Once upon an orderly and regulated time, trucking was all about moving goods from Point A to Point B. What happened in between was largely up to the driver as long as everything loaded onto the trailer came back off again intact, at the expected place and somewhere inside the delivery window.
When mobile communications began to provide a view into that mysterious territory between point of origin and delivery, however, everything began to change. It is changing still, because what shippers and carriers alike saw were opportunities everywhere to make things better, to take slack out of the system, smooth out inefficiencies and (most importantly) recover the profits that were being wasted along the way. Today, hard times are making that supply chain review process an urgent priority, while additional new technologies are providing the means to really set supply chains humming.
Supply chains have become so important, in fact, that a Georgia Tech study indicated that a company's stock price can drop as much as 8% on the day a supply chain glitch is announced, according to the Council of Supply Chain Management Professionals.
“Historically, there is no doubt that mobile communications has had a huge impact on the supply chain,” notes Norm Ellis, gm and vp of transportation and logistics for Qualcomm Enterprise Services, a division of Qualcomm Inc. “The supply chain has been leveraging mobile communications for years to reduce costs. You couldn't do JIT [just in time] delivery without it, for instance, because you had no visibility; you couldn't see what was taking place. Now logistics management is moving far beyond that.”
“Logistics was just a general term for managing freight before. Now it is truly about managing a product end-to-end,” says Rick Ochsendorf, vp-operations for PeopleNet. “That is very different. Everybody today, from manufacturing to billing, has lots more visibility into the supply chain and lots more automated integration with other business functions. That is flowing more data, better data, through the entire system and enabling the coordinated push we are seeing for greater efficiency, optimization and asset utilization.”
“People increasingly want visibility to what is going on all along the supply chain, and they want it in real time. That is the biggest trend we see now,” says David Custred, director-sales and service, McLeod Software.
NOW YOU ACT
If technology-provided visibility up and down the length of supply chains was the true starting point for supply chain management, then mobile computing and decision-support tools are what are really animating that vision today and bringing management plans to life, real life.
“Visibility must be holistic and supported by appropriate decision-making tools that can help turn information into action,” notes Randy Littleson, vp-marketing for Kinaxis Inc., in his article “Supply Chain Trends: What's In, What's Out,” Manufacturing.Net, Feb. 6, 2007. “Providing information does little good without the capability to do something with it. Information in this context is only powerful when it can be: consolidated for a multi-enterprise view across the complete supply network; analyzed by front-line staff using real-time manufacturing and supply chain analytics and data modeling for what-if scenario simulations; and shared and collaborated on with parties internal or external to the organization.”
Data you can “do something with” is what today's IT suppliers are all about, which increasingly means the ability to manage by exception, compare actual performance to planned performance and share information. Xata Corp.'s Xatanet 4.0, for instance, is designed with an exceptions function to track ongoing operational events and identify performance levels outside user-defined limits. Learned standards can gather and store long-term aggregate data, such as time between stops, to permit plan-to-actual or actual-to-best performance comparisons.
“Our system collects so much information,” notes Tom Flies, senior vp-product management for Xata, “it can be tempting to try to do too much at once — more than you have the people and processes to handle.” Learned standards is one way to avoid that problem.
“What we are really trying to get to as an industry is the ability to follow an order from start to finish, to automatically track the entire process and point out any inefficiencies and their causes as they occur,” says Steve Hensley, president of Blue Sky Technologies Inc., a Cadec business partner. “We want this to be real-time too,” he adds. “We don't just want a rearview mirror look at what happened yesterday.
“To achieve this, you have to be able to pull very specific pieces of data automatically from every function, every movement all along a supply chain and then monitor it [also automatically] for exceptions which may require intervention,” Hensley adds. “Most of our customers are private fleets in the grocery or food service business. Many of them have ten to thirty different pieces of software handling different functions, such as warehousing, transportation, routing and scheduling, and dispatch. They need an agnostic system that sits across all that like a dashboard and provides a constant window into the critical aspects of the working system. That is what we do.”
A POP-UP WORLD
Supply chain optimization provider Manhattan Associates Inc. refers to this dynamic supply chain management as a “pop-up” supply chain philosophy, where retailers and manufacturers can adjust their transportation and inventory requirements on the fly to meet changing needs. The company just announced the updated release of its Extended Enterprise Management (EEM) system designed to provide seamless visibility and automated reporting of critical events all along a supply chain.
“This capability is seamless due to the visibility EEM provides, along with the capability to make quick decisions should an unexpected event occur anytime during the movement of goods,” says Eddie Capel, executive vp-product management and customer support at Manhattan.
This movement-by-movement, minute-by-minute, pop-up world sounds like a very demanding operating environment for the private and for-hire fleets running within today's dynamic and evolving supply chains, but for many fleets, it also sounds like opportunity knocking. “Our customers are trying to find ways to extend themselves so as not to become a commodity,” says Qualcomm's Ellis. “They are moving into logistics and supply chain management, in some cases taking over complete responsibility for their customers' supply chains, even overseas.
“They are owning that entire process because they want to make sure that the parts which are germane to their own business are secure, and they see opportunities to wrap a tremendous amount of value around the supply chain,” he adds. “We aren't just talking about the biggest operations either — the C.H. Robinsons, Ryders or Penskes — but also about smaller, asset-based providers that use their own power when they can and outsource the rest. Some have offices around the globe.
“We are reacting to their expanded scope of activities by working with companies to help them tie all their systems together to create one end-to-end system that enables them to meet their customers' growing tactical and strategic logistics management needs,” Ellis continues. “For instance, we are introducing a new module called Work Flow, which will give drivers in-cab access to their manifest and all the work-related tasks that go with it. The new system is totally intuitive; there are no macros to remember. The purpose is to make it easier for even inexperienced drivers to deliver what customers need and want.”
Customers who need and want more logistics management support from their transportation suppliers have to be willing to give something in return — visibility into their own internal systems and a willingness to collaborate to achieve shared supply chain goals. The same is true for carriers.
“We see big opportunities for improvement through collaboration,” notes Blue Sky's Steve Hensley. “For example, you can use geofencing near a customer's dock to alert them when a truck is about to arrive. For refrigerated carriers, this can be a very big deal because they have to run the refrigerated unit while they wait to load or unload and that costs fuel as well as time. Visibility plus collaboration allows you to compare plans to what is actually happening and to make changes accordingly.”
“There is a lot more collaboration now between all parties along a supply chain,” says PeopleNet's Ochsendorf. “Partners are integrating their systems in order to make it possible to automate processes, like integrating order creation for the shipper with dispatch on the carrier side. We are also seeing a lot more usage of geofencing because it gives everyone the ability to compare the plan with actual data from the route and make adjustments. Smart systems can also ‘learn’ and make constant plan corrections automatically.
“For instance, an automated dispatch system can assign a driver to a load based on preset parameters,” he continues. “Then the pickup point is geofenced, so the system automatically reports when the load had been picked up. GPS follows it in transit and monitors cargo and vehicle sensors, if appropriate. Geofencing at the delivery point or points automatically captures data on when the load arrives, is unloaded and the driver has departed again. Of course, the driver is confirming and entering order-specific data along the way. All this information flows automatically into the billing process, driver payroll, fuel tax reporting, and inventory management — wherever it is needed along the supply chain.”
“We are seeing shippers and carriers change and adapt to the new realities of the marketplace. Motor carriers are diversifying and adding other services, such as LTL and intermodal or logistics management. We are also seeing subtle shifts in freight patterns,” notes Monica Truelsch, director of marketing, TMW Systems Inc.
“This is creating tremendous new opportunities for carriers,” says Ochsendorf. “For instance, we see a lot of LTL carriers forming partnerships with one another. One regional carrier may have high density and great coverage in some lanes but not in others. If a customer needs help in one of those lanes where the carrier is weak, they will partner with another carrier who has more capacity there and share the revenues.
“There is less worry now about the competition and more pulling together to see how we can all get things done, make things work,” he notes. “The spike in fuel prices this summer accelerated this process. People had to open up and share information in order to reduce costs. It made some companies much more creative and willing to try new things. Circumstances forced companies to interact.”
“Today, collaboration is blurring the lines between disparate functions,” explains Adrian Gonzales, of ARC Research, in “Making Smarter Decisions Faster,” the feature article in Descartes Systems Group Customer Newsletter, “Making Things Move,” June 2008. “Electronic data interchange [EDI] is being integrated with other technology applications to drive cooperation and capabilities to improve end-to-end shipment management and logistics processes. These networks…have become much more than the transfer of structured, standardized data from one computer to another. They have evolved into logistics communities that extend beyond the simple interchange of logistics information to also provide value-added application services.”
In their report, “Managing Transportation Costs in a Tough Economy,” Ryder System encourages supply chain partners to collaborate to reduce transportation costs: “Collaborate with customers, suppliers and even competitors,” they note:
Share transportation costs by combining shipments with another business that has similar transportation requirements and complementary schedules.
Utilize backhaul miles to improve asset utilization.
Work with customers to adjust inefficient delivery frequencies, minimum order volumes and other metrics that positively impact supply chain costs.
“We are all getting a wake-up call now,” Ochsendorf says. “It might be painful now, but it is probably good for the industry in the longer term. It is forcing us all to interact more, support our customers more and become better companies. We are going to keep moving down this path; nobody is going back to doing business the old way again.”
For more information on this topic, visit these web sites:
You say supply chain; I say logistics
It is easy to end up in a tangle of vague terminology when talking about supply chains and logistics. To help clear up the confusion around these evolving terms, the Council of Supply Chain Management Professionals (CSCMP) created official definitions for “supply chain management” and “logistics management” as well as explanations of their boundaries and relationships to other processes and activities.
Like nesting boxes, logistics management sits inside the larger supply chain management “box,” while functions such as transportation management and warehouse management fit inside the logistics management space. Here are the CSCMP definitions. Typically, fleets work in the logistics management arena:
Supply chain management: Encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service suppliers and customers. In essence, supply chain management integrates supply and demand management within and across companies.
Logistics management: Logistics management is that part of supply chain management that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.
These activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning and management of third-party logistics service providers.
In their definitions, CSCMP also notes that both supply chain management and logistics management are “integrating functions,” linking with other functions such as marketing, sales, finance and information technology to get the total management job done.