Transportation
and Distribution Management–Automating the Process
This paper will discuss the necessity of improving the shipment
information management process in order to facilitate a more seamless
supply chain.
The objectives of this paper are threefold:
-
Help executive management realize the importance of this corporate
information repository
-
To assist Logistics, Transportation, Treasury, Accounting, Purchasing,
Operations and Manufacturing professionals leverage the transportation
database for profit improvement and corporate performance
-
Use a freight bill management, shipment information and transportation
collaborative portal to achieve collaboration amongst the business
partners
As we begin to consider automation, more often than not, we tend
to focus on goals and objectives rather than identifying, understanding
and respecting all of the activities associated with the operation
and jobs that we are attempting to automate. Failing to
recognize and appreciate the history of each of the study tasks
will result in false assumptions and missed opportunities.
In order to maximize benefit, facilitate the process and create
a platform for long term improvement, one of the successful methods
of approach is to first describe the situation in detail.
It is from this perspective that we can truly establish realistic
and achievable goals and objectives that identify meaningful benefit.
One successful method of approach is based on two key principles,
case based reasoning and artificial intelligence. Case based
reasoning allows you to study detail and therefore understand
every task in the manual processes, while the artificial intelligence
perspective compels you to structure logical paths, simultaneously
developing an understanding of the probable interdepartmental
relationships. The combination of these principles brings together
the specialized intelligence of the specific professional disciplines
and the generalization of such begins the basis of a collaboration
platform.
Understanding the Shipping Process (high
level overview)
Why begin here? Transportation expenditures are greater
than those of warehousing, customer service and order entry –
combined! In most companies, transportation expenses can
be as much as 18% of every sales dollar.
From the perspective of data collection, this process could begin
with the acceptance of a qualified order; in essence, this means,
at the very least, that credit and inventory have been validated.
A Pick Pack List is created and the information (electronic or
paper) moves to the product location where the goods are picked,
packed and readied for shipment. A Bill of Lading is prepared
and the carrier arrives for the pickup; the freight is signed
for and the Bill of Lading parts are distributed. (For additional
information about Bills of Lading and liability you can refer
to our white papers titled, “Freight
Terms and
Loss and Damage Claims” )
The Corporate Data/Information Repository
The data collected in the shipping and ensuing processes is the
platform upon which most mission critical business decisions can
and should be made!
An example of the data elements contained in the Bill of Lading
are: Shipper Name, Consignee Name, Carrier, Creation Date,
Reference Number, Origin and Destination detail, Product Description,
Pieces, Weight and Total Weight, Pick up Date, Special Terms and
Conditions (inside delivery, rush, etc.) Advanced Shipping Notices
or ASN’s can also be generated at this time.
This data in and of itself, when converted to information is very
important, as an example, when combinations of Bills of Lading
are examined, it becomes easy to recognize patterns of performance.
However, when you link qualified order data to the Bill of Lading
data, you can begin to understand how a sales person performs
against a distribution analysis and sales territories, or product
performance by territory or distribution market analysis or buy
in or sell through analyses. Further, when you link your
inventory to the Bill of Lading data, you can determine out of
stock conditions in relation to salesmen, territory, customer,
DC, cost center and though-put by facility or competitive performance
by facility and do this down to the sku level.
Manufacturing, Purchasing, Finance and Treasury as well as Human
Resources can easily benefit form this robust corporate repository
just as well because the data elements relate to their business
segments as directly as they do to transportation, distribution
and logistics. Clearly, Manufacturing can better understand
their consumption if they can count on their flow of components,
Purchasing can buy better if they know their true landed costs
and provide real-time information, Finance and Treasury can manage
cash more efficiently and effectively if they can forecast and
accrue more accurately and timely, Human Resources can acquire
the right labor at the right time and for the correct amount of
time if the requiring departments can forecast more efficiently.
Although the above are just a few examples of the power of the
beginnings of the database, and a simple representation of some
combination of data and subsequent conversion to information that
can be used for timely and accurate decision criteria; you will
see as this white paper continues that the continuous collection
of data in the transaction stream and its corresponding availability
to the appropriate designees, at the right time will eliminate
corporate silos and facilitate collaboration.
Collecting Data in the Transaction Stream
(motor carrier description)
The shipping process identified above concluded with the carrier
pickup. It continues here with the carrier retuning to its
terminal for cross docking, outbound, interline and ultimate delivery
processing. The minimum data collected in this process are:
carrier assigned references (transaction numbers, trailer, tractor,
rig, job, location, dock), route, load position, manifest, sequence,
manifesting, billing, interline revenue divisions and freight
movement. This process can occur more than once and over
one or more carrier lines.
The data collected in this continuing process, at a minimum, consists
of: the above data, and tracing, tracking, shipment location,
placement, interchange and delivery information.
The Corporate Data/Information Repository
When you consider the volume, type and quality of data collected
from the beginning and through the ensuing processes identified
and add to that the knowledge, skill sets and experience that
the various management disciplines and their respective professionals
bring, it should become evident to all that the decision criteria
for accurate and timely decisions for planning and reaction lie
within the Logistics Information Repository (LIR). The LIR
contains vital information about costs, purchasing, markets, inventory
turns, customers, claims, sales, sales personnel, carrier performance,
DC competitive assessment, through-put, inventory put-away, warehousing,
labor and many other areas of cost, cost avoidance, profit and
profit improvement.
THE SYSTEM DESCRIPTION
Freight bill management, cost control, transportation information
and logistics collaborative portal amongst the business partners!
The Objective
The ability to convert the data to highly coherent information
and share the information with authorized business partners, at
the right time, at the right location, globally, 24/7 without
encumbering the internal or partners proprietary computer systems
is what the neutral ASP model was designed to do.
An ASP as the Delivery Mechanism
An application service provider or ASP is one that provides their
services over the Internet. In most instances, the operating
software resides on the provider’s equipment and the data files
reside there as well. Authorized users have access to the
system/service dependent upon security level. As an example,
some users identified as administrators can view data and change
files, other users can only view files and only certain files
at certain times. Other users can be designated as security officers;
they can authorize new users and designate clearance levels.
Why an ASP?
ASP or Application Service Provider is one that provides computer
applications on the web. A highly secure ASP allows appropriate
information access and necessary dialogue to all authorized business
partners at the right time and at the right place without encumbering
proprietary operating systems and does so in neutral territory,
24/7.
What ASP Model Meets the Three Objectives?
Predicated upon the three objectives stated above, the most suitable
ASP model would be a freight bill management, cost control, transportation
information and logistics collaborative portal. This model would
be responsible for, in order of events:
Accepting/preparing Bill of Lading data, generating the Bill
of Lading- in this task, data would flow to the ASP and populate
the appropriate B/L fields and the B/L would then be generated
or the B/L would be initially generated on the Web. All
appropriate data would be validated and retained for subsequent
use, inquiry or reporting.
Assigning freight costs and the corresponding general codes
or cost center information- once the B/L was prepared, actual
freight cost would be assigned based upon the actual route of
movement. General ledger codes are then assigned, cost center
are applied and total freight costs are calculated. At this
point, optimization can occur (provided the appropriate wave frequency
in the process has occurred); the B/L’s can be transmitted directly
to the respective carriers and the shipments staged for pickup.
Pre-payment and add charges- for those companies that pre-pay
and add freight charges to their merchandise invoices, they can
easily access this file for all necessary information or obtain
a report (electronic or paper) to facilitate their invoicing process
and expedite their receivables.
The files- the above processes have created the necessary
routines to achieve: tracing and tracking; auditing/matching;
duplicate payment prevention; payment control; payment; performance
monitoring and management reporting, including but not limited
to all of the examples identified above.
Another very important advantage of this selected model is that
it operates 24/7 across all time zones and therefore properly
addresses global commerce.
While not addressed specifically in this white paper, it should
be clear that all of the preceding is absolutely applicable to
the entire inbound process and all of the advantages apply equally
as well.
If a key goal of collaboration is to effectuate a smooth, continuous,
cost efficient flow of goods and information along the supply
chain, a seamless supply chain can not be achieved until the data
supporting the various decision points is accurate and timely
available to authorized business partners.
Collaborative performance is realized by
virtue of the necessary preliminary data having been captured
in the shipping process and being combined with the data continuously
collected in the ensuing transaction stream. Consequently,
authorized consignees can determine in-stream shipment status,
consignors can precisely establish the time of delivery for invoicing
and passage of title and other mission critical relevant information
can be viewed in this neutral ASP environment. Messaging
is another critically important part of this ASP model as it satisfies
this “final mile” in the collaborative process and does so with
full and complete documentation.
The impressive nature of the data combined with its capture in
the transaction stream, coupled with the ASP’s fundamental ability
to provide equal access to authorized business partners at the
right time, across the globe, 24/7, coupled with the ability to
communicate special situations, those outside of the business
operating rules, presents itself as the ideal candidate for collaborative
performance.
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
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 TransportGistics, Inc. or
the individual authors (papers@transportgistics.com)