In previous blog posts (Parts 2 and 3), we explained how new fulfillment models are needed to survive in today’s omni-channel world. In this blog post, we will take a closer look at why cloud technology is the best option to grow your omni-channel supply chain capabilities.
As companies have moved toward supporting an omni-channel business strategy, there has been an explosion of new fulfillment methods, including new order entry approaches (via apps, websites, etc.), new delivery models (such as Amazon’s Prime subscription model, same-day shipping, standard shipping, etc.), as well as new payment concepts (such as PayPal, Apple Pay, etc.).
Between receiving the order and shipping the product, the trend is to keep the fulfillment model flexible to a certain degree based on a limited set of predefined delivery models — while at the same time, not providing too much delivery flexibility. Otherwise, companies experience profit margin erosion and the complexity of the fulfillment model becomes unmanageable.
A great example of a cloud-based fulfillment model, designed specifically for the omni-channel world, is the one that Amazon deploys. Amazon’s fulfillment model is strong, but flexible enough, to provide customers very specific customer service experiences. Amazon adheres to the following fulfillment model:
- Supplier sends products to an Amazon warehouse
- Amazon catalogs and stores the products
- Customer purchases products with a specific service expectation
- Amazon picks and packs products
- Amazon ships products to customer and provides order support to ensure tracking and smooth payment
The beauty of the Amazon fulfillment model is its ability to provide a menu of delivery options, in which the delivery date can be extended (free no-rush shipping, free standard shipping, free two-day shipping), in addition to offering one-day and same-day shipping options that feature different price options for specific customers.
Enabling such a revolutionary delivery model provides Amazon a unique competitive advantage, as it gives customers not only an unlimited choice of products, but also a nice range of options in terms of delivery services. This is very hard to replicate by competitors with a less flexible delivery model.
A cloud-based fulfillment model provides companies with sufficient flexibility in delivery options. It can also help companies evolve and increase their service options, as a unique competitive advantage, over time, one delivery model at the time. JDA solutions can leverage source data from your enterprise resource planning system to provide superior fulfillment capabilities, powered by what-if simulations and scenario planning, across your order management, demand planning, supply, allocation, warehousing, and transportation processes.
The unique advantage of deploying JDA solutions in the cloud is the segmented response approach, which allows companies to define specific delivery models for specific customers and products. Companies can also simulate and analyze scenarios leveraging in-memory decision support, based on powerful algorithms and significant CPU power.
Additionally, by leveraging the cloud, new delivery models for specific customer or product segments can be defined and added at a much faster pace than with traditional IT projects. The cloud architecture can absorb the increased data size and complexity that’s resulted from the omni-channel model, enabling companies to add computing power and scale hardware as needed.
Cloud deployments also offer an evolutionary and seamless approach to upgrading business capabilities, without the traditional IT constraints related to sizing hardware and computation needs or buying the necessary boxes and/or data center space.
This is why cloud goes hand in hand with the development of future omni-channel fulfillment models. By leveraging capabilities in the cloud, companies can increase the modularity, scale and hardware size for in-memory computations, enabling them to gradually increase their supply chain capabilities. It’s this self-service approach to growing and evolving your supply chain strategy that truly differentiates cloud deployments from implementing on premise.
Companies that harness best-of-breed IT solutions, via the cloud, to transform their supply chains will not only survive, but also thrive in this new omni-channel world.
To view previous posts in this blog series, visit: