The cloud is increasingly a competitive advantage for retailers, manufacturers and distributors in an era when downtime can spell disaster. Discover the top advantages of migrating to the public cloud, with insight from manufacturers like Munchkin.
In the wake of the eCommerce boom, technology has become an integral part of the successful relationship between retailers, manufacturers and distributors aligned to meet the dynamic demand – supply driven by today’s online consumer. Digital transformation has enhanced processes that were traditionally highly manual in nature – from inventory management to procurement.
IT professionals in this space increasingly feel the burden of responsibility for ensuring demand is met. Downtime and scalability have become a living nightmare, both for companies that rely on their eCommerce website to drive ROI, and for distributors and manufactures who live minute-to-minute with just-in-time supply chains and changes in consumer trends. The pressure on IT departments is significant, as disrupted flow due to application downtime comes at the expense of the company’s bottom line. To ensure that impact due to any such disruption is minimized or eliminated, IT will typically overcompensate by the purchase or provision of additional and duplicate capacity and related cost.
Having the right IT infrastructure in play is a major competitive advantage for retailers, manufacturers and distributors alike. Moving from unreliable legacy infrastructure to a modern platform that can scale on demand is appealing to those companies who are looking to stay ahead of the competition and “future-proof†their technology stack in an ever-changing industry. According to a surveyOpens a new window of legacy Oracle customers, 9 out of 10 decision makers reported that their senior management mandated a cloud adoption strategy in all forms in 2019. As these aligned industries go through incredible transformation, their technology environments are evolving simultaneously. Below are the top benefits today’s retailers, distributors and manufactures are seeing by migrating to the public cloud.
How Retailers Are Reaping Cloud Benefits
Perhaps the biggest driver of cloud adoption by retailers is the agility the cloud offers to scale on demand. With the public cloud, retailers can easily ramp up additional applications and servers to accommodate major product promotions and peak shopping seasons. For example, take Amazon Prime Day. Many large retailers such as Target and Walmart offered competing Prime Day deals, effectively increasing online demand. Public cloud providers like Amazon Web Services (AWS) are specifically designed to scale on demand, so retailers can quickly spin up more servers to support sudden increases in online activity. With AWS, companies can then decrease their computing capacity just as quickly, providing significant benefit to those retailers who may have scarcer resources and don’t always need dozens of active environments.
The cloud also provides retailers with a way to more quickly meet shifting customer demands. Companies can react nearly instantaneously to trends in the marketplace and on social media by using the right IT stack. For example, retailers can quickly pivot and address the increased demand if a social media promotion of a certain fashion item prompts dramatically increased website traffic. Retailers can customize their IT environment, change servers and easily dial up or down services with the public cloud. Unlike paying for infrastructure on-premise, where many times retailers might only use half of the allotted environment, the public cloud enables companies to pay only for the volume of storage needed. This flexibility is especially useful given retail is one the primary industries that has significant peak seasons and slower seasons, and thus companies don’t always need the same computing capacity.
In that vein, many companies make the jump to the public cloud for cost efficiency. With a significant number of retailers already barely making profit margins, coupled with consumers’ demands for cheaper items and expedited free shipping, being able to cut costs elsewhere is crucial. Traditional on-premise solutions are not competitive with the cloud when it comes to total cost. For instance, building, installing and maintaining a data center is often very expensive for a retailer. The costs associated with supporting the designated space for the database alone can be quite significant, regardless of company size. Updating and maintaining older data centers and refreshing hardware as needed is also costly. As businesses scale and expand their global presence and supply chains, so does the data center price tag, given the many requirements of multi-location IT operations. Taking away the capital expense of housing and maintaining the data center by moving to public cloud results in consolidation and optimization of all IT infrastructure, driving tremendous cost savings.
Distributors and Manufacturers Moving to the Cloud
The cloud also enables timely and increased visibility into real-time, analytics and inventory for manufacturers and distributors and allows them to more effectively manage their global supply chains. Heading into peak retail season (i.e. the holidays), this can be even more useful, as distributors are able to better forecast inventory volume and scale to meet requests for increased shipments. Ultimately, this only helps elevate customer satisfaction levels, as product availability can be scaled to ensure orders are met in a seamless fashion. MunchkinOpens a new window , a leading manufacturer, distributor and retailer brand for infant and toddler products, had used Oracle E-Business Suite for years but struggled with server scale and availability to meet shifts in demand. Munchkin knew supply chain efficiency was crucial to their bottom line, so they solved for this by making the switch to AWS and are now more efficient in how the company scales applications (and thus, overall shipping) up or down to align with demand including seasonal peaks.
Anything that could disrupt the flow and process is incredibly detrimental for manufacturers and distributors living minute-to-minute with just-in-time supply chain. In fact, many companies are hesitant to embark on a migration journey simply because the process of moving to the cloud might result in downtime during transition if not properly implemented, even though the cloud enables more consistent uptime and availability compared to other IT options. However, with sufficient help from a third-party vendor, manufacturers and distributors can rest assured that the migration process will not be detrimental to their inventory management and supply chain processes. During Munchkin’s migration process, the company partnered with Apps Associates to ensure downtime was minimized. The entire process took six weeks while the actual migration cutover was completed over two days. Post-migration, the company now enjoys significantly more server uptime and peace of mind.
Similar to the benefits for retailers, making the switch to the public cloud also enables increased flexibility and scalability for manufacturers and distributors. When Munchkin made the switch to AWS from Oracle E-Business Suite, it was able to move faster and more flexible than ever. When they needed to change a memory configuration, they were able to upgrade it overnight. In the past, changing a hardware configuration required weeks of effort, while incurring additional costs.
Cutting costs, increased flexibility, scalability and uptime are all benefits that retailers, manufacturers and distributors can leverage in their digital transformation. While migrating all applications and environments might sound challenging, companies in these industries don’t have to do it alone. They should consider a partner who is an expert in their particular environment and who knows how to transfer legacy and custom applications so nothing slips through the cracks. A partner can even support post-migrationOpens a new window to help with operational efficiency, cost savings and overall total cost of ownership (TCO). Retailers greatly benefit from migrating to the public cloud, and in a couple years, those who don’t make a move off-premise may find inventory left on the clearance rack.