InsourceAudit..Freight bill management, shipment information, cost reduction portal

THE DIMENSIONS AND DYNAMICS OF CONNECTIVE TECHNOLOGY

Introduction

The purpose for this white paper is to provide a basis and reason for the “transportation and logistics applications technology revolution”, and to demonstrate that “connective technology” is the key facilitator for: future development; growth; and sustainability; as well as presenting thoughts and ideas of relevant, forward thinking applications.

Executive Summary

“Connective Technology”, if defined as, “a means and a method for transporting data and information within, amongst and between trading partners”, than it is the basis upon which collaborative applications rest. If you agree with this notion, than connective technology is also the underpinning of the “era of enormous transportation and logistics applications potential”.

Background

A revolution occurred in 1995 when transportation in the United States experienced its second most influential event! Deregulation had been occurring over many years, perhaps as far back as the mid to late 1940’s. Possibly, President Truman only spoke of it casually, but by 1972 with the expansion of the “commercial zones”, followed by the elimination of the Civil Aeronautics Board, the undercharge scam of the 80’s, along with the elimination of the need to prove, “public convenience and necessity” as a condition precedent to becoming a common carrier; these critical events were in place to support a revolution. In 1995 when the Interstate Commerce Commission and the companion state departments of transportation were terminated, a date was fixed to the transportation revolution.

January 1, 1995 ushered in a new “era of enormous transportation and logistics potential and opportunity! Unfortunately tradition dies hard, and the opportunity to continue squeezing the last penny from adversarial freight cost negotiations not only continued beyond deregulation, it became more prevalent. The adversarial relationship between shipper, carrier, and consignee that existed during financial regulation was, for a time re-energized by deregulation.

Click here to read the entire paper

Rates, rebates, and other forms of predatory and non-compensatory practices increased; carriers were no longer exempt from the Sherman Anti Trust Act and tariffs proliferated almost equal to the dramatic increase in the number of enterprises becoming carriers. The rapid increase in the numbers of carriers together with the swell of defunct carriers furthered the separation.

Shippers, carriers, and consignees were early adapters of micrologistics [1] applications, but their independent use also increased the distance between them.

Essentially, deregulation manifested itself in a knee jerk reflex, portrayed by the carriers offering depressed freight rates to ward off a waterfall of new competition and spoilers. Likewise, shippers and consignees supported this attitude by pitting one carrier against another in an effort to drive down freight rates even further.

While the advantages or disadvantages of regulation vs. deregulation could be long argued, most would agree that deregulation as well as the other events described above, cried out for, at least, freight rate and tariff automation. History is still being written, but today it could be effectively argued that tariff automation coupled with the foregoing events was one of the trumpets heralding in a new era of transportation and logistics software applications that recognized the importance of connective technology.

A Time and an Environment, Ripe for Change

The late 1980’s witnessed the height of shipper, carrier, and consignee acrimony, widening the gap and separating them even further apart. Notwithstanding this entrenched attitude, it was clear, retrospectively that this period bore witness to changing minds. Recognizing that greater opportunities awaited shippers, carriers and consignees beyond freight rate reductions, adversarial price driven negotiations were becoming a thing of the past.

By 1995 the industrial mindset towards freight transportation was changing from the adversarial, price driven posture to a mature understanding that shippers, carriers, and consignees could become “trading partners”. Like all other trading partners, they could finally avail themselves of the same opportunities accorded other commercial and industrial relationships.

Enabled by connective technology, “events of transportation importance” and other technological advances, influenced by timing and converging on what will become known as, “the new era of enormous transportation and logistics potential”; the golden age of transportation and logistics management and information software applications was born.

The adversarial transportation relationships that began prior to 1887, finally gave way to a new atmosphere founded upon a cooperative environment, whose foremost principle was the recognition of the advantages of a symbiotic relationship among shippers, carriers, and consignees.

Fundamental Elements of Change

The bonds that secure and foster all relationships are the ability to articulate and to effectively communicate. In order to communicate, the parties must be able to “connect”.

“Connective” is defined as, the act of joining. For the purpose of this white paper, “connective” means the act of joining trading partners. To further describe the relevant meaning of “connective”, consideration should be given to the word, “Connectivity”. It is defined as, “the ability of hardware devices, software packages, or a computer itself to work with network devices or work with other hardware devices, software packages, or a computer over a network connection. [2]

“Technology” is the application of science and engineering for the development of efficiency and effectiveness.

As in all relationships, there are very specific events that pave the way to the future, in the case of “connective technology” the TDCC was the event, and EDI was the device that facilitated the connection amongst, within, and between the trading partners. EDI and transportation, as measured by today’s standards, has a long history dating back to the early 1960’s, when some very clever transportation and MIS professionals joined forces in Washington, DC and formed the Transportation Data Coordinating Committee (TDCC). The TDCC established the first set of communication standards which enabled EDI.

Another very important component necessary for a solid “connective technology culture”, one that would be capable of developing and growing highly coherent and intelligent micrologistics applications; processes; information; and management systems was “convergence”. Convergence is the “coming together of like and disparate knowledge bases, skill sets, technologies and disciplines; the purpose of which is to solve business equations with the intended benefits of creating new paradigms and achievements that would be unachievable through traditional methods”. [3]

The Internet became the primary domain and common repository for data and information. With reasonably secure Internet connections, driven by the need to exchange data and information, coupled with the potential benefits that shared information could provide, the logistics trading partners began to more freely invest in collaborative micrologistics applications.

Fueled by the benefits’ incentive, appreciation for “connective technology empowered micrologistics applications” grew rapidly, and across the industrial spectrum. In addition to the traditional types of systems/services such as: service bureaus, licensed programs and those that were internally developed; the ASP (application service provider) along with the BPO (business process outsourcing) were introduced. The Internet became a “ubiquitous and democratized platform for collaborative technology driven transportation and micrologistics applications”. With the introduction of “mass”, relevant “connective” software applications gathered momentum.

Who are the Trading Partners?

The “logistics trading partners” have multiple identities that are based upon time and event. As an example, when they are neither shipping, receiving nor carrying goods, their identity changes to manufacturer, distributor, retailer, buyer, seller or any of a host of relevant industrial and commercial descriptions. Their alternating industrial life forms determine their respective operating requirements and styles, as well as defining the data and information they each produce. Correspondingly, their alternating industrial life forms determine their data and information needs, simultaneously influencing when they are needed.

The Freight Paradigm

Yesterday’s view of “freight transportation” limited its understanding, function, and purpose to picking up or delivering products.

Yesterday’s freight paradigm was limited to the belief that, "it was only a product whose initial identity began when it was placed in a shipping container, of any kind; and lost that identity when it left the container”.

Today's freight paradigm [4] views the “entire life cycle of freight” beginning with its first appearance in the supply chain as an SKU, and continuing on its lifelong journey through the entire supply chain, concluding with its ultimate consumption.

Today’s paradigm recognizes that “freight” has three (3) primary touch points within the supply chain: pre-shipment; in-transit and post-shipment. In addition to these, there are an infinite number of secondary and tertiary physical and virtual stops throughout the supply chain, which also represent important data opportunities.

Each industrial life form has a relative view of “freight”, but still embrace the general definition of “freight”, “Goods carried by a vessel or vehicle, especially by a commercial carrier, cargo” [5]

Today’s freight paradigm recognizes the existence of a “freight alter ego”. The “alter ego” travels with the physical freight and acts as a “penetrator” and collector. It operates pervasively amongst the trading partners’ respective supply chains, moving through and across their departments while bridging corporate disciplines, and continuously collecting and appending the data and information. Collecting data from the supply chain transaction stream provides the trading partners with a constantly refreshed, robust database that is highly capable of being effectively managed and exploited.

Logistics, the Beginning of the New Potential [6]

In addition to the standard, non-military dictionary definition of logistics, “managing the flow of raw material through the finishing process”, logistics “manages, integrates, and controls the flow of information, material, and money” [7] . Essentially, logistics is capable of managing multiple, complex inter and intra-departmental relationships and disciplines simultaneously. “The Dichotomy of Logistics” [8] speaks to the two primary components of logistics:

“Macrologistics is the study and management of the overall aspects, process, and workings of logistics”.

“Micrologistics is the study of the operations and the application of the components of logistics, such as transportation, inventory, warehousing, purchasing, and customer service.”

By understanding the two primary components, it becomes clear that they are well capable of managing and operating, multiple and varying complex activities simultaneously. Micrologistics components give the “freight alter ego” its pervasive license to transport itself across and through every department and business discipline, both internal and external.

Convergence: An Applications’ Cross Cultivated Intelligence

Connective technology enables the trading partners to better exploit their respective corporate knowledge bases. Intra and inter-departmental relationships and disciplines that are empowered by convergence work groups, rely on connective technology to maximize capability and to fulfill its promise.

A convergence work group that includes transportation and logistics professionals is enriched by their unique perspectives [9] and intelligence. Additionally, the convergence work group’s ability to exploit the corporate knowledgebase offers limitless opportunities for creating new applications, benefits, and paradigms [10]

Today’s logistics and transportation professionals have earned their seats at the corporate tables and are now in a position to offer worldwide commerce and industry the benefit of their unique perspective, organizational centric [11] position, knowledge and wisdom. Their organizational or corporate centric position and awareness of and sensitivity to the corporate knowledgebase, position these professionals adjacent to one of the largest “data pools of potential opportunity” [12]

This robust pool contains universally appealing and important data that has been gathered from the supply chain transaction stream; data such as: purchasing; sales; warehouse; credit and collections; Bills of Lading; internal and external transportation; delivery; that are shaped by each industrial life form.

Wireless technology significantly improves the efficiency and effectiveness for transporting data that are collected from the supply chain transaction stream

The convergence of wireless technology and Freight Life Cycle Management(sm) joins two (2) highly influential and dynamic business methods and functions that considerably improves the speed, quality, quantity and type of data that can be collected, processed and converted to information

Consistent with today’s freight paradigm, there are an infinite number of “physical stops” in addition to “virtual stops” at which data can and should be collected. When wireless technology is coupled with “Freight Life Cycle Management(sm)” [13] (FLCM), the needs of industry can be properly addressed far more effectively because of the inherent ability to rapidly deliver a meaningful real-time flow of information. The inherent capabilities of wireless communications and FLCM make a significant contribution to improved corporate performance through timely and accurate decisions.

Connective technology facilitated systems that utilize the Internet for their “trading partner knowledge bases”; that are driven by expert systems delivered through an ASP are positioned well for achieving logistics excellence. It is connective technology that empowers the trading partners, positioning them “to solve business equations with the intended benefits of creating new paradigms and applications”.

The Dichotomy of Forward Looking Applications

In order to move forward and to sustain growth and development, there must be a solid platform comprised of an understandable history, which has evolved logically. Logical evolutions are highly capable of supporting rapid growth and development.

Clearly, transportation and logistics information and management applications, facilitated by connective technology have proliferated over the last several years and will continue to populate the corporate landscape. For the most part, these connective applications fall into, at least, two broad categories: repackaged single user systems that have been wrapped in communications software, that allow networking; and the true network applications that have evolved from a solid history and logical evolution enabled by connective technology.

Within this latter group, it is highly probable that two applications paths will emerge: a continuation of commercial business applications; and politically driven security applications motivated by international security concerns. To meet tomorrow’s needs and to effectively deal with terrorism; both groups must employ wireless connectivity.

Forward Looking Applications Enabled by Connective Technology

Today’s freight paradigm satisfies the mandate for initiating data collection at the earliest possible time. This continuously refreshed data is universally important for the trading partners’ individual and combined success. Independently and collectively, it supports timely and accurate decisions.

Two forward thinking applications are being presented. The first is a commercial application that incorporates the “freight life cycle” concept; and the second is a security application that addresses the need for effective homeland security. While they are separate applications, their design embraces incremental and connectible concepts and features. RFID and RF are used to collect data and convey information.

These two forward thinking applications’ design and structure embrace forward thinking concepts and techniques that allow them to rapidly employ new technology. The ability to employ new technology is a key factor that should allow this security solution to stay ahead of the challenge.

Forward Looking--Commercial Logistics Application

Tracking freight in the new freight paradigm – In the new freight paradigm, the movement of goods; whether they are between vendor and customer; warehouse shelf and staging; or inventory and production, is defined as transportation. In this regard, a “carrier” can be viewed as: a commercial carrier; a forklift; an employee; or a pick cart. A “container” can be viewed as: a shipping carton; a pallet; an envelope or a warehouse bin. The transition from the old to the new paradigm and the necessitated change in thinking has bridged the old barriers between transportation and warehousing where, in transportation, time in transit was measured in days (or perhaps hours) while in warehousing, time in transit was measured in minutes (or perhaps seconds). Therefore, viewing freight in the new freight paradigm requires that the movement of all goods be measured at there smallest increments to facilitate the workflow and needs of all active and passive participants.

In order to effectively track and manage “freight” at such a small interval requires a device that can tie people, goods, time, and location together. By incorporating wireless technology, data applications have crossed this hurdle and provided data, metrics, responsibility and accountability to accommodate the functions and needs of all users.

A Tracking, Receiving, and Internal Delivery System [14] benefits from those new associated and attendant opportunities for accountability and responsibility as a result of time and material. Important tasks such as the following are capable of being performed:

Buy-in and Sell Through Analysis

Managing inventory more efficiently

Improving put-away, usage and throughput

Develop a meaningful formula for inventory levels

Reduce service level costs

Improving the percentage of meeting customer expectations

Achieving deliverables

Establishing meaningful service levels

Ongoing competitive assessment, both internal and external

Analysis and reporting from a robust database

A Forward Looking--Security Application

Background

Motor freight transportation is pervasive! In essence, it licenses trucks to travel on every highway; pass and enter every conceivable: business structure; government installation; public utility; dam and reservoir; and cross over every bridge and through every tunnel. Motor freight transportation is responsible for delivering our food and merchandise; and material for building homes and factories; and at the end of the process they remove our refuse. With their freedom to roam and their ability to transport goods, trucking is responsible for a very large part of the economy.

Trucks can also carry munitions and weapons of mass destruction including, but not limited to biological hazards and nuclear material. They can carry inert material such as nuts and bolts; the weight of which can be an effective ramming device plowing into and destroying a bridge support. Trucks can carry freight that is harmless, but when combined can become a highly effective explosive. A truck can deliver any material to an assembly or material marshalling point; the subsequent use of which could be for terrorism.

Motor freight transportation is the life blood of the nation’s economy. Transportation is the supply chain vehicle, and without it there is no supply chain or economy!

A truck can wander throughout the nation at will and it is this very ability that demands our attention in post 9/11. Homeland security is at risk because of the viability of our freight transportation system and more specifically the truck.

The Department of Transportation, in the early part of October, 2001 was highly motivated because of that realization, and solicited white papers of “ongoing technical or project activity that addressed homeland security”. Because of the nature of this solution, certain information has been intentionally excluded.

DOT/FAA Scope of Interest:

“To improve the security, or reduce the vulnerability of transportation service to accidental or intentional disruption. It involves the physical infrastructure and vehicles associated with pipelines, rail, ports and waterways, civil aviation, mass transit, highways, and especially combinations of these modes and the interfaces between and among them as well as the information infrastructure associated with their operation and control. Their aim is to take necessary steps to identify promising technologies and concepts and to promote their expeditious implementation.”

In order to satisfy the objectives, the connective technology homeland security solution focuses on the following five (5) critical areas [15] :

1. The human factor, such as the driver, the dispatcher/planner, etc

2. The vehicle--transporting and/or containing the freight, such as the tractor/trailer.

3. The material that is being transported – i.e. the freight

4. The infrastructure – the roads, bridges, tunnels, public utilities, nuclear facilities, etc.

5. The alerting and dispatch of properly equipped response teams.

The first check is the credibility of the driver followed by the integrity of the equipment. The license is scanned into the vehicle’s black box. This box contains the data of the rig, tractor unit, van, tow-truck, barge, engine, etc. The combined driver and equipment data is transmitted to a regional control center for automatic real-time verification, validation, and storage. The regional control center database will be linked to other government departments, such as the INS, FBI, CIA, and all other appropriate federal, state and local government agencies.

The second check is against the load documentation that describes the freight. This data is typically an extension of the RF/bar code processes currently used to track freight to the vehicle, and is a continuation of the database used by Warehouse Management Systems (WMS) and truck routing systems to plan and manage freight and rig movements.

The third check relates to the trailer and freight information using the data held on file by the licensing authority which interacts with the driver transmitted data.

The fourth check addresses location; and utilizes GPS and route tracking software. This check has two distinct functions. First, it ensures that the tractor/trailer/freight/driver combinations do not enter the public domain until all verifications have been achieved; secondly, it monitors the location of vehicles relevant to vulnerable locations and situations.

The fifth check employs interactive vehicle routing software coupled with GPS to satisfy surveillance.

The system maintains various “thresholds” that work in conjunction with severity levels. Corresponding dispatch of an appropriate response are rationalized by the system.

The combined activities and processes are interactive and allow analysis to take place 24/7 using random system penetration points. This process allows the system to perform risk assessment at will and simultaneously compares its results to operator initiated risk assessment. One of the advantages of this routine is that it eliminates false/positives that could be operator or unauthorized user induced.

Conclusion

Logistics is a highly robust business discipline capable of providing industry with important tools including an “energized corporate knowledgebase”. Function and performance place logistics in a pivotal role because it is responsible for raw material moving into, through and finished product out. The inter-intradepartmental and inter-intradisciplinary relationships that are affected by, and because of logistics, makes it organizational centric. Its inherent capabilities enabled by connective technology offer industry a platform from which the intellectual promise of cross cultivated intelligence can be realized in corporate performance.

[2] Microsoft Press® Computer and Internet Dictionary © & ℗ 1997, 1998 Microsoft Corporation. All rights reserved. Portions, The Microsoft Press® Computer Dictionary, 3rd Edition, Copyright © 1998 by Microsoft Press. All rights reserved.

[5] Excerpted from The American Heritage Dictionary of the English Language, Third Edition Copyright © 1992 by Houghton Mifflin Company. Electronic version licensed from Lernout & Hauspie Speech Products N.V., further reproduction and distribution restricted in accordance with the Copyright Law of the United States. All rights reserved.

[7] A registered sales mark of KLM Associates, LLC.

[14] TransportGistics – www.TRaIDS.net

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 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)