Imagine a global manufacturing enterprise where the supply chain operates like an intricate gear system—each component must mesh perfectly to ensure smooth product delivery. Traditional supply chain management methods have functioned like thick grease coating these gears, slowing operations and reducing efficiency. Now, a new lubricant called "cloud computing" is transforming this system—lightweight, efficient, and dramatically improving supply chain flexibility and responsiveness. This represents the profound transformation currently underway in supply chain management software—an accelerating migration to the cloud.
Cloud Computing Reshapes Supply Chain Management
With its unique advantages, cloud computing is increasingly becoming the preferred solution for optimizing supply chain management. Compared to traditional on-premise deployment models, cloud-based software operates on a subscription basis, significantly reducing upfront costs. Cloud solutions require minimal or no on-site services—just an internet connection enables access anytime, anywhere. More importantly, cloud computing offers exceptional scalability, allowing flexible resource adjustments based on business needs, with software updates automatically performed in the background without labor-intensive manual upgrades.
The supply chain management (SCM) software sector has embraced cloud computing with particular enthusiasm. Transportation management systems (TMS) and global trade management (GTM) systems were among the first to leverage the "anytime, anywhere" nature of cloud computing, enabling seamless cloud-based connections between shippers and carriers. GTM providers can better coordinate with dynamically changing global compliance requirements. Other supply chain solution components quickly followed suit. Today, many modern warehouse management systems (WMS), yard management systems (YMS), and other supply chain software applications have transitioned to cloud deployment.
Market Expansion and Growing Cloud Service Expenditures
This trend reflects the broader global cloud computing market boom. Gartner predicts worldwide public cloud service spending will reach $598 billion in 2023, up significantly from $491 billion last year. Sid Nag, Gartner VP and analyst, notes that hyperscale cloud providers are driving the cloud computing agenda. Enterprises now view cloud as a crucial strategic platform for digital transformation, prompting cloud providers to continuously enhance capabilities amid intensifying digital service competition.
Gartner data shows 94% of enterprises currently use cloud computing to some degree, with infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) being the most popular offerings. Retail, healthcare, and financial services lead cloud adoption.
"Cloud-First" Strategy Becomes Standard
Businesses across industries increasingly prioritize supply chain management. Whether overhauling existing approaches or implementing new solutions, technology investments play a pivotal role—further accelerating growth in cloud-based SCM software.
Nishanth Sridharan, Accenture's Americas Senior Director, identifies key objectives including enhanced supply chain visibility, improved transportation transparency, and effective inventory management. He predicts digital commerce growth will continue driving cloud investments as a pathway to faster decision-making and inefficiency elimination.
The SCM software market generated $15.8 billion revenue in 2022, projected to nearly double to $34 billion by 2030—growing at a 12.6% compound annual rate, largely fueled by cloud applications that inject greater adaptability and flexibility into supply chain processes.
Sridharan emphasizes we've entered the digital era, with growing enterprise adoption of next-generation digital supply chain solutions supporting intelligent, robust, and more resilient operations. Cloud computing enhances speed, agility, and visibility.
Cloud Computing Supports Sustainability Goals
Cloud technology also helps enterprises achieve sustainability targets. Citing IDC data, Sridharan notes continuous cloud adoption could reduce CO2 emissions by 1 billion metric tons between 2021-2024. "A key factor in lowering cloud-related emissions is the higher efficiency from aggregated computing resources," IDC explains.
The report adds emission reductions stem from consolidating computing from discrete enterprise data centers to larger-scale facilities that better manage power capacity, optimize cooling, utilize energy-efficient servers, and improve server utilization.
Accelerating Cloud Migration in US and European Markets
Clint Reiser, ARC Advisory Group's Supply Chain Research Director, observes accelerating cloud adoption in both US and European markets. While North America initially led Europe in WMS cloud adoption, European demand for cloud-based supply chain applications now grows rapidly.
Reiser cites a Danish WMS provider reporting 80% of new clients choose SaaS models, having discontinued perpetual software licenses. Users now select either SaaS or on-premise deployment—both ultimately subscription-based. An Italian software developer confirmed near-zero license revenue, having transitioned its logistics execution architecture (LEA) platform and microservices-based cloud WMS to the market. "These represent European vendors explicitly adopting cloud-first strategies," Reiser notes.
Other North American and European companies have offered SaaS solutions for years, while some now build entirely new cloud-native solutions using microservices architecture. Reiser highlights Körber Supply Chain and Manhattan Associates as SCM vendors making significant cloud progress. Manhattan Active WM (their cloud-based WMS) now serves 51 clients across 113 live sites—doubling from 24 clients at 41 sites in May 2022. "Measured by sites or clients, Manhattan's growth in this space is substantial," Reiser remarks.
Cloud Blurs Boundaries Between SCM and SCP
While SCM software helps shippers manage supply chain operations, supply chain planning (SCP) focuses on demand planning, network optimization, forecasting, and analytics—the former improves efficiency, reduces costs, and enhances customer experience; the latter optimizes performance, mitigates risk, and increases profitability.
Historically distinct, SCM and SCP applications now converge toward comprehensive supply chain solutions, with cloud computing helping erase boundaries between them. Cloud's ubiquitous nature enables real-time collaboration, file sharing, easy updates, progress tracking, and cross-departmental task allocation. For instance, cloud-based SCM can forecast demand, which SCP then uses for more accurate procurement and manufacturing planning. Alternatively, SCM tracks customer orders while SCP leverages collected data to improve future supply chain performance and customer service.
Gartner Senior Director Analyst Amber Salley observes SCP gradually moving away from "function-centric activities" toward serving as guidelines for logistics departments to formulate warehousing, transportation, and manufacturing plans. "Supply chain aspects often operate in silos, as do related technologies," Salley explains. "We anticipate greater convergence between planning and other supply chain components over time."
Start Small, Scale Quickly
Cloud computing will continue facilitating SCM-SCP convergence. Salley notes most traditional planning software providers either already offer or are developing cloud-based platforms—some completely replatforming to cloud-native architecture, others hosting existing client-server applications in cloud environments.
These initiatives benefit both software users and providers. "Having all customers in one cloud environment reduces resources needed to support legacy application instances," Salley says. "Vendors may view cloud as reducing expenditures while concentrating more resources on development."
Sridharan expects cloud computing will continue serving as the foundation for advanced technologies like AI, machine learning, IoT, and blockchain—all relying on cloud's ubiquitous access and collaboration features. For companies embracing cloud, he offers simple advice: start small, scale quickly.
A longtime cloud advocate, Sridharan sees bright prospects for this software delivery model. "The ultimate goals—enhanced supply chain visibility, transportation transparency, and effective inventory management—offer compelling benefits," he says. "Digital commerce growth will sustain cloud investment as enterprises seek accelerated decision-making and operational efficiency."