July 2002 | Commentary | 3PL Line

The 4 T's of SC Excellence: Timing, Trust, Transparency, Technology

Tags: 3PL

Last month, 75 years after Charles Lindbergh's landing in Paris, his grandson Erik recreated the historic trans-Atlantic run. Charles navigated by sight—flying low and sticking his head out the window. Erik flew with advanced avionics and a sealed, heated cabin.

What else has—and hasn't—changed since the original flight?

Both flights were as much logistical as avionic exercises. And the fundamentals of logistics haven't changed much since: timing, trustworthiness, planning, preparation, knowledge, skill—and technology.

But the technology itself has certainly changed. Charles Lindbergh flew blind, out of contact with the world. Erik flew with full knowledge of the world, including real-time NBA scores if he wanted them, and certainly weather conditions.

Each link in the logistics chain has been transformed by the migration of imbedded intelligence into the technology tools and processes that supply chain managers routinely use today, and will likely use tomorrow.

Timing and Trust

Chief among the advantages are vastly better control over timing, and the knowledge and trust that things will happen as planned. Erik flew a plane that—by design—was slow, like Charles', but otherwise his flight resembled a modern supply-chain transaction. At all times he knew precisely where he was, and so did the airport he left, those he flew over, and the one he intended to reach. His pinpoint progress was monitored; obstacles flagged; contingencies in place; resources—fuel, performance, and staples—readily measured .

IT Enables Transparency

The whole chain is visible to everyone in it. Today's supply chain, in the abstract, is made entirely three elements: time, trust, and transparency. A prime raw material that makes it work is technology.

The materials handling industry has built a business of moving things around, always mindful of these three elements. Those of us in the industry have consistently adopted, even developed, current technology to do it. We began with physical packages and over the years added information (predominantly information about goods). Recently some of the large players have added capital to the mix. There's not much else to move besides goods, information, and funds.

Today, a typical supply chain transaction might choreograph movement of a hard-drive component assembled in Singapore to its casing in Mexico. The hard-drive manufacturer might want to cut accounts-receivable from 30 days to 10. Logistics can easily do that. In this case the carrier would inform all parties of the shipment's progress and arrival; possibly involve a capital element to purchase the invoice; advance payment to the supplier; and collect time, trust, transparency of goods, information, and funds from the recipient.

Consider the defense contractor Raytheon, which makes the Phalanx ship defense system—containing 5,000 different parts—installed on U.S. Navy warships. The parts once lingered in 10 Navy warehouses spread cross-country, and it could take days, if not weeks, to get a particular one. By rationalizing its supply chain with outsourced help, Raytheon is now ready for next-day delivery anywhere in the United States, and through two ports of embarkation, to destinations worldwide. Time and trust through transparency.

The Backbone of Small Business

This blend of services is crucial to small business. Third-party supply chain managers have a finger on the pulse of commerce to an unusual degree, because the bulk of their clients are the hundreds of thousands of supply chain members in the small-to-medium-size range. This community is the lifeblood of commerce. It's the small plane crossing the Atlantic—not the jumbo jet or supersonic fighter.

Investing in Technology

Size isn't a barrier to using the best technology. Outsource if you don't have it in-house. A recession—a post-Sept. 11 world—is the time to ratchet up technology investment, not cut back.

Advanced logistics facilities these days are bristling with technology—a complex interface among physical elements to move packages, parcels and information technology, and to route them accurately and quickly. Today, an advanced facility might consist of several million square feet and miles of conveyors, sorting hundreds of thousands of packages per hour using overhead cameras, hand-held optic devices, and countless other high-tech devices that harvest millions of data items in the course of a day.

These facilities "belong" to customers. Using web technology, a mom-and-pop shop can transact, track, and complete business that flows through the system. In essence, billions of dollars of infrastructure—for goods, information, and capital—is at the mom-and-pop's disposal.

This allows even the smallest company to accomplish four key things:

1) Save time. Transactions today are increasingly multi-national, but the barriers of distance no longer apply to anyone, including mom-and-pops. A small business that doesn't explore new sources is losing a competitive edge.

2) Build trust. Tracking a shipment is no longer a service—it's a competitive imperative. Not only does it fuel smooth transactions, it speeds payment and paves the way for repeat business. The small business clinging to antiquated tracking systems overlooks the imbedded trust-building technology in vendors' infrastructures and takes a serious risk.

3) Advance transparency. Saving time and building trust are functions of knowledge. Small businesses, like their large counterparts, must make it a habit to have dynamic information at hand—and institutionalize the procedures that allow it.

4) Enhance skill. Technology is a tool. It cannot replace skill. In fact, it amplifies ineptitude. By the same token, it amplifies competence. People are still the centerpiece of any successful enterprise.

By the way, Erik Lindbergh arrived as scheduled in Paris. Guess what? It wasn't particularly big news.

And that, in truth, is the real news.