USING TODAY’S PRACTICES TO MANAGE
TRANSPORTATION AND DISTRIBUTION
Y2K was touted as the thing that
would shake the underpinnings of the world if appropriate attention, time and
talent were not dispatched. Budgets were
established, consultants were hired, staffs were increased and of course the
programming queue was extended.
The process to meaningfully
deregulate transportation meaningfully surfaced in 1982 with the undercharge
claim mess. Deregulation continued to
evolve over the next thirteen years concluding on January 1, 1995.
When you think about
transportation and distribution, it doesn’t take long to realize its importance
in commerce and industry. Transportation
and distribution are the life bloodline to the marketplace; without which there
is no commerce, there is no industry and there is no economy, of any kind.
Y2K was important; and
fundamental changes had to be made so that data could be processed.
Deregulation was important and
fundamental changes in the way we manage, source, buy and control
transportation and distribution had to be made so that the orderly, efficient
and effective flow of material would continue.
Managing today’s transportation
and distribution with yesterday’s practices is equivalent to using pre-Y2K
processors and practices to run your computers.
What is Transportation and
Distribution Management Today?
It is highly probable that you
would get as many different answers from as many people asked, but there are
generally accepted functions that can be identified. In many corporations, shifts in management
structures have occurred and rather than write in terms of typical department
descriptions, corporate need seems to be a more pragmatic approach.
Managing transportation and
distribution effectively and efficiently today requires the necessary
experience, knowledge, expertise, sophistication and technology not only in
this particular discipline but in the related and corresponding business
disciplines. Therefore the approach to
addressing today’s transportation and distribution management practice requires
a skill set that can understand and appreciate a holistic view of the meaning
of the flow of material from the ground through customer satisfaction.
The major changes, since
deregulation in concept and approach that are being addressed in this white
paper are: the holistic view and technology.
Because a holistic perspective is total and all encompassing, a starting
or penetration point is always difficult and may not be uniformly
applicable. Generally speaking, one
could begin with how the “typical” commercial and industrial enterprises need
to ship and receive their goods:
- in the most efficient and effective manner.?
- in the most cost efficient and effective manner.?
- in the most timely efficient and effective manner.?
- in all of the above.?
- in different requirements than the above.
- without care or concern.
The above six (6) items are a
sample of the minimum detail that should be studied regarding a needs
assessment. However, those kinds of
basic questions drive the balance of decision criteria for a needs/control
profile. We call this a “needs/control
profile” because each need or group of needs will result in corresponding
control functions. As an example, the
need to obtain cost efficient and effective freight rates and charges results
in the need to control such cost. The
counterbalance needed for the profile concerns itself with external issues such
as carrier fitness, desired levels of customer satisfaction, vendor compliance,
collaboration, business rules, legal requirements (weights, measures, hazmat,
etc.), liability, performance standards, service verification, available
networks and common formats at the very least.
Additionally, there are discrete
functions that must be performed under transportation and distribution
management:
- Transportation Sourcing
- Transportation Purchasing
- Carrier Selection/Execution
- Routing
- Costing
- Auditing
- Payment
- Tracing
- Tracking
- Bill of Lading
- pricing
By automating these discrete
functions, and establishing goals in association with the needs/control
profile, it is arguable that one could develop a completely automated
transportation and distribution management system with essentially no clerical
intervention; with intelligent database interrogation capabilities by management. Clearly, databases would have to be
established, once achieved; the system would collect new data in the
transaction stream as well as collecting new data from its external database
sources. When you think of the
proliferation of data/information from the transaction streams at each of the
discrete functions, as an example, the flow of new carriers from transportation
sourcing, or the data collected from vendor routing requirements, or the
performance data collected from the tracing and tracking flow and how that
relates to the auditing and payment issues, especially if your pricing is based
on time sensitive delivery; it becomes obvious that a strong connection between
data collection, data/information distribution and collaboration begin to occur.
Collaboration is a major issue of
importance in the new world of transportation and distribution. It is one of
the most critical elements in the latest frontier for improvement; the sharing
of ideas and information across the industrial and commercial platforms. When you think about the most likely place
for collaboration to occur, it should be transportation. After all, it was transportation, back in the
1960’s that established the first communications standards under the TDCC
(Transportation Data Coordinating Committee).
Further, it is transportation and distribution data that contains a
wealth of information, both primarily and secondarily. As an example, consider the primary elements
of the Bill of Lading: Origin,
Destination, Weight, Pieces, Nomenclature, Route, Carrier, Date; multiples of
these provide information such as frequency, and other benefits of pattern
recognition. Secondarily, Bills of
Lading typically relate to sales orders, invoices, purchase orders and other
instruments that address other corporate areas of influence such as accounting,
finance, operations, manufacturing and so on.
The combination and permutation of these data and the resultant
information is formidable.
Transportation, Distribution
and Collaboration The Partnership for the New Frontier
The Bill of Lading being the
initial transportation document and the subsequent transportation process being
the most prolific data carrying vehicles, one could consider this to be the
platform of collaboration. As an
example, the Bill of Lading could be used to drive:
An ASN
A Load Tender
A freight Cost
A Freight Invoice
A Routing
An incremental part of a
consolidation
A pre-pay and add charge
A shipment
An SKU cost
Et. al.
Collaboratively speaking we know
that the following personnel could be interested:
Carrier
Accounts receivable clerk
Consignee
Shipping supervisor (labor
scheduling, etc.)
Receiving clerk
Cross dock supervisor
Shipment planner
Et.al.
What is collaboration?
There are two interesting
definitions that we have chosen:
1.
To
work together, especially in a joint intellectual effort.
- To cooperate treasonably, as with an
enemy occupation force in one's country.
Unfortunately, much of the
corporate world continues to dwell upon the second definition and this has had
a limiting affect on the first more meaningful definition.
If a key goal of collaboration is
to effectuate a smooth, continuous, cost efficient flow of goods and
information, we believe that this can be achieved with the caution implied in
definition two while essentially operating in the spirit of definition number
one. Simply put, if one only has to
divulge pertinent information to the appropriate source at the correct time and
keep such information highly secure, such process should achieve the objective.
Since collaboration doesn’t
necessarily mean talking or communicating, but clearly means sharing, the
combination of the needs/control profile and the discrete functional elements
provide the essential collaborative platform.
If you accept the description of the platform, then the question that
must be answered with respect to collaboration is, “how do we share certain
information, at certain times, to certain highly defined functions and what
methods are used for the dissemination process and avoid the implication of
definition number 2?”
Answering the Question
We believe the answer to the
question lies in the existing technology.
In some cases we have seen a seamless transition into on-line routing
guides, auditing/matching, tracing and Bill of Lading systems as ASP’s
providing embedded, “simpler is better” partnership participation with highly
secure, pinpointed collaboration. On the
other hand, we have seen start, stop type singular standalone software applications. At the other extreme, we have seen closed
loop or incestuous systems that only speak amongst themselves. In time, and with the involvement of the
world of transportation and distribution professionals we will continue to
evolve, meeting the challenges of collaboration and tomorrow.
Continuation
Please consider this white paper as a beginning 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 above represents the opinion of the author and not necessarily the
opinion of TransportGistics, Inc. nor is it presented as a legal position.
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content copyright by TransportGistics, Inc. All rights are reserved. The authors
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from TransportGistics, Inc. or the individual authors (papers@transportgistics.com)