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"This innovative supply chain execution software allows you to control orders from all sources, provides electronic storefront
capabilities, organizes inventory of all types, directs and executes all
logistics operations, manages customer /
client accounts and tracks every shipment, and integrates accounting processes – all in real-time."
Source : Cadre Technologies, Inc
Collaborative Logistics Technology: Filling the Competency Gap
Logistics Technology is also known as :
Logistics Technology,
Logistics Management,
Supply Chain Technology,
Logistics Solutions,
Logistics Industry Trends,
Forecasts Logistics Industry,
Logistics Solutions Spanning,
Transportation Logistics Information Technology,
Web-based Supply Chain Technology,
Capacity Logistics Services,
Transportation Logistics,
Internal and External Logistics,
Logistics Information Technology,
Global Logistics Management,
Lean Logistics Technology,
Discrete ERP Software,
Logistics Technology Roadmap,
Logistics & Supply Chain Management,
Logistics Operations Management,
Acquisition Technology Logistics,
Core Logistics Technology,
Logistics Engineering Operations,
Reverse Logistics Technology,
Analysis Logistics Technology,
Resources Information Technology Logistics,
Chain Logistics,
Logistics Information Requirements,
Logistics Technology Services,
Logistics Quality,
Enhances Logistics Technology,
Logistics Software and Technology,
Acquires Logistics Technology,
Logistics Technology Support,
Multimodal Logistics Services,
Definition of Logistics Technology,
Internet-based Logistics,
Logistics Systems Managing.
Overcoming the diverse technical competencies between participants in a supply chain
community is an absolute requirement of leading service providers.
Hosted execution and visibility applications, coupled with outsourced technical expertise
can provide new, competitive advantages for companies who aspire to providing greater
levels of service.
Introduction
When opportunity knocks, a third party logistics company can expect to jump through a whole
new set of hoops to meet the unique requirements of a new client.
The nature of a logistics service provider’s business is diversity. Every client has different
customers, products, suppliers, carriers and geographies. To be successful, a third party
logistics provider needs to bring facilities, capabilities and broad experience to the table.
But it’s not only operating talent and facilities that wins business. Transcending the very different
technical competencies found in every community of clients, customers, suppliers and carriers
is perhaps the most challenging hurdle to clear.
In the past decade there have been volumes written about the virtues of supply chain visibility
and execution systems. In white papers and in seminars, supply chain industry experts have
projected the value of synchronization, the efficiencies of optimization and the new competitive
advantages of trading partner system integration.
It’s hard to argue with the concept. When everyone’s systems are working together to fulfill
perfect orders, execute on-time shipments and provide early alerts to problems, life is good.
The problem is: very few supply chain communities are made up entirely of companies with
best-in-class supply chain applications. Most company’s technical capabilities are average or
below. System integration between participants that facilitates electronic collaboration is a
requirement for any community of manufacturers, suppliers, carriers, warehouses and retailers
to be successful.
The strategic investment required to integrate diverse systems and scattered data resources
while developing the necessary technical expertise can be significant. Given the continual
pressure of everyday logistics operations and delivery deadlines, building this competency
internally is not a priority for most third party operators.
To fill this gap, many companies have turned to on-demand supply chain solutions. By
outsourcing to aSoftware-as-a-Service (SaaS) supply chain vendor, companies can enjoy a
long list of benefits including lower up-front costs, faster implementation time and the ability to
immediately connect with new or existing communities of trading partners.
This paper evaluates the challenges of supply chain systems integration in a diverse community
and how outsourcing this critical business function can increase a logistics service provider’s
value to its clients and other participants.
Aggregated Supply Chains: The Dynamics of Technically Diverse Players
It’s a rarity when a warehouse operator can own all or even most of the process between the client and
the retailer or end-customer. Even the simplest operations engage with dozens of other providers and
suppliers because each client (supply chain) represents a different group of players with different needs.
Manufacturers, 3PLs, carriers, freight forwarders, retailers, importers and others are aggregated to
perform a variety of specific logistics tasks. Each participant is enlisted for specific reasons: location,
experience, capacity, cost and other factors. Most providers, however, are not selected for their advanced
use of supply chain information technology.
When it comes to information sharing there is a wide range of technical competencies in any given
collection of supply chain companies. Only 20% of all supply chain companies are considered ‘best-inclass’
when it comes to application of technology* which leaves the other 80% at average or below. Even
companies who have implemented the most advanced ERP, warehouse management or transportation
management systems are challenged to effectively utilize all or even most of the features available in
their software.
Compounding all of this is continual change. Just when everything is set up and working, something
changes: a new carrier replaces one who didn’t perform, a new supplier is added, a new shipping lane
opens up with a low cost carrier, and so on. For every change, a new technology relationship must be
established.
Most supply chain IT departments have their hands full managing internal systems. Electronic interaction
and on-line execution is typically performed only for those clients and vendors who demand it.
The entry fee for participation in a growing number of logistics opportunities is some level of supply chain
technology for exchanging information about orders, shipments, receipts, and problems. The more
technically competent a company is, the better equipped it is to participate.
For those companies who are technically capable to provide advanced supply chain visibility and
execution, there are many distinct competitive advantages. The benefits include greater efficiency,
reduction of risk, lower costs, flexibility and the ability to work with a wider network of global supply chain
partners.
All of this sets up to be a very attractive value-add for logistics service providers. The ability to transcend
the different levels of technical sophistication between partners is perhaps even more valuable than being
able to keep up with the best-in-class. Bridging the gap between a low-cost carrier who only works with
spreadsheets and a manufacturer who demands fully functional EDI is valuable to everyone involved. The
manufacturer enjoys lower shipping costs while the carrier is able to participate despite its lack of
technical sophistication. And, in middle, the technically savvy operator solidifies his or her market
position.
What are the benefits to being a supply chain-execution leader? What does it take to add this capability?
What are the differences between supply chain partners in terms of data, systems and communications?
What level of investment is needed in supply chain software and technical expertise?
*Aberdeen Group, August 2007
Speeding Up to Fill the Technology Competency Gap
Electronic supply chain execution capabilities are usually borne out of necessity. Most companies start
using EDI because a powerful client or other trading partner mandates that they do so as a prerequisite to
the business relationship. They insist on it because it saves them time and money. It’s rare that a service
based logistics company initiates use of electronic collaboration to make their business processes more
efficient. By now, most entrenched supply chain companies already use EDI at some level, so not having
the capability leaves a supply chain vendor at the lower end of the logistics marketplace.
Minimally, and without much sophistication, a company can use spreadsheet technology and e-mail as
their EDI solution, and many do. This mode of operating is time intensive because most data interchange
is manual. It’s also error prone. It actually increases the complexity of business processes. So, few
companies see the value. When a company takes the next step and integrates their EDI data directly with
their business systems, the value of electronic interaction becomes more apparent.
But this paper isn’t about minimal, forced use of EDI. A complete supply chain visibility and execution
capability goes far beyond mapping and interchanging electronic messages. It includes detailed visibility
of inventory, orders, shipments, receipts and payments. It also provides knowledge of expectations and
the business rules for each of the participants: clients, customers and partners. Exception alerts,
shipment and order status, performance dashboards and flexible reporting are all required to step up to a
leadership position in collaborative logistics.
In order to move up the technology competency ladder, a service company has two options:
- Establish an EDI and supply chain execution solution in-house
- Utilize a hosted supply chain platform provider.
For most companies focused on warehousing or transportation, implementing the capability in-house,
from the ground up is a daunting challenge. The time and capital required to acquire and implement inhouse
systems is an expensive, long term undertaking. Finding an experienced staff or developing one is
even more of a challenge. Availability of the system and return on the investment are long and longer
term, respectively.
Using a hosted supply chain platform is a much more attractive path to collaborative logistics
competency. Hosted systems provide a hardware and software platform on-demand as an on-line
service. This eliminates the time and expense of selecting, buying, training, and implementing a new
system, out of the box. The best on-demand services typically offer a technical staff with deep domain
experience in on-boarding new companies at all levels of technical competency. Plus, they have working
knowledge of multiple ERP and operational systems used in the market and are better able to manage
business processes between disparate systems.
Speed is one of the most important reasons to consider an on-demand system, also known as“software
as a service (SaaS). Plugging into a pre-existing platform, with an in-place staff drastically cuts
implementation time. And, since they specialize in bringing supply chain companies on-board, hosting
companies can likely provide immediate connection to an existing community of networked players.
Finally, an on-demand solution will deliver a much faster return on investment. It is an almost immediate
extension of the existing business. What used to be a low-level, manual EDI burden is now a profit center.
Stepping Up to Become a Logistics Technology Leader
Deciding to use a hosted platform for linking information systems between supply chain partners goes far
beyond technology enablement. It should not be considered outsourcing of the business process. It is an
expansion of strategic resources in order to fill a gaping hole. It requires a willingness to develop internal
resources to do the necessary blocking and tackling to bridge the technology gap between the haves and
have-nots. The logistics provider is responsible for knowing what to do and what is expected. The
technology provider provides the platform and does the mapping and translation between partner
systems.
Establishing an active supply chain collaboration practice opens up new opportunities. Instead of
responding and adhering to pre-defined conditions, the competent logistics provider becomes an
aggregator, capable of bringing new partners together to fill gaps in a client’s supply chain. This includes
bringing low level technology users into the mix and connecting with more competent players.
Companies that set themselves up as aggregators are more attractive to new clients and partners.
Connecting the various players not only relieves the client of this burden, but it also serves to build a new
network of partners with varying technical competencies, logistics capabilities and price ranges. This
means that a 3PL is no longer defined by its own location(s) and internal capabilities. It is now known as a
lead provider who can gather resources that span geographies, functions and cost factors.
By adapting business processes and trading partners to meet the demands of a constantly changing
business environment a logistics provider can enhance its value to both its clients and its partners. The
ability to onboard new trading partners quickly to provide collaboration between new networks of
customers, carriers, and suppliers makes a 3PL more attractive to the entire market.
It’s not just 3PLs that can step up to this position as an aggregator. Carriers, freight forwarders, importers,
manufacturers and retailers can all position themselves as the lead partner, capable of bridging
technology and execution gaps. Some companies who climb this ladder even change their market
classification to become known as a 4th Party Logistics Provider or Lead Logistics Provider.
Obviously, a logistics company doesn’t become a collaborative logistics superstar overnight. Operators
usually develop collaboration capabilities on behalf of a specific client; or for a new project; or just
because they admit that they are weak in supply chain execution. If the initial project goes well, and the
relationship between logistics company and technology provider is successful, it will expand. As it
expands, the logistics company grows in its knowledge and confidence. Using the platform and technical
talent, the logistics company expands its internal competency and begins offering services to more
clients. Supply chain execution and visibility becomes a profit center and a powerful differentiator.
It’s been said that when someone does an exceptional job, they will be asked to do it again. Since only
20% of all supply chain companies achieve best-in-class use of visibility and execution technology, (and
that includes manufacturers, retails and the big logistics companies) there is plenty of room for becoming
a high achiever. Building a reputation for successful collaborative logistics is rewarded with more
opportunities. A competent company can become the electronic glue that enables a manufacturer to
execute transactions more effectively and expand the universe of available providers.
What Are the Specific Challenges?
Being caught in the middle can be a tricky proposition. On one side, a logistics provider is hired by a client
(retailer or manufacturer) to manage inventory flow by engaging with the client’s ERP system which
creates orders and initiates activity. On the other extreme, the same provider must work with carriers,
other warehouses and suppliers who are technically challenged to receive and provide accurate and
timely information to guarantee performance to the client.
So what are the specific operations and transactions that need a higher level of competency in order to
meet the growing demands of logistics IT?
EDI: Electronic Data Interchange (EDI) is the most obvious place to start. It is the most traditional form of
logistics collaboration. EDI can be defined as a transfer of structured data, by agreed message standards,
from one computer system to another without human intervention. EDI ‘standards’ were designed to
formalize the format of trading documents between systems. In theory this makes a lot of sense. In
practice, different companies have different ‘standards’ which means that the process requires human
intervention, at least in the mapping process. Each trading partner needs to integrate message processes
from their host system to the agreed upon format for both sending and receiving EDI messages. The
mapping process between systems reconciles the data between each of the partners. Once the
interchange format is ‘mapped’ between two (or more) systems, EDI messages are transmitted in using
variety of technologies including value added networks (VANs), modem, Internet Protocols (FTP), Email,
HTTP, AS1, AS2, etc. Typical messages utilized in a supply chain model include Shipping
Notice/Manifest, Purchase Order, Invoice etc.
EDI requires care and feeding at all levels. For many established retailers and manufacturers, flexibility is
needed to support the varying interfaces used by VANs and ERP systems. In other cases, manual update
intervention is required for trading partners with lower technical capabilities. Also, EDI is not a ‘set it and
forget it’ practice. Continual monitoring and auditing is required to confirm that the conversation between
companies and systems does not lose anything in the translation.
An established logistics hosting provider can navigate the seemingly endless details of EDI for a logistics
company. Supporting the standard and customized EDI solutions to transfer information between clients,
customers, vendors and other points of the supply chain is a major component of their business.
Inventory Management: Visibility of inbound, outbound and current inventory allows CSR’s, logistics
professionals, sales people, and management to track current inventory levels for each SKU down to the
lowest level of detail (batch code, lot or serial number) and to share current levels with external systems
for monitoring orders, reconciling inventories and planning.
Order Management: Orders processed either manually by a supply chain participant or via EDI using a
VAN or other protocol are delivered directly to the appropriate distribution center for processing. Visibility
of the process is enabled through the on-demand portal, providing access and control to IT managers and
other stakeholders responsible for the activities.
Transportation Management: An on-demand provider can provide integration with a variety of
transportation solutions. Tight integration with carriers, logistics service providers, and customer systems
using both packaged industry system and custom solutions is essential to successful participation.
Event Management/Notifications: Event management capabilities allow for management of critical,
planned or unplanned events via notification such as email, fax, pager, mobile phone or PDA. The hosted
system should be configured to make execution level decisions based on business rules, current supply
chain status (inventory levels, transportation availability) and customer preferences.
Reporting/Business Analytics/Performance Management: Analytic and performance tools enable the
exploration and analysis of supply chain data from any perspective. A hosted provided can produce
reports to enable periodic and scheduled analysis of current supply chain status including on-time
shipment and short order reports. Recent trend data allows for proactive management of planned and
unplanned inventory depletion.
Technical Considerations: The on demand solution reduces IT risk by keeping systems available, secure
and up to date. It should be modular and designed to be fully scalable for both horizontal and vertical
business applications and industries. This will allow for client specific customization and added flexibility
to extend the information scope, based on the individual needs of each client and trading entity. An ondemand
solution should include a broad portfolio of subscription and managed software options that allow
a company to choose the best way to implement the solution. A major benefit of a hosted model is the
ability to only use the required modules for any given trading relationship. Packaged software usually
includes many features and modules that are not required.
Persistent Change: One of the key elements of a successful supply chain service strategy is selecting a
technology platform built for change. On-demand applications are intrinsically well suited for this model,
given their faster implementation time, subscription or transaction payment models, and elimination of the
need to buy and maintain hardware. There is no such thing as a permanent operating mode. Things
always change. So why set up a complex internal implementation? When something changes, the
software installation must change. With an on-demand system, change is expected.
Supply Chain Visibility and Execution
Sometimes, when supply chain visibility is discussed, one can conjure up a cynical image of a bunch of
highway construction workers leaning on shovels, watching someone else work. After all, just having the
ability to observe work in progress doesn’t necessarily contribute to its completion. For those in the
driver’s seat of a best-in-class manufacturing company or retail enterprise, visibility is an irreplaceable
capacity to monitor and manage activities at all levels.
But observation (visibility) isn’t possible until a supply chain works. The starting point is execution and the
creation of informational and operational processes necessary to execute orders, shipments, receipts and
payments. Mapping the various documents traded by the different participants in order to execute
transactions is a challenge that can be met with a well managed system. Setting up the system so that
each transaction adheres to business rules is an even more critical challenge.
Monitoring activity and inventory to measure efficiency, proper alignment of resources, performance and
exceptions is more accurate when the relationship between systems properly established. Visibility is an
invaluable by- product of supply chain partner integration. As logistics companies become more
sophisticated in their use of powerful supply chain technologies, visibility becomes another demonstrable
value-add.
Conclusion
The collaborative logistics technology gap exists due to the cost and complexity of integrating disparate
systems between companies at all levels in the supply chain. In an industry based primarily on physical
movement of inventory, information is a powerful dimension that most companies do not fully utilize.
Filling this gap represents an opportunity for logistics service providers to stake a leadership claim.
Third party logistics companies, carriers and other service based companies can step up to this position
by working with a hosted technology partner. In-place systems and technical staff can help a logistics
provider become a competent supply chain collaborator at a greatly reduced cost and in a much shorter
time frame than in-house development.
time frame than in-house development.
Logistics providers who are able to utilize supply chain technology for electronic collaboration are more
attractive to the entire market. They assist retail and manufacturing clients by extending information from
their host business systems into the supply chain, saving time and money. Clients are also able to
participate in supply chain initiatives that demand electronic collaboration. At the same time, lower cost
carriers and warehouses are enabled technically by a lead logistics provider. The entire network
surrounding a technically competent logistics provider expands with this ‘magnetic’ IT bond.
Cadre Technologies, Inc.
This white paper is published by Cadre Technologies, Inc. an independent software vendor, specializing
in Microsoft based multi-modal supply chain execution and inventory visibility systems. Cadre’s hosted
LogiView system empowers companies to successfully aggregate, monitor and analyze shipments and
inventory across a broad spectrum of business units, suppliers, and enterprises. It helps companies
reduce their inventories, and pro-actively improve supply chain efficiency and performance.
LogiView is a hosted suite of products and applications designed to collect information from multiple
locations and sources including warehouse management systems, purchasing systems, transportation
systems, retail, manufacturing and virtually any supply chain distribution system. It is available to gather
and disperse information via the web, telecommunications, EDI and through host business systems.
LogiView is designed to provide manufacturing companies, logistics service providers, distributors,
carriers and retailers detailed updates on the events and exceptions that occur in complex supply chain
execution.
Cadre’s Cadence Warehouse Management System is the first multi-modal product that provides workers
with speech, bar-code scanning, keypad and browser interface on a single mobile computer. The system
operates in real-time on the Windows Server platform.
For more information about Cadre and its Cadence Warehouse and LogiView systems, please visit
www.cadretech.com or call 1-866-252-2373.