infrastructure changes the entire competitive scenario.

Products & services reach the market faster.

Cloud based supply chains are more scalable and dynamic which

allows them to counter the problems of continuous shortening of

product and service lifecycle and increasing competitive threats much

more efficiently than infrastructure intensive supply chains. This reflects positively in the

financial result of the organization.

Concerns

Complexities and sensitivities can be created in the partner eco-system.

Security is a major concern as lost data can result in lost intellectual property,

lost product and hence lost business.

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Conclusion

Technology plays a very important part in determining the success of a supply chain. This e-book

is primarily meant to inform you about the present day technologies that are heavily involved in

determining the efficiency and productivity of the logistics and supply chain industry. By

incorporating these technologies in their supply chain design an organization can achieve:

Improved identification and bridging capabilities of gaps.

Optimized operation.

Increased supply chain visibility.

Improved decision making power.

Increased efficiency

Better responsiveness leading to improved customer relationship and hence added

competitive advantage.

DreamOrbit with its dedicated team of software professionals with an in-depth knowledge and

expertise of the Logistics and Supply Chain industry can help you achieve all these advantages

and more. Reach out to us at http://dream-orbit.com/contact.aspx. 53

About DreamOrbit

DreamOrbit is an outsourced software product development company. We help enterprises and

software companies (ISVs) build innovative solutions that are cross platform enabled and work

on cloud based delivery model. Our expertise lies in software R&D, system architecture design

for large enterprise applications, deployment on production servers, load testing and

performance management.

We can help you –

Build and adopt Supply Chain Management and Logistics solutions for your Enterprise.

Create specialized product development teams at no management cost.

Build and execute an efficient cloud strategy for your business.

www.dream-orbit.com

Additional Resources:

1. DreamOrbit Knowledge Base

2. High Performance Logistics & Supply Chain using Business Intelligence Solutions

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