The transportation management arm of software giant Oracle Corp. has joined forces with cloud-based warehouse management system (WMS) provider LogFire Inc. to create what the companies said is the first-ever integrated transportation and warehouse suite tailored to the cloud.
The announcement, made earlier today, is unusual for Oracle in that it involves a partnership with a firm that it is not acquiring. Generally, Oracle fills development gaps either by buying a vendor offering supply chain functionality or by building the capability in house. The move also furthers Redwood Shores, Calif.-based Oracle's broad strategy of migrating supply chain services from traditional on-premise systems, where software is customized and maintained for clients, to web-enabled, cloud-based models, where startup costs are lower and deployment times are faster. Users of cloud-based supply chain services achieve full payback on their investments about 1.7 times faster than with on-premise solutions, according to data from Nucleus Research, an IT research consultancy.
Oracle already has a cloud-based transportation management system (TMS) and offers an on-premise WMS solution. It was unclear up until now which direction Oracle would take to move WMS functionality to the cloud. Atlanta-based Logfire is considered a leader in the nascent area of developing cloud-based software that can effectively manage a warehouse.
The agreement is nonexclusive, and Oracle is not taking a financial stake in LogFire, said Diego Pantoja-Navajas, LogFire's founder and CEO. LogFire hopes to be involved with Oracle as it moves functions like enterprise resource planning (ERP), order management, and global trade management to the cloud, Pantoja-Navajas said.
Many users grasp the financial benefits of migrating WMS processes to the cloud, but have been deterred by concerns over security as well as over "lag times" in the exchange of instructions from cloud-based WMS to automated material handling systems in the DC, according to James A. Cooke, an analyst with Nucleus Research. "Warehouses running sophisticated automated equipment can't afford a delay in getting information from the cloud," Cooke said in a phone interview.
If estimates from consultancy Gartner Inc. are any indication, the companies will be tapping into a potentially lucrative segment of supply chain technology. According to a 2013 Gartner survey, 40 percent of respondents said the inability to orchestrate and synchronize end-to-end business processes was one of the top three barriers to meeting their supply chain management objectives. In comments included in today's statement, Dwight Klappich, research vice president for Gartner, called "supply chain execution convergence" one of the "most important trends in logistics management."
LogFire said that first-quarter revenues rose 60 percent from the same period in 2014, and that 30 million transactions were shipped through its fulfillment network in the first quarter of 2015.