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Cloud computing refers to a systematic computing concept, which basically involves the connection of several computers via real-time communication network. In the real world situations, cloud computing is also referred to as the distributed computing within a given network, a common feature in the contemporary management that allows simultaneous running of programs within a network of computers. In the phase of inventory management, cloud-computing technology has been used with a view to improving the level of performance with respect to reduction of queue time, and enhancement of accuracy among other benefits. One of the most powerful inventory management concepts is the fishbowl management solution, which enables simultaneous overseeing of multiple locations, reordering of commodities, and tracking their shipments among other activities . Despite some few disadvantages, cloud computing is advantageous in inventory management, as discussed below.
Advantages of Cloud Computing in Inventory Management
Over a long time, sophisticated inventory management solutions have been used, despite their high costs, relative to the functional capacities of small and medium-sized enterprises. In addition, inventory management also involved the purchasing of appropriate hardware for the housing of data, as well as IT specialists to uphold the software in addressing management challenges, which summed up to high costs of management functions. In the contemporary management frameworks, the majority of organizations have embarked on the use of IT-based inventory management. Among the key advantages of cloud computing in inventory management are improved efficiency, enhanced coordination, and cost saving prospects, which enable firms to expand and enjoy large-scale economies of with a reduced number of intermediaries. The establishment of various management processes has also been improved through acute reduction in lead-time via the simultaneous handling of the management process through inventory counting systems .
On the other hand, the majority of inventory records have been successfully relocated from their physical placement to impartial computerized system location. It implies that commodities are handled without their physical storage within the organizational premises, which is an important process of mitigating the organizational carrying costs and the aggregate costs in the long run through computerized monitoring of inventories. Furthermore, some items, which can be easily hidden (e.g. transistor radios and calculators), are highly susceptible to theft. At the same time, other products, such as meat and poultry, are also prone to quick spoilage among others. Consequently, the physical storage of such products is exempted through cloud computing of inventory management, thus, reducing accruing losses that would result from such casualties.
On the other hand, the costs attributable to ordering and reception of products, commonly called ordering costs, are relatively reduced due to cloud computing. As a matter of fact, this implies that the costs of ordering products are reduced. For instance, cloud computing cuts down unnecessary costs of preparing and printing invoices, shipping costs, and costs of inspection of goods upon arrival among others. It is also reduced by virtue of aggregate processing of orders, contrary to the handling of individual orders per given time .
Disadvantage of Cloud computing in Inventory Management
It should be noted that cloud computing may also result in a number of challenges in inventory management. For instance, information leakages, where data storage on the Internet lack high security provision, result in a risk of business collapse through theft, serviced by computing network. In particular, Accenture Technology Lab asserts that smaller firms may lack the capacity to protect their assets in the web storage, and this may pose a serious risk of losses due leakages to the wrong hands, through the use of personalized server .
In most situations, cloud computing service providers present their bargain as a utility-based supplier. However, on account of the entire costs of installation and use, the recipient company is faced with a predetermined deal, which often falls beyond the actual usage. In order to avoid higher costs relative to previous inventory management approaches, a thorough scrutiny of the installation and usage process ought to be carefully analyzed. Consequently, high and unnecessary costs may be avoided, evidence that cloud computing is a better alternative to sophisticated methods of inventory management, used in previous approaches. Cloud computing is therefore considered relatively cheaper IT management option for small, medium, and large enterprises .
Cost and Benefit Analysis of Cloud Computing
With the expansion of the business ranges and volumes of stocked commodities, there are a number of complexities, relative to inventory management and logistics. Consequently, this aspect raises the major role of warehouses in organizational inventory management. As a result, various enterprises adopt Warehouse Management Solutions (WMS) in conjunction with the institutional supply chain execution systems, particularly through the cloud-computing framework. Consequently, cloud computing is important in developing high efficiency and pro-active service delivery to both clients and purveyors .
When cloud computing is effectively integrated into the inventory management, organizations may cut down aggregate costs, besides increasing its prospective profitability and capacity to respond. Previously, sophisticated semi-automated technology was a restrictive practice for the high profile organizations and professional supply chain enterprises, owing to the complexities involved and investment echelon needed. However, careful selection of cloud computing in warehouse management has led to discrete mitigation of the inventory management complexities, and therefore, improved efficiency, speed, and accuracy, as well as the overall ability to effectively respond to extreme seasonality.
In the adoption of the requisite WMS through cloud computing framework, institutions follow a discrete process through identification of major focal areas. However, the poor adoption of Warehouse Centric Solution may lead to increased difficulties in handling inventory records, creating a pool of leakage and losses in general. Finally, cloud computing in inventory management leads to the elimination of individual companys needs for purchasing, deploying, and maintaining IT infrastructure among other application software. Thereupon, the investments result in significant economies of scale and industrial skills, thus, reducing Total Cost of Ownership (TCO) for the clients, deploying cloud computing business management system .