October 2007 | Commentary | IT Matters

Web Services Add Sizzle to Shipper-LSP Integration

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Emerging Web services promise to revolutionize the way companies and logistics service providers (LSPs) integrate.

I am not talking about accessing a Web site using a browser, but secure system-to-system service requests sent over the Internet that can link enterprises, allowing a company to utilize third-party Web services as a seamless part of its own business processes.

Using Web services, a shipper can access an LSP's functionality or data from within the ERP system and get a reply, typically in less than one second. The shipper then has the flexibility to integrate the Web service into its business process.

For example, a shipper's customer service representatives (CSRs) often need to quote freight costs. With an LSP's freight cost Web service, the shipper can issue a call from its ERP's order management module to the service provider's system. The LSP's system replies with the estimate, which the CSR can quote to a customer.

Additionally, the shipper has great flexibility in how it uses this data. If the shipper wants to apply a markup to the freight cost in its own system before quoting the cost to the customer, it's easy enough to do so.

Before Web services, the shipper might have had to ask for a quote by phone, then wait for a response. Or it might have used an estimated rate stored in its ERP system. This could differ from the real rate, resulting in surprises when the bill arrived. At worst, the shipper might have estimated conservatively, possibly jeopardizing a customer's business with an overpriced quote.

Immediacy and Accuracy

With a Web services-based integration to their LSP, shippers can access an accurate freight cost estimate when it counts most—when they are talking to customers.

Such an approach also alleviates the need for shippers to store freight rates in their ERP system. Most ERP systems are ill-suited for this purpose.

Perhaps more importantly, managing a freight rates database is an onerous task that is not part of a shipper's competency. This task is best outsourced to the LSP who maintains accurate freight rates as a core business responsibility.

Consider another question customers commonly ask CSRs: "When will my freight arrive?" Again, service reps typically answer this question using static data stored in their ERP system. Transit times can vary across carriers (typically not modeled in the ERP system) and in the real world are constantly changing.

The result is inaccurate delivery date promises to customers, possibly resulting in lost business.

Using Web services, shippers can tap into the most current and accurate information provided by their LSP and give customers up-to-date transit time information.

Manufacturers can also use this information to improve the accuracy of material resource planning calculations, which are also based on static, and frequently conservative, lead-time estimates stored in an ERP system.

As these examples show, the emergence of Web services gives logistics service providers new opportunities to provide value to their customers; and shippers can more accurately and efficiently share this information with consignees.

Web services allow the shipper-LSP partnership to grow more strategic by allowing shippers to integrate LSP-managed information at new points within their business processes.

These techniques can be used to achieve improved customer service by providing timely and accurate data from the LSP to the shipper, while eliminating less-efficient communication methods such as phone and fax.

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