As e-commerce surged amid the COVID-19 pandemic, the use of cloud computing in the logistics industry accelerated significantly. The cloud supply chain market was $6.93 billion in 2020 and is expected to grow to $16.02 billion by 2028.
Aside from the global pandemic, several factors contributed to the growing use of cloud-based solutions in supply chains. Customers increasingly demand transparency and quicker delivery times. And businesses need more cost-efficient and scalable options—not to mention real-time data to support modern supply chains.
This post covers cloud logistics. We’ll discuss how it’s advantageous to the global supply chain and how you can integrate it into your business. First, let’s define cloud logistics.
What Is Cloud Logistics?
Cloud logistics is the use of cloud computing technologies and cloud-based software to manage, optimize, and streamline logistics and supply chain operations. This approach enhances various aspects of logistics operations, including transportation, warehouse management, and inventory control.
In supply chain management, cloud computing allows you to store data on a centralized platform. Thus, interested parties can access the live information from any device with internet access.
Additionally, a cloud supply chain replaces hands-on methods such as manual data entry and manual inventory checks with interconnected and automated cloud-based software.
Cloud Logistics Examples
Here are a few examples of common cloud computing applications in logistics:
- warehouse management systems
- transportation management systems
- freight management systems
- supply chain management systems
These systems track shipments, optimize routes, manage inventory, and improve overall logistics operations.
Why Is Cloud Computing Important in Logistics?
Cloud computing enables businesses to streamline processes, enhance data accessibility, and improve decision making. By shifting your logistics to the cloud, your business can leverage these gains:
- Instant remote access to inventory information: To control risks and maximize your business’ profits, it’s important to have instant access to the capacity of storage facilities and stock levels, and other information about the inventory. The cloud enables real-time remote access to inventory information. This allows you to know how pricing or products fluctuate and important figures like profit margins and sellers. Moreover, instant data access helps you boost sales, respond to customer demands quicker, and provide better customer service.
- Make data-driven intelligent decisions: Cloud computing for logistics management enables decision making based on data analytics. This means that when your logistics operations is in the cloud, it provides your business with a lot of data. This data is then analyzed by other cloud solutions. This enables making smarter business decisions, rather than just anticipating things or creating business plans. In addition, the logistics industry is already adopting solutions built on other modern technologies like artificial intelligence development. These solutions further help gain intelligent insights, optimize performance, and drive value.
Benefits of Cloud Logistics
Implementing cloud computing in logistics provides a comprehensive overview of your business’s supply chain through detailed information and analytics. Here are some additional benefits:
- Cost-effectiveness: Unlike traditional systems, cloud-based systems don’t require hardware resources or infrastructure to function. They also work on subscription or pay-per-use models, allowing businesses to pay for only the features and resources they need. Furthermore, adopting cloud-based solutions reduces operational costs.
- Real-time data access: Cloud platforms aid access to live updates on shipments, inventory, and demand. This enables quick and informed decisions.
- Scalability: You can seamlessly adjust infrastructure to meet fluctuating demands without significant upfront investments in physical IT systems.
- Collaboration: Cloud computing improves communication and integration across your supply chain stakeholders, including suppliers, vendors, and customers.
- Improved efficiency: Human errors, missed deadlines, worrying about oversupply or undersupply, and a host of other factors all impact logistics efficiency. Implementing cloud computing for logistics automates several processes and operations, which eventually reduces human errors. Moreover, it speeds up operations to save time and get things done without heavy supervision.
Role of SaaS in Cloud Logistics
Additionally, a critical driver of cloud computing in logistics and supply chain operations is the adoption of software-as-a-service (SaaS) solutions. These are cloud-based apps tailored to provide logistics and supply chain management functionalities, usually on a subscription basis. They typically include features for inventory management, warehouse management, transportation management, and supply chain analytics. Some examples include Flexport, ShipStation, and Oracle NetSuite SCM.
Data Security in Cloud Logistics
Data security and privacy are top concerns in cloud computing in the supply chain. Storing sensitive supply chain data such as shipment details, customer information, and financial records in the cloud requires security measures to protect against different kinds of threats.
Let’s take a closer look at some of these security and privacy concerns:
- Cybersecurity threats: Cloud logistics systems are vulnerable to various cybersecurity threats. Some examples are malware, ransomware, phishing, and unauthorized access attempts. These threats can result in data breaches, system disruptions, or theft of valuable intellectual property.
- Insider threats: Insider threats—intentional or accidental—pose a significant risk to data security and privacy. Employees, contractors, or partners with access to sensitive information can intentionally leak or misuse data. Or they can inadvertently cause breaches through negligence or lack of awareness.
- Third-party risks: Supply chains often involve multiple vendors, suppliers, and logistics partners who access shared cloud platforms. However, this collaboration introduces additional vulnerabilities and risks. These third parties’ security practices and data handling capabilities may not align with your company’s standards. This potentially leads to data breaches or unauthorized access.
- Data governance and compliance: Logistics companies handle vast amounts of data, including sensitive information, proprietary designs, and financial records. Maintaining data governance and complying with relevant privacy regulations and industry standards is crucial. Noncompliance can result in legal consequences and damage to your company’s reputation.
Best Practices for Secure Cloud Logistics
To maintain privacy, you can implement these best practices:
- End-to-end data encryption: Encryption helps you secure cloud-based supply chains, as it ensures confidentiality.
- Access control: Data access should be granted based on roles and responsibilities, with appropriate authentication and authorization mechanisms in place. It’s essential to track potential threats with AI, use multi-factor authentication (MFA), and control stakeholder access.
- Compliance management tools: You can use tailored tools such as Amber Road to monitor various global regulations, help comply with legal requirements, ensure that data processing practices are up to standard, and provide documentation to prove compliance.
- Employee training and awareness: From spotting phishing attempts to understanding the importance of strong passwords, a well-informed workforce is critical to preventing data breaches. Foster security awareness by conducting regular training, testing your team members through phishing simulations, and sharing data privacy best practices.
- Thoroughly vet your third-party vendors: Given the reliance on third-party vendors, it’s essential to thoroughly vet partners before engaging by reviewing their privacy policies and cybersecurity practices. Furthermore, regular monitoring and audits are necessary to ensure partners maintain high standards over time.
- Prioritize monitoring and auditing: Regularly checking your cloud environment for suspicious activity increases the likelihood of identifying problems early. Auditing access logs is vital to identifying unauthorized attempts to access your system and potential data breaches. Additionally, audits provide essential insights into security incidents. Consider tools like AWS GuardDuty and Azure Advanced Threat Protection for real-time detection of suspicious activities.
It’s important to realize that, despite the aforementioned privacy and security concerns, cloud storage often provides better protection against cyberattacks than other options. This is because information stored in the cloud is regularly backed up and kept off-site. Additionally, cloud storage services constantly monitor suspicious activities and store your information safely off-site in an encrypted format, helping mitigate security risks.
Final Thoughts
Throughout this post, we’ve explored how cloud logistics can streamline your supply chain operations, reduce operational costs, and improve overall efficiency while offering the best approach against privacy and security threats. By leveraging cloud-based SaaS solutions, your business can adapt to customer demands for transparency and faster delivery times.
From real-time visibility into scalability and enhanced data security, Workato, the leader in enterprise automation, helps you optimize your logistics systems. With Workato, you can transition from manual methods to cloud computing seamlessly and ensure profitable, sustainable, and efficient operations in your business.
Curious to know more? Get in touch with our team of experts to schedule a demo and get the most out of your supply chain.
This post was written by Kelechi Ugwu. Kelechi is a passionate and versatile Software Engineer and Technical Writer with a love for crafting innovative digital solutions and communicating complex technical concepts in a clear and engaging manner.
