Technology Today: 5.24.2010

Posted by TED Magazine on Monday, May 24, 2010

Logistics Industry Drives the Evolution to ‘Software –As –A- Service’

The software as a service (SaaS) model has been widely embraced by multiple industries thanks to the numerous advantages that on-demand solutions deliver. Logistics-intensive organizations, however, were among the first to turn to SaaS to reduce costs, increase operational performance and improve customer satisfaction. As the need for connectivity, collaboration and compliance grows, many members of the global supply chain now realize that SaaS in the logistics market can offer far more than “rented” application software when connected to a “federated” network comprised of several communities (such as airlines, ship and truck carriers, government agencies, logistics providers, etc.), each with a common interest.

Consider the next evolution of SaaS as business social networking for the supply chain community –SaaS 2.0, if you will. Leveraging a federated network, SaaS 2.0 extends the value that traditional on-demand solutions offer by not only providing pay-per-use access to applications that businesses need to manage their supply chains, but also by  bringing together and enabling multi-party collaboration between logistics service providers, supply chain partners, carriers, customs agencies and customers from around the globe.

Combining SaaS logistics applications with a federated network helps participants build communities, readily connect with trading partners (already connected to the federated network), and transition beyond the simple interchange of information. In this scenario, SaaS logistics applications and a federated network combine to support multiple multi-party processes and connections within a single environment on a global scale.

The logistics network

A logistics network is a highly complex “organic” group of trading partners that perform any of a wide range of logistics-related business functions (e.g. freight forwarding, customs compliance, etc.). Many industry players have become seasoned users of SaaS applications that pertain to specific functions in order to speed up delivery, streamline processes, and reduce errors and complexity.

As supply chain processes become more complex, the need for partners to work together, be more efficient, and keep pace with the latest legislative requirements regarding advance notification, securing trade lanes, chain of custody, accountability and the automation of paper documentation, continues to grow. SaaS 2.0, for its part, brings a blend of hardware, software, networks and business services to enable multi-party workflow-based applications that need to be shared by thousands of companies on a daily basis.

In the past, SaaS applications tended to serve a specific business function (e.g. order processing, transportation, warehousing) or vertical (e.g. manufacturing, healthcare, pharmaceutical). Today, a SaaS 2.0 platform, such as the Descartes Global Logistics Network (GLN), serves as “all things to all people” by connecting the entire community of logistics service providers and trading partners through a single polymorphic federation.

This state of being united and leveraging multiple network applications through a global network promises to take the industry well beyond its reliance on standalone solutions and individual transactions. This approach delivers a wealth of advantages, including standardization of documents and data, increased automation of routine functions, and easy accessibility to real-time information for all partners.

It also provides an opportunity for customer intimacy and the prospect to make more money; facilitates operational improvements to dramatically lower the cost of doing business; and facilitates compliance with an increasing number of regulatory changes around the world.

Communication barriers between manufacturers, retailers, carriers, government agencies and other stakeholders are reduced by applications and the trading community being brought together. By way of example, when one party generates information or implements a change, that data can be disseminated throughout the relevant members of the community in real-time.

Driving the evolution of SaaS

Given the complexity of global trade and the information that must be communicated, it comes as no surprise that the logistics industry is among the first to venture into the concept of SaaS 2.0.

The ability to unite disparate business processes represents a pivotal shift in global logistics practices. The convergence of functions is now taking the logistics industry from a cost-savings oriented mentality that focuses on functionality, integration and risk reduction, to a compliance-oriented one, which drives innovation and business networking through automation and real-time access to information.

As we look ahead, SaaS 2.0 has potential to provide the foundation for delivering the next big thing in logistics – the ability to track and manage all elements of the global supply chain (Global Trade Management, Supply Chain Execution and Mobile Resource Management) through a single resource, while collaborating seamlessly with supply chain partners.  Undoubtedly, the impact of this evolution would be felt by carriers, logistics service providers, customs filing agencies, and of course supply chain operators such as manufacturers, distributors and retailers. In view of this, now is the time for members of the global supply chain to prepare for what lies ahead by embracing SaaS 2.0 today. 

I believe SaaS 2.0 is here to stay.  Please contact me for information utilizing on-demand technology companies providing services that can help distributors reduce their costs.

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Stacey Pandeloglou is the president of Distribution Technology Group and writes twice monthly here.  Reach him at 757.491.4978 or Stacey@dtgworldwide.com.