Aug. 11 2006 12:48 PM

While computers and the Internet have revolutionized the way and the speed at which we conduct business and access information, there is little that technology has done in the last 30 years to speed the actual delivery of a package. A parcel must still be delivered from one location to another, and the modes of transport we use today have not changed significantly. Running in parallel with the comparatively slow modes of package delivery is the rate of automating package processing, integrating logistics data into the enterprise and re-engineering supply chains to rely on information rather than on excess capital assets.


Although logistics information processing has lagged behind other branches of enterprise computing, companies now realize that the information about a package is as valuable as the contents of the package itself. They are also becoming aware of the cost savings and competitive advantages they can derive from automation and integrating logistics information technologies.


For example, detailed package shipment information originating from a computerized shipping system at the shipping dock can be integrated with:


  • Customer relationship management (CRM) or order manage-ment systems (OMS) to notify customer support specialists when a package was shipped, by which carrier, the carrier package identification number for tracking and when it is due to arrive.

  • Accounting systems to use the shipping cost information to more easily reconcile carrier invoices, allocate shipping and mailing charges to cost centers and expedite billing customers.

  • Warehouse management systems (WMS) to provide notification that an item was shipped to accurately maintain inventory control and drive replenishment processes.

    The end result of automating shipment processing, integrating logistics data into the enterprise and re-engineering supply chains can be improved customer service, better cash flow and a drastic reduction in capital assets.


    To be competitive, shippers must evolve beyond order fulfillment execution to providing visibility of information such as status of orders to ship, backorders, shipment tracking details, quantity and location of inventory within the supply chain, manufacturing lot numbers, estimated delivery time, logistics costs and crediting returns. The Internet, using data exchange standards such as XML, is rapidly becoming an economical medium for the consolidation and transport of this information. Supply chain visibility can now be provided by a single Web-based software application integrated to enterprise-wide business information systems such as enterprise resource planning, order management, warehouse management and transportation management to accurately share information with business partners and customers. Suppliers can react more quickly to market changes, better manage materials flowing through their supply chains and provide precise inventory control in case of product recalls.


    One of the most significant trends in logistics today is the increased use of regional less-than-truckload (LTL) land transport companies and express carriers such as UPS, FedEx, Airborne Express and the U. S. Postal Service. Companies are relying more on the express delivery of materials in smaller quantities as opposed to bulky pallets or containers transported by heavy freight modal carriers such as trains, trucks, cargo planes and ships. This supports cost reduction or value-adding processes such as just-in-time inventory management, cross-docking and merge in transit. The added cost of express carrier delivery service is more than offset by the reduction in capital assets. Asset reduction may include fewer warehouses, a decrease in distribution personnel, elimination of truck fleets and reduction of finished goods inventory.


    As companies increasingly rely on express carriers for just-in-time delivery, they also cannot afford to rely on a single carrier for all their needs. While most express carriers provide logistics automation systems, they typically only support the carrier's own service rates and do not offer complex business rules logic integration with other enterprise systems. As a result, shippers are increasingly implementing third-party vendor shipping systems, which allow for multiple carrier "rate shopping" for the most cost-effective service. These systems also support multi-carrier "manifesting" (the ability to generate compliant shipping documents as well as electronic upload of shipment package level detail in the various formats as required by each carrier).


    While the Internet, EDI and XML have made it easier for business partners to share information and re-engineer their supply chains, these improvements in communication have done nothing, until recently, to eliminate the bottleneck of package processing at the shipping dock. New Web-based logistics information systems that distribute pre-ship functions such as address entry and verification, carrier services rate shopping and document generation to networked desktop computers throughout an organization, are lifting the burden off of shipping department personnel. Delays are now minimized from deciphering hand-written shipping instructions, inaccurate addresses and manual entry of ship-to data into a shipping system. Manifest shipping systems programmed with business rules logic and integrated with desktop pre-ship functionality allow for the complete automation of the shipping process resulting in improved productivity and lower operational costs.


    Web-based shipping systems are simple to deploy at each workstation and are easy to scale because they only require a browser interface. The server-based application software maintains up-to-date carrier rating information, generates carrier-compliant documentation and can be programmed to enforce business rules such as using a particular carrier service exclusively for certain package weights shipped to specified delivery zones. Web-based shipping systems are ideal for office or academic campus environments where multiple users within multiple departments ship packages. Order entry departments and e-commerce sites now have an economical way to enable customers to pick their own delivery service to match the delivery needs and to track the shipment online until receipt.


    While the Web is now making an impact on enterprise logistics, its use has limitations. Shippers still prefer to maintain their proprietary logistics information databases in-house. The ASP business model has yet to catch on with mission critical applications such as high-volume order fulfillment due to intranet security concerns and bandwidth bottlenecks that always occur later in the shipping day around carrier pickup deadlines. There is also a distinction between Web-based services that provide only rate shopping and tracking versus those that are able to provide multicarrier manifesting so that packages can actually be shipped.


    As carrier customers demand more information about the status of their deliveries at multiple checkpoints, carriers in turn demand more from shippers: expanded detailed shipment information and faster access to the information, in ever more complex electronic formats. Maintaining compliance with thousands of carriers' ever-changing rates and electronic manifesting formats often requires the dedicated effort of an experienced logistics information software company and provides significant barriers to entry for many technology start ups.


    One of the most interesting aspects of e-commerce is that anyone around the world can now access a storefront to order items. The actual locations of the storefront and the fulfillment center can be located anywhere as well. This creates new opportunities and new challenges for companies to support international delivery. It has also prompted international logistics specialists to offer standalone Web-based rating and logistics services or to partner with domestic logistics software specialists. As the Web has dramatically increased the flow of information across national borders, so it is now increasing the flow of goods and services and the need for international logistics expertise.


    Even with the downturn of dot-com mania, the Web is recognized as a valuable tool and has shifted the focus of enterprise computing from B2C transactions to the restructuring of internal business systems and to B2B collaboration. Much collaboration today results only in the distribution of the same inventory around the supply chain, not reducing it. Companies need to continue to actively re-engineer their supply chains for increased efficiency, just-in-time inventory, smaller quantities order fulfillment as well as capital asset reduction. Logistics systems automation and the ability to do business with multiple express carriers are essential to provide cost-effective, on-time deliveries, which are a prerequisite to realize the new efficiencies throughout the supply chain. These factors, combined with the data access and processing efficiencies available through the Web, will enable and require companies to focus more on automating logistics, one of the last frontiers of enterprise computing.


    Terry Mosbaugh is marketing manager of Neopost Logistics Systems in Hayward, California. For more information, visit


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