IARW Southeast Chapter
Is Cloud-Based WMS an
Option for Complex
Distribution Centers?
Southeast Chapter Nashville 2012
• Manages warehouse inventory, space,
equipment, and labor resources to direct
the flow of materials and information from
receiving and put-away to light assembly,
order picking, value-added processing and
shipment
Warehouse Management At-a-Glance
Inbound Internal Processing Outbound
Southeast Chapter Nashville 2012
Just-in-Time Delivery
• How can I improve the speed of warehouse operations?
• How do I integrate
operations to reduce order processing time?
Guaranteed Availability
• How can I improve order promise accuracy?
• How do I create a global view of inventory?
One Size Fits One
• How can I manage SKU proliferation?
• How do I ensure labeling compliance?
Lowest Total Cost
• Where can I reduce
inventory while maintaining high fill rates?
WMS Benefits
• Potential Improvements in:
– Inventory accuracy and turns – Space utilization, stock
rotation
– Order, lot and serial number tracking
– Backorder handling – Crossdocking
– Resource planning and scheduling
– Labor and equipment productivity
– Performance measurement – Customer service
• Potential Reductions of:
– Damage/Shrinkage – Lost stock
– Safety stock
– Search times and deadheading
– Paperwork – Human error
– Physical inventory taking – Labor, equipment and utility
costs
Why the Need for an Alternative to Installed Software?
“Sometimes we just don’t upgrade because of the effort and expense – I feel
like we’re always behind”
“It’s a pain – and expensive – having to keep our hardware current” “Our IT staff have so much on their plates” “I’m not sure we
have the expertise to administer this system”
Southeast Chapter Nashville 2012 Overwhelming complexity + Brittle infrastructure = < 30% of IT budgets goes to innovation and
competitive advantage IT Investment 42% Infrastructure Maintenance 30% Application Maintenance 23% Application Investment 5% Infrastructure Investment Operational demands limit business agility
On-Going Costs for On-Premise
Software
• Hardware updates • Additional software (back-up, monitoring, VM) • Dedicated IT personnel • BandwidthSoutheast Chapter Nashville 2012
What Does “In the Cloud”
Mean?
• Your vendor hosts your system for you in a
secure data center
• You access the system through the Internet–
just like plugging in to an outlet. Use as much
“power” as you need
Southeast Chapter Nashville 2012
• Only a small business can gain any cost savings benefit out of using cloud computing
• Data security issues make cloud applications riskier than in-house applications
• Critical applications do not belong in the cloud • The main reason for companies to move to cloud
computing is to save money
• Cloud applications are less reliable than running systems in-house because you can't fix them in the event of a crash
Southeast Chapter Nashville 2012
Cloud vs. On-Premise
Considerations
• Economic: Cloud-based deployments are
subscription-based, which can minimize
up-front capital expenditures for perpetual
software licenses and servers
• Focus on core competencies: Technology
infrastructure may be managed more
effectively by the engineers who created the
technology rather than your own IT
Cloud vs. On-Premise
Considerations
• Cost of Upgrades: WMS upgrades are often
expensive and complex because of
customization done to the WMS. With a
cloud-based WMS, the software upgrades and
updates are managed as part of the service by
the technology provider. This can significantly
reduce the cost and complexity of a WMS
Southeast Chapter Nashville 2012
Component On premise Cloud
Pricing model Perpetual software license Monthly subscription Hardware Customer purchases Included
OS licenses Customer purchases Included Software licenses Customer purchases Included Maintenance fees 18-22% of software cost Included IT operations (backups,
patches, security, monitoring)
Customer performs Included Operating costs (electric,
space, bandwidth, hardware upgrades)
Customer purchases Included
• A common objection
• Ex: conveyor sortation systems, pick-to-light,
carousel, automated storage and retrieval
systems (ASRS)
• Integration with cloud WMS is possible with
thorough testing
Southeast Chapter Nashville 2012
Increased Service Levels With
Cloud Deployment
• High availability
– 100 percent uptime outside of scheduled maintenance
• Back-up
– Daily server back-ups
– Full daily database back-up
• Disaster Recovery
– In the event of disaster at primary, secondary datacenter will be brought up within hours
Network Connectivity Example
Actual cloud WMS customer with: • Pick to light
• Automated cart picking • Conveyor sortation • SAP interface 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 M bps
Southeast Chapter Nashville 2012
Cloud Architecture
Networks & Security
• Secure multi-tenancy architecture
• Secure private network with flexibility to connect via direct connection, VPN, or client VPN
• Robust security measures including DDOS protection and IDP/IDS Switching & Servers
• Fully redundant enterprise-class equipment
• Our Dynamic Allocation v2 Intelligently allocates resources
• Higher performance than most virtual machines.
Dynamic IO (Storage)
• Intelligent provisioning and migration
• Three copies of data kept at all times
Cloud Security Example
Threat Countermeasure
Unauthorized physical access to
cloud-based computing assets Infrastructure access controls
Unauthorized system access Information security controls (e.g. password encryption)
Access controls (e.g. authentication, authorization) Identity management
Unauthorized access to data Theft of data
Data location management Database access controls Virus and malware Data security software
Southeast Chapter Nashville 2012
Scalability/Elasticity
• Vertical
– Add compute requirements as needed
• Autoscale
– Dynamic addition of compute requirements
Questions to ask your cloud provider
• How thorough is the service-level agreements– Any SLA worth its weight should specifically address uptime guarantees, as well as incident response times and remedies
• What levels of RTO and RPO do they offer
– The lower the RTO and RPO are, the more mission-critical the system is
• Where will your data reside and what backup and recovery procedures are included
Southeast Chapter Nashville 2012
Full-service cold storage 3PL distribution company that handles 13 million cases (260,000,000 lbs) of
perishable food products annually.
Problem: Wanted to minimize risk of downtown, reduce on-site IT team
Solution: Cloud-based WMS solution
Early results: Reduced staff head count by 22%, increased productivity by 40%
Business and IT Leaders Say Cloud
Enables Agility
80%+ associate business agility with revenue growth, cost reduction, and risk management
63% agree cloud can have a significant impact in making business more agile and responsive
Companies with enterprise-wide cloud deployments are 3x more likely to
Southeast Chapter Nashville 2012 • “There is a good deal to be said in favor of having your
supplier host your solution: It allows experts to maintain and upgrade your system; and from a budgeting
perspective, having a simplified SaaS payment plan that includes software, the server infrastructure, and
maintenance for both, better aligns the costs with a new WMS to the cost reductions it brings. HighJump
demonstrates a strong vision in this space as the overall trend of SaaS solutions starts to gain wider adoption in supply chain applications”
