In one sense, transitioning to a full-fledged Logistics 4.0 system is always going to be more of a challenge than making Industry 4.0 a reality. Yes, Industry 4.0 requires big investments in carefully-chosen IT infrastructure and a strong commitment to visibility and connectivity, but the purview of this technological revolution is mostly limited to the factory floor—i.e. a physical space that you, as a manufacturer, have access to and control over. With logistics, this limit doesn’t exist—instead, you’re trying to gather data from objects that are in motion all around the world, from shipping containers to trucks to the forklifts in your partners’ warehouses.
Studies show that, as of 2018, 73% of companies had at least one application in the cloud. This includes the 47% of companies who are using on-premise servers to handle their ERP, but using APIs to connect to the cloud elsewhere. And it’s not hard to imagine why companies are gravitating away from on-premise and towards more flexible cloud-based options—after all, the upfront costs are lower and the risk of obsolescence or costly maintenance is greatly reduced. Even if you’re still hosting critical functions like your ERP in-house, there are still benefits to be gained from cloud-connectivity in terms of flexibility, analytics integration, and visibility.
According to Gartner, by 2023 cloud-based supply chain technology will be worth $11B. And from the looks of it, that might not be far off. Optimism about the cloud is guiding decisions that companies are making with regard to their SCM and ERP technology—with investment in cloud infrastructure continuing to rise across industries. As with any new technology, though, it’s hard to separate the hype from the real value adds. Is the cloud the right choice for your value stream, or is good old fashioned on-premise hosting a safe bet?
Though the manufacturing sector has traditionally not been the fastest adopter of cloud technology, there’s no denying that the demand for cloud-based apps and services in the industrial world is increasing. One estimate suggests that the cloud manufacturing market could nearly triple in just a few short years, from just shy of $40 billion in 2018 to more than $110 billion by 2024. Based on the way people talk about cloud technology, it’s easy to see why: it’s often cited among the most important drivers of the Fourth Industrial Revolution, and insiders often suggest that it has the power to revolutionize ERP, power improved demand forecasts, and improve operational visibility.