Cogistics: Harnessing the Power of Collaboration
Given the direction of today's economy, most companies continue to focus on ways to reduce costs and increase their return on investment. There are many means to achieving these goals, but clearly better use of data—that is, transforming raw information into actionable knowledge—is a sound approach.
In the supply chain, where all activities are interlinked and therefore dependent on seamless processes and reliable and accurate data, successfully distilling information is critical to success. That's why Cogistics Inc., Lakeland, Fla., has embraced this concept, and built its business on helping companies plan and execute their transportation and supply chain operations with better, cleaner data. It does this by fostering more collaborative information-sharing among its clients' customers and their carriers.
"The most interesting and exciting topic in the industry right now is collaborative logistics," says John Sobczak, supply chain manager for Cogistics. "The collaborative approach, in contrast to traditional third-party logistics outsourcing, is becoming the preferred way of doing business.
"If a company outsources a service, it invariably gives up a certain amount of control. A collaborative logistics strategy puts companies back in the equation, with third-party logistics providers facilitating their program with material and transportation suppliers."
Cogistics enhances this cooperation by "utilizing logistical planning software tools to help companies reengineer their inbound domestic and international transportation supply chains," adds Sobczak. "In a mutually beneficial scenario—with a company's full range of facilities, suppliers, and selected core carriers taken into consideration—excess capacity is minimized. That reduces transportation spend and maximizes core carrier utilization."
The Collaboration Value Equation
"Today's competitive environment requires that companies reduce inventory carrying costs while concurrently reducing the overall cost of transportation," says Sobczak.
"Additionally, companies need online shipment visibility to meet the demands of changing production requirements. By working collaboratively with companies, their vendors, and their transportation service providers, Cogistics helps increase collective visibility so that they can better realize their supply chain goals."
The advantage of applying this strategy is that "carrier choice, route, and timing are developed in cooperation with the outsourcers," he says. "This allows them to continue to use carriers with which they may have long-time relationships.
"Obviously there are times when carrier change is the best option, but unlike other logistics companies that impose their own group of core carriers, in collaborative logistics companies are able to stay with their own carriers when it makes sense to do so," Sobczak says.
"The outsourcers are also part of the process when it involves developing the managed demand transportation routes. Their input is important in developing routes with pickup and delivery times that are most convenient to their facilities. As a result, they can have the convenience of the trucks arriving during off-peak times for maximum utilization of existing warehouse personnel," he adds.
Rather than developing programs that impose day-of-week and/or frequency of pickups, Cogistics works collaboratively with the outsourcer to develop parameters. As a result of this cooperation, the runs are engineered to meet the outsourcers' needs.
"They get the best of both worlds—they reduce transportation costs without giving up those savings in other areas such as inventory," says Sobczak.
Cogistics' collaborative logistics approach affords outsourcers the flexibility to look after their own best interests, and not foist sole responsibility on a third party.
"Unlike other third-party logistics arrangements, our collaborative logistics pricing agreements are in the name of our clients. This keeps them from being locked in if they want to bring the process in-house once the contract ends," he says.
With outsourcers properly communicating among their supply chain service providers, how then does Cogistics help them turn information into knowledge, and knowledge into economic advantage?
"It starts with our freight bill pre-audit and carrier payment process," explains Jeff Leslie, Cogistics' manager of customer services. "Invoices are first audited to ensure client responsibility, then checked for correct application of charges.
"We pride ourselves on collecting data and maintaining a comprehensive transportation data warehouse. With that in mind, all relevant data is collected from invoices and all supporting documentation," he says.
This information may include transport modes, service levels, custom-house service charge categories, ancillary charges/categories, commodities, account codes, purchase order numbers, bill of lading numbers, part numbers, third-party transactions, MRO purchases, and multiple client-plant assignments.
A Well of Information
Ultimately, Cogistics helps its customers develop a comprehensive well of transportation information. This data is a powerful tool and provides companies with the ability to completely understand their transportation spend.
"Once a clearer picture is established, companies can mine the data for economic and operational improvement. The evolution of this process helps us further collaborate with our clients in developing new strategies to minimize spend and create a more efficient transportation supply chain, giving them a competitive edge," says Leslie.