Recent IT buzz indicates that Third Party Logistics (3PL) companies are starting to consider the implementation of cloud-managed services for their clients. While it’s still too soon to see the overall impact of this trend, the concept is important to understand.
So what is cloud technology, exactly, and how would it work in the world of 3PL? In a nutshell, cloud computing involves using virtual, Internet-hosted servers to store your data, rather than storing it on local servers; it allows for flexible information management without the associated investments in infrastructure hardware and software. Basically, you’re taking the job of data management out of your own hands and placing it in the hands of a remote service provider. It’s a radical departure from the standard server model.
What could cloud technology mean for 3PL? If implemented properly, a remote data management service could reduce IT- and overhead-related costs for a logistics and transport business, and allow for easier data management scalability. Investing in cloud computing also provides logistics companies with access to new IT technologies, as well as real-time data accessibility.
With an operating change this profound, however, many 3PL companies are understandably taking a “look before you leap” approach to cloud technology. As with any new system, there are possible risks. First and foremost is the potential increase in upfront costs to establish a cloud-managed environment. Businesses need to make sure that their needs – and the needs of their clients – justify that expense. Perhaps the company prefers not to be tied down to a single IT vendor, or they’re worried about the security of their data. And if things are currently running smoothly with a company’s IT systems being managed in-house, it may seem needless to fix what isn’t broken. There’s also something to be said for waiting to see how the cloud technology trend “plays out” in the 3PL IT environment before making any decisions one way or another.
One thing is for certain – cloud computing and its effect on the Third Party Logistics industry will be an interesting development to follow in the coming months.