SCM moves logistics

Moving along the supply chain, technological advances create fundamental shifts in transportation logistics.

By Roxanna Guilford

How you move your product has almost become more critical than the product itself. For apparel manufacturers who want their goods to reach consumers quickly and at the lowest possible price, good logistics are crucial – but the transportation element must be viewed in the context of the entire supply chain. As Dave McClean, director of global marketing at GeoLogistics, puts it: "It’s the last bastion for cost reduction."

Traditional transport companies seem to share this opinion. They are entering the market, positioning themselves as integrators or third-party logistics firms. Companies like Crowley, UPS and Ryder already have global status, and entering the logistics area lets them use their existing status and assets throughout the supply chain. Their message is clear: automate.

The focus is moving away from reducing transportation costs and toward creating a more efficient supply chain at a reduced cost. In other words, the transportation element may cost more – but the entire process ends up costing less.

"Through … bar-coding technology, routing tools, warehouse-management systems and transportation optimizers, time can be taken out of the cycle and efficiencies can be realized while still maintaining the capability for quick reaction when change is required," explains Thomas Ming, Crowley Logistics’ vice president for business development.

Smaller and faster

It used to take three to four months to replenish customer inventories. Today, that’s simply too slow. "Customers are now asking us to deliver and turn goods floor-ready, prepped within 24—48 hours of giving us order," explains Dan Castiglione, manager of distribution systems at William Carter Co. "Retailers are trying to keep their inventories down, so they are ordering more often."

What used to be an order for five to six dozen pieces are now orders for six pieces, he explained. Manufacturers are making more frequent shipments, and this requires increased efficiency.

Distribution models are changing with the advent of e-commerce, notes Lynnette McIntire of UPS Worldwide Logistics. Retailers – even manufacturers – have Web sites that sell directly to the consumer.

From pallet and case loads to individual deliveries directly to the end user, shrinking shipment sizes is a trend that will only continue to increase, observes Devdutt Yellurkar, president and CEO of Yantra, an e-commerce fulfillment systems developer. "The whole dynamic is in flux," he says.

Visibility and tracking

With new technology, manufacturers have the ability to manage goods en route. "If a customer ships out a thousand orders, they have all of that information," explains Michael Knebel, MIS director at TDM Freight Services, a third-party logistics firm. With two-dimensional bar codes, automated warehouse and transportation management systems, Web-based tracking and other IT logistics solutions, data management is streamlined. And automating the data helps eliminate data-entry errors.

Many companies are using Internet-based trace-and-tracking systems, especially third-party logistics firms that must integrate various platforms from different vendors along the supply chain.

On most of these systems, parties along the supply chain can access this data via the Internet. "The technology is definitely here to tell you where your goods are," Knebel says.

If you can log on and find out where your inventory is – often by SKU number – distribution decisions can be made before the shipment even hits the shore.

However, Larry Ferrere, Vastera vice president, warns that companies give up control when they rely on third parties to handle global logistics. Visibility is key, he says, no matter who handles logistics. If you have liability, you should have the information.

Supply chain visibility lets companies respond quickly to bottlenecks and other changes with the click of a mouse. With SKU-level visibility, manufacturers have even more control.

"If you can accurately forecast your production needs, you can consequentially forecast the number of truckloads you would need to deliver those products," says consultant Brian Everett, president of MindShare Strategies, Inc. "By providing visibility of truckload forecasts to your carriers and third-party transportation providers, they in turn would know in advance their asset requirements and could better optimize their assets–ultimately allowing them to lower their transportation costs to you."

Collaboration

"Team player" may be a cliché in management circles, but not in logistics. Collaboration is becoming an increasingly attractive option, with logistics firms acting as brokers, matching available space with clients.

Ryder is actively pursuing multiclient strategies. "Companies are either bursting at the seams or have way too much space," observes Ron Lentz, Ryder’s vice president of business development.

Ryder’s strategic alliance with i2 Technologies has provided the necessary IT tools to "allow several different, very complex software packages to communicate with each other."

Changing face of competition

The bottom line? "In the future, supply chains will compete rather than individual brands and products," Lentz says. "If you’re a CEO today and not thinking about the supply chain, you’re in trouble."

His colleague, James Nelson, is even more blunt: "The most efficient supply chain wins.

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