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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 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:
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:
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.
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.
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)
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