White Paper: What Cloud Computing and Reshoring Mean to the Transportation Industry. GTG Technology Group

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1 White Paper: What Cloud Computing and Reshoring Mean to the Transportation Industry GTG Technology Group

2 GTG Technology Group, LLC builds software to manage global transportation management systems (TMS) for all sizes of intermodal brokerage, and drayage transportation companies. GTG is dedicated to providing TMS solutions designed to provide end-to-end visibility and connectivity. GTG s software is delivered as a Cloud-based Software as a Service and was engineered to help businesses in the transportation industry overcome their challenges faster, more cost effective, and more efficiently. 2

3 Contents What Cloud Computing and Reshoring Mean to the Transportation Industry... 4 Reshoring Surge: Re-evaluating Business... 5 What It Takes to Reshore... 6 The Benefits of Cloud-Based ERP Solutions... 7 How Companies Integrate Cloud Solutions... 8 Friends With Benefits: The Relationship Between Cloud Software and Reshoring... 9 Reshoring, Cloud Computing, and Unique Opportunities for the Transport Industry Is It Worth It? Legal

4 What Cloud Computing and Reshoring Mean to the Transportation Industry Since 2010, over 200 nation-wide companies have discontinued outsourcing of production and brought the industry back to the states, creating over 650,000 manufacturing jobs. What made this beneficial reshoring possible? Parallels in cloud computing and automation software trends suggest these platforms may be making the change easier for manufacturers. Companies opting to reshore their production plants use cloud-based technology to rule out lengthy implementation processes when building new facilities or changing existing ones. However, some companies are still hesitant to switch to cloud-based software, arguing that the parallels in trends alone do not warrant a change. 4

5 Reshoring Surge: Re-evaluating Business Businesses are always looking for opportunities to lower costs, improve product quality, and drive profit margins. Manufacturing and logistic expenses are always scrutinized for these factors. In the past, outsourcing was a way to realize financial goals, taking advantage of the cheap costs and low overhead associated with remote production plants and workers. Reshoring is just as calculated a move, taking advantage of new opportunities to streamline production, enhance value, and make more money by reincorporating and localizing the workforce. According to the Boston Consulting Group, more than 33% of manufacturing leaders (those representing sales in excess of $1 billion) are considering taking advantage of the benefits associated with this reshoring trend. While experts are reviewing the correlation between reallocating work and the rise of cloud computing, the decision is easier to make due to rising wages overseas and additional demands, like logistic requirements and consumer interests. In fact, the companies polled also cited labor costs, product quality, ease of doing business, and proximity to customers as motivation to pick up stakes. As an anticipated 2 to 3 million jobs are poised to return to the United States, many industries will experience growth and the fluctuations in business that comes with it. Local markets are expected to thrive, and transportation is one trade anticipating a marked increase in business and revenue. Cloud-software will play an instrumental role in this development, as companies will look for ways to remain profitable and competitive by streamlining business, tracking performance, and staying as efficient as possible. This is evidenced by companies like ET Water Systems, who seized the opportunity years ago to transplant manufacturing operations overseas. After recalculating the expense of global versus domestic costs in United States, the enterprise came to a realization: the difference between local and international costs were marginal. Even General Electric was caught reshoring its efforts back state side. Needless to say, the trend of savings historically associated with outsourcing work internationally are becoming much less tangible. 5

6 What It Takes to Reshore If a company decides to headquarter its business back in the United States, it will take a lot of communication and lean thinking. All operations will have to function at peak levels of efficiency, focusing on new ways to stay flexible, adjusting to market growth or loss, seamlessly integrating new systems, maintaining conservative inventory levels, and decreasing overhead costs while still maintaining product quality. There are also social and political hoops to consider as business is taken back through international regulations and demands. Overall, it takes an efficient team centered on the goal of a cooperative, smooth transition. Companies in transition must find and take advantage of any opportunities for greater productivity. Whether it s supply chain renovations, re-evaluating operations, or optimizing distribution processes, efficiency is the critical ingredient to a viable, costeffective move. As companies look to relocate in the U.S. market, they must be prepared to respond to new trade regulations and understand the best ways to bring their entire team up to speed on any modifications or unseen circumstances. Preserving brand image and reputation through quality assurance and prompt response times is critical at this stage of flux. Maybe it s a simple cost analysis encouraging companies to reshore, or perhaps the benefits of virtual solutions make it possible. Either way, the advantages of cloudbased Enterprise Resource Planning (ERP) make the process of transitioning smoother and more manageable. Reshoring companies continue to turn to the benefits of the cloud as they re-evaluate their enterprise resources and integrate new software to enact new strategies. 6

7 The Benefits of Cloud-Based ERP Solutions According to a study by the Aberdeen group, integrating a new enterprise strategy through the cloud was over 60% faster than an on-site initiative. Furthermore, the cloud has the unique capability to streamline operations by working through the limits of where the hardware is located and where supplier information is stored. This means preserving and accessing data can be done through a single source simplifying and reorganizing the process. In addition to this capability, enterprises turn to cloud solutions for: Improved analytics and accessibility. The idea of universal accessibility from any location is enough to turn many entrepreneurs heads. But getting everyone on the same page of the same system is only the beginning. Gathering, evaluating, interpreting, and circulating information across the workforce can be done at lightning speed, and select data can be shared with investors, shippers, or anyone else along the pipeline. This helps businesses evaluate trends and behaviors, respond with greater flexibility and reach, and cut down on miscommunication. Collaboration. Systems for workers, executive leaders, marketing teams, investors, and consumers can be developed for mobile platforms, allowing these parties to have constant access to the information and quality management tools relevant to their interests. Companies can roll-out real-time updates and projections with these systems. 7

8 How Companies Integrate Cloud Solutions When a company sets out to incorporate cloud services, they are presented with numerous options. These can be tailor-fit to the company s needs and include options as complicated as running a personal server or as simple as getting the team on google docs. Many independent companies are available to run systems remotely, leaving entrepreneurs with little to do other than communicate their needs and adjust to the new program. Different ways to incorporate the cloud include: Infrastructure as a Service (IaaS). This model relies on either physical or virtual machines to manage information. It has the capability to support many networked devices or systems and can scale (without delay) to fit the data and operational needs of the company. A business can rely on IaaS to manage local area networks and similar functions, host a website virtually, or reorganize and control its infrastructure. This option lets clients enjoy complete security with the servers secured remotely; the business is not accountable for any cloud hardware, either. Platform as a Service (Paas). With this option, a host sets up a computing platform, including an operating system, databases, servers, and more. This model relies on database functions, web servers, and other technical measures. These items are delivered by the cloud provider, so some development experience is needed to integrate with a business. It is a supplement to an existing infrastructure, simplifying processes such as hardware installation. Software as Service (Saas). This cloud-platform is licensed as software, typically on a subscription basis. Applications are hosted and customers can access them via the Internet. Some easily identifiable features of this model include Customer Relationship Management software, accounts, virtual desktops, and more. Depending on the solution, users can access the cloud on networked devices. These can include desktop computers, laptops, and mobile devices. Cloud services may rely on physical hardware, or they can be accessed simply through a web browser. Others required dedicated software to run applications and manage client information. An employer can use a private cloud and server solely devoted to his or her interest, but there are public systems that are safe and effective for certain needs. These are systems like Microsoft or Google, offering services as simple as calendars, shared documents, and more. They are managed by these corporations and available to whoever signs up for the service. A business will pick a system that works for its needs and identify what networked devices customers, stakeholders, or personnel can use to review and send info. In the transportation industry, this often includes tablets, computers, and cell phones. 8

9 Friends With Benefits: The Relationship Between Cloud Software and Reshoring The relationship between the reshoring phenomenon and cloud-computing may not seem apparent at first, but the issues cited by manufacturing leaders as reasons to move on can be managed by these technological innovations; the demands of reshoring can be handled by the cloud. As enterprises buttress their connections and cut costs in anticipation of a change, they often turn to cloud-based ERP solutions to meet demands and seamlessly transition company processes and workflows. This can guarantee systems are easy to navigate and work with, making sure supply chains, distributions, and services are ready before starting. Cloud platforms enable opportunities to increase visibility, develop and implement new innovations, and boost productivity and efficiency. As business owners are stepping back from the overseas market, cloud solutions can absorb costs associated with the trend and present enterprises with new and better options than ever before. This happens by: Localizing a system. Reshoring a business means companies can take advantage of the perks of operating regionally. Cloud systems allow for universal communication and a central system for operations, and while they can be implemented for companies overseas, these benefits make the expense of basing operations in the U.S. practical. This means companies can enjoy the advantages of being local. Aside from simplifying operations by cutting through international regulations, companies can better see and interact with the employees, investors, and suppliers in their organizations. This allows for improved communication, more competitive prices, and the flexibility to pinpoint and respond to changes more directly. Increasing visibility. Cloud software enables companies to monitor and evaluate a multitude of functions cross-departmentally. As enterprises reassess their offshored assets and facilities, they may realize how this increase in visibility means manufacturers, team leaders, distributors, and shippers can be managed anywhere at any time. 9

10 Reshoring and implementing cloud solutions to track performance and communicate within an organization means labor costs, product quality, and ease of doing business can be regulated from a central location. Furthermore, with everyone relying on a single system, organizations are better able to realize and respond to any issues related to their production or supply chains. Enhancing accessibility. With an increase in visibility, workers are better able to understand business demands, and any changes, deadlines, or fluctuations can be communicated and responded to in record time. Pinpointing weaknesses, correcting problems, and developing and initiating new systems can all be done quicker and easier through a single, uniform system. Employees, management teams, and leaders in any capacity can submit data quickly and accurately, leading to more accurate, up-to-date, and faster decisions. This drives growth. For example, implementing a mobile plan is far simpler with a company already situated in the cloud. Releasing programs like this across a business that already has a virtual system in place means everyone can integrate with the new plan. Businesses will have more flexibility and enjoy the capacity to operate from wherever they are located. Boosting productivity and efficiency. With advantages like greater flexibility, increased visibility, and innovation, it should come as no surprise that enhanced productivity and efficiency are a side effect of working in the cloud. There will be less downtime in waiting or responding to business demands; clients, workers, and executive leaders will all have access to critical information at the touch of button, and everyone can communicate more effectively. Cloud software also enhances a company s ability to make decisions and implement new programs. As businesses transition to the cloud and take advantage of its unifying features, they will find that the process for developing a strategy, screening it through the necessary channels, and executing it across the organization are more practical and cost-effective. 10

11 Reshoring, Cloud Computing, and Unique Opportunities for the Transport Industry While these offerings can be applied across many industries, the cloud presents unique opportunities for the transportation business. The industry is already inundated with demand, whether it s meeting shipping requirements, maintaining order accuracy, or keeping speeds competitive. This is a unique industry where it is vital that every individual involved in the process, including suppliers, carriers, and freight brokers, are always on the same page. As more trades bring their business home, the transportation industry will experience a spike in demand. These businesses need to stay competitive in light of this influx, adapting to the cloud and understanding how to satisfy clients. This can be done in the following ways: Cloud-based storage and document imaging. This innovative technique enables companies to store all of their data remotely, decreasing overhead. This facilitates the exchange of information, allowing companies (even with remote teams or international workers) to communicate. It is a safe, effective way to consolidate operations and implement changes such as reshoring. Furthermore, electronic document imaging lets an entrepreneur upload all of his or her hard copies into the cloud. This is a way to guarantee employees have all the information to make on-time deliveries wherever they are. With mobile integration, invoices, delivery information, schedules, and other physical forms can be accessed as needed. Instant rates and fully-integrated accounting. Staying competitive is a core element of any business. Gaging a viable service rate requires competitor analysis, market assessment, and pricing estimates. Cloud-based solutions give a business owner the ability to determine shipping rates, carrier management features, and confirmations at any moment. This degree of accessibility also eliminates any delay between accounting functions and invoices, as financial data can be connected to statements and confirmation systems. 11

12 Cloud-based solutions incorporating all of these features can help companies adjust to increased demand and stay on top of overwhelming business and competition. It is also a great way to optimize functions, eliminate any excess, and stay flexible. Lastly, the expansion of cloud-based services, companies opting for a local presence, and consumers looking for the most convenient and competitive shipping options opens up new and unique opportunities for the industry. For example, two years ago, J.B. Hunt transport, a nationally acclaimed carrier and global provider, launched a final-mile program. It delivered online orders through the last leg of the trip, simplifying local pickup services through FedEx or USPS. J.B. Hunt also installed equipment for the buyer. The service expanded to commercial freight, taking on more specialized equipment. This kind of move relies heavily on cloud-based services, taking advantage of a unique opportunity to respond to smaller orders. 12

13 Is It Worth It? Whether or not the U.S. is experiencing a surge in reshoring as a direct result of cloud innovations, there is little question that virtual ERP solutions seem custom-made to support this transition. This presents a new opportunity for business, but it also affects overhead and how the business operates at a fundamental level. The uptick in both the numbers of companies reshoring and enterprises looking to cloud-based solutions means the transportation market will grow thick. Intermodal shipping may decrease as more products are made locally and the demand for a nearby delivery system increases. This affects private and government-run operations alike. Fortunately, this rise in local interest also means the demand for new hires will grow, as well as competitive pay and intensive screening processes, to make sure drivers are compensated fairly and screened properly. As the changes continue to take place, companies will need to keep an ear to the ground, watching for opportunities to expand or cut costs, relying more and more on quick response times, quality of service, and personal reputation. Many businesses focusing on local operations may also find themselves drastically reducing their overhead expenses and running their trucks fewer miles than ever before. Implementing cloud-based ERP solutions lets companies apply their own system of operations and culture to any circumstance. They are also easier and quicker to implement, outpacing physical programs at an astounding rate. Regardless of if a business is responding to popular trends or looking to cut costs, the ability to collaborate across an organization skyrockets through the use of cloud-based ERP solutions. 13

14 Legal Copyright 2015 GTG Technology Group. All Rights Reserved. GTG Technology Group logos, and trademarks or registered trademarks of GTG Technology Group or its subsidiaries in the United States and other countries. Other names and brands may be claimed as the property of others. Information regarding third party products is provided solely for educational purposes. GTG Technology Group is not responsible for the performance or support of third party products and does not make any representations or warranties whatsoever regarding quality, reliability, functionality, or compatibility of these devices or products. 14