This white paper will identify and discuss: critically important, automated, and incremental freight transportation solutions that manage the logistics functions within the supply chain; and how their converged process and function can simultaneously deliver the collateral information to the entire trading partnership at the speed of commerce. 

Changing Business Attitudes

Yesterday’s business relationship recognized the individual importance of the buyer and seller.  Individual advantage was the objective and this attitude was portrayed with customers and competitors alike.  This business relationship was supported on many levels, but most supportive was the belief that success could not be shared, that is, there could be only one winner. 

Together with the major events of the last half of the 20^th century, the new generation of business architects and visionaries understood the need to change the relationship from buyer/seller to one that fostered the benefits of utilizing the strengths of both, one that would encourage mutual advantage.   

As business managers were being empowered by network computing and enabled by communications in conjunction with other relevant software applications, the relationship paradigm was shifting further away from the individual and moving rapidly towards trading partnerships.

The Trading Partnership

Transportation plays a critical role in the new relationship paradigm.

Transportation’s metamorphosis from a highly regulated industry to a market driven form, mimicked the subtle transition from buyer/seller to trading partner that was occurring throughout the economy.  As the principal contributor to the corporate information repository, transportation could make available continuously refreshed information that flowed directly from the transaction stream.  Next, transportation’s position at the corporate border gives it first access to trading partner issues, including but not limited to compliance.

Trading partnerships just like the traditional buyer/seller relationship are governed by business rules. 

Business Rules

Business rules have their basis in the contractual relationship between buyer and seller.  They are a high level description of how the parties will operate.  Drilling down through the process is required in order to have a day to day working set of rules that will allow personnel to best understand their respective roles.  These “rules of engagement” are the operational rules that govern the day to day activities and determine how the sellers and buyers will conduct themselves at the transactional level.

The Rules of Engagement

The rules of engagement are essentially a compilation of business rules that particularly address the operating conditions under which the trading partners perform.  Developed from an understanding of the corporate philosophy and empowered by the Terms of Sale/Purchase and Freight Terms, the rules of engagement truly establish the way in which the trading partners conduct themselves.  The rules of engagement also function as the platform through which compliance is defined and enforced. 

Yesterday’s practices saw the rules of engagement as a static body of operating rules that spoke to sales and purchase driven freight transportation matters such as carrier selection, routing, packaging and labeling, claims and credit.  Their primary form of communication was the “printed routing guide”.  A weighty document that resembled War and Peace, it was published either semi-annually or annually.  Because of its unwieldy size, lengthy preparation and printing time it was not unusual that at the time of its distribution, it was already outdated and required the collateral issuance of supplemental instructions.  In an attempt to keep current, some companies issued supplements and revised pages, similar to tariff updates, throughout the life of the guide.  As cumbersome and impractical as this process was for the issuers, it was at least as painful for the recipient.  Neither buyer nor seller could timely deploy changes or even place the changes into a workable process.  If getting the information out on time was impossible, it was equally impossible to take advantage of significant transportation opportunities that were literally available throughout the entire life of a shipment. 

The level of frustration was elevated because market driven opportunities, the obvious benefits of network computing and the availability of information.  Knowing what could be and not being able to take advantage of the opportunities relegated the available information to reports that simply reinforced what the business manager knew, information moving at the speed of commerce coupled with the ability to select in-stream opportunities could be highly beneficial.

The result of all of the inefficiencies in yesterday’s static routing guides manifested themselves in a great deal of acrimony and contention with customers.  Inefficiencies and missed opportunities continued to pile up.  Issues that could have been resolved at the time of shipment were delayed and became serious compliance enforcement matters.  With its pronounced inability to keep current or allow the parties to take advantage of market driven opportunities, it further exacerbated the traditional buyer/seller relationship by pitting one against the other simply because of the inefficiencies of a static set of operating rules in a dynamic market economy.

Dynamic, On-line RoutingGuides

Trading partnerships thrive on timely and accurate information and today’s trading partnership understands the importance of the “law of commerce and logistics” which states that, “Increasing the speed of electronic commerce results in the consequential demand to accelerate the supply chain”. 

Today’s communications technology is replete with impressive function and capability.  Similarly, today’s transportation and logistics professionals are embracing new freight transportation paradigms and automated freight transportation management solutions.  Consequently, embedding the rules of engagement in a transportation and logistics management solution whose converged process and function could equalize the flow of goods with the corresponding data could be called a dynamic, on-line routing guide. 

Immediate advantages of the dynamic, on-line routing guide (DOR) can be found in their automated search capabilities.  As easy as searching a “Word” document, the DOR achieves instantaneous look-up and because it usually retains several previous versions on-line, complete information is available.  By comparison, the static paper routing guide was a virtual nightmare, researching 100’s if not 1000’s of pages was the first of many barriers.  This condition alone forced buyers and sellers into protracted debate that often times threatened customer relationships; and at the end of the day, if the matter was a chargeback it was written off.

Chargebacks, a Pragmatic Example for Today’s DOR

Chargebacks are a part of every business and should therefore serve as an appropriate example to demonstrate why the DOR is best equipped to effectively and efficiently address the rules of engagement.

• For the overwhelming preponderance of customers, chargebacks are a legitimate demand for credit; a means to correct a transaction failure or to honor a promise for performance. 

• Chargebacks can also be an anticipatory scheme that represents a pre-determined, self-serving, and unilateral after the fact negotiation whose purpose is to obtain a lower purchase price. 

• Uncontrolled chargebacks can drain a company’s strength and profits!

Chargebacks can be opportunistic and they take on many forms; they can occur by default as well as design.  Regardless of the reason, if they are not effectively confronted, they can erode corporate profits directly and indirectly.  Operating in the background over an extended period of time, their insidious behavior can severely damage customer relationships.

Chargebacks that are not confronted properly will thrive in an environment of confusion.  Lingering chargebacks expose companies to serious risk and make them vulnerable to the capricious activities of unscrupulous customers or their own personnel. 

Reacting to chargebacks is as ineffective as nailing jello to the wall.  Consequently, a proactive stance is the most successful corporate posture to effectively deal with and confront chargebacks.

The DOR provides a highly effective means for efficiently dealing with and timely concluding chargebacks.  In the first instance, the embedded rules of engagement would identify the right to issue a chargeback and the conditions under which a chargeback could be issued.  With the transactional information simultaneously available with the appropriate rule, resolution is immediate.  Typically, the DOR provides interactive communications so that matters such as chargebacks can be cured within the transactional time frame.

Another example of the importance of moving information at the speed of commerce would be found in market driven freight rate opportunities.  With access to the transaction stream, shipment information can be compared to available lower freight costs and with the rules of engagement simultaneously available to the trading partners the potential for taking advantage of such opportunities is inherent in the DOR.

A Plan to Effectively and Efficiently Digest and Treat Chargebacks

Sustaining a successful and profitable business, at the very least, is dependent upon the proper application of well accepted, universal business principles.  Of critical importance is the need for each business segment to properly understand those principles.  Once understood, the corporate rules of engagement can be established.  To complete this process, the rules of engagement must be effectively articulated amongst all of the trading partners.  Well established and commonly understood rules of engagement are the basis for creating a solid business platform upon which every enterprise can efficiently conduct their chargeback strategy.  This solid business platform is the primary corporate defense against invasive attempts, unintentional or intentional, to destroy profitability and to prevent unjustifiable consumption of resources.

Terms of Sale/Purchase and Freight Terms  establish the contractual terms that govern the entire business relationship between the trading partners and are the basis upon which the rules of engagement are created.  Initially defining when title passes, Terms of Sale/Purchase next determine who, where and how the established rules of engagement will operate.  The Freight Terms identify the party responsible for the payment of freight charges; in the context of this white paper, they serve to support the conditions under which certain chargebacks will be addressed and satisfied. 

For the most part, the rules of engagement determine the validity of a chargeback, if a violation has occurred, and its subsequent treatment.  Therefore clearly defined and well understood rules of engagement will immediately provide the trading partners with a substantive guide to properly treat a chargeback and the basis upon which they can establish a prima facie chargeback.  General examples of the rules of engagement include, but are not limited to: (for a complete description of the rules of engagement and how compliance is made easy, follow this link)

Routing

Packing, marking and tagging

Notification

Document inclusion

Delivery instructions

Carrier selection

The best method for effectively and efficiently communicating and articulating the rules of engagement amongst the trading partners is the routing guide and history has firmly established it as the preeminent device.  Too many companies still continue, unnecessarily to mail out printed routing guides.  The rapid pace at which transportation opportunities and issues occur truly calls for an automated, on-line routing guide.  Similar too the printed version, it would continue to present the fundamental information or offer a full and complete version, but the web based guide would be able to communicate the information instantly over the Internet.  Additionally, day to day modifications necessary to accommodate interim issues that would manifest themselves in chargebacks, as well as other important issues, would be addressed via a simple on-line entry with the corresponding look up capability.

TransportGistics, Inc. has significantly improved the routing guide, its development, maintenance, access, and overall capability.  Its RoutingGuides.com product accommodates instant changes, makes them immediately available for all authorized trading partners, and has significantly reduced the number of chargebacks.  With the rules of engagement readily available and always current, compliance is simple and easy because the trading partners always work with timely and accurate information.  With the added feature of maintaining current and historical versions, dated chargebacks can be easily researched and easily resolved by the trading partners. 

General issues that affect the trading partners are published instantly and specific questions that are required to address special timely situations such as a failed carrier pickup are communicated instantly via email right through RoutingGuides.com.  Essentially, RoutingGuides.com offers vendors and customers alike full visibility of the rules of engagement 24/7. 

To gain a better understanding of the rules of engagement and to learn how many of the world’s leading corporations effectively and cost efficiently control chargebacks, and all compliance issues, simply click on the following link: RoutingGuides.com.

Conclusion

The shift from the traditional buyer/seller relationship to the trading partnership recognized the need for a new relationship paradigm in order to allow the parties to take advantage of market driven opportunities.  The automated, on-line routing guide with embedded rules of engagement is the most efficient and effective device capable of achieving the demands of the law of commerce and logistics. 

As a living instrument, the dynamic, on-line routing guide will continue to move information at the speed of commerce.

About TransportGistics, Inc.

TransportGistics is a global, multi-product and services company that provides market leading, simple, incremental solutions for transportation management and logistics functions within the supply chain.

TransportGistics commitment to education is portrayed through its advancement of professional logistics and transportation programs.  Its white paper site presents important and timely transportation and logistics subjects each month, and is regularly visited by more than 125,000 clients and readers representing companies in the private and public sectors, universities and governments, worldwide. TransportGistics is a founding  partner at the Center of Excellence in Wireless Internet and Information Technology at the State University of New York-Stony Brook.

Continuation

Please consider this white paper as a continuum in this subject area, succeeding white papers will address common issues and address them with common solutions.  We encourage our readers to direct any specific questions or comments to papers@transportgistics.com.

Disclaimer

The information presented herein represents the opinion of the author, but not necessarily the opinion of TransportGistics, Inc.  This white paper is not presented as a legal position or as a recommendation.

“Idea Logistics",  "Freight Lifecycle Management”, “Convergence” and “Today’s Freight Paradigm” are sales marks of TransportGistics, Inc.

All content copyright by TransportGistics, Inc.  All rights are reserved.  The authors of the articles retain the copyright to their articles. No material may be reproduced electronically or in print without the express written permission from the individual authors and/or TransportGistics, Inc. (papers@transportgistics.com)