This Just Out: The Latest in Logistics I.T.
Heavy freight, “lite” logistics and global customs clearance procedures drive three new supply chain applications.
What’s hot in 2003? As always, the logistics IT market is crowded with new tools to ease goods through the pipeline from producer to ultimate consumer. Vendors and service providers stand ready with ever-improving technology to help you buy transportation, swap data with suppliers, track shipments, get your goods through customs and, of course, save time and money—all from the comfort of your mouse and keyboard. Here’s a look at just a few recent developments in logistics IT.
Integres: Book it!
Need to move heavy cargo fast, but want to let someone else figure out the best way to get it there? Integres Global Logistics can quickly locate space for you on one of 12,000 daily flights or 40,000 trailers, says Mary Thomson, the company’s vice president of marketing in Rancho Cordova, Calif. Shippers who book freight through the web-based service choose from two-day, two-day express, next-day, next-day express, and next-flight service.
Integres grew out of Cargo 2000, an initiative by major airlines, forwarders, and technology firms to develop efficient and reliable air cargo services based on uniform procedures and measurable standards. Some members of the group concluded that they weren’t making enough progress because companies didn’t want to share sensitive data with competitors, Thomson says.
On the theory that sharing is more palatable in a revenue-producing venture, several Cargo 2000 members formed Integres in 2001. Current transportation partners in the business are American Airlines Cargo, United Cargo, Roadway Express, and UTi Worldwide. Another partner, Unisys, provides the underlying technology.
Last year, Integres launched privately branded, web-based transportation services for Roadway, United Cargo, and American Airlines Cargo. In September it debuted a service under its own name.
Each of the four transportation offerings uses a variety of carriers, but the private-label ones rely more heavily on the assets of their owners, Thomson says. If a customer uses the Roadway product, “the freight more often will run on a Roadway truck,” she explains. “On the United web site, cargo will fly on a United plane more often.”
On the Integres site, the routing engine is carrier-neutral, scanning all capacity available to provide the desired service at the best price, she says.
A shipper becomes an Integres customer by registering on the web site. When the shipper requests a quote, the system returns pricing for each of the five available services. Customers receive “true pricing,” based on the actual cost to Integres, Thomson says.
For example, freight shipped Friday for delivery in two business days might cost less than freight shipped Monday because the intervening weekend allows Integres to move the goods by truck rather than air.
Integres has negotiated favorable rates and terms with a host of major airlines and trucking companies, and especially its strategic partners, Thomson says. “We give the customer access to capacity and the boarding priority they would not be able to get either directly through the airlines or through a traditional freight forwarder.” The company uses a network of local cartage companies to handle pickup and delivery.
Once a customer books a shipment, staff at Integres tender the freight to a carrier. Through Electronic Data Interchange (EDI), the carrier notifies Integres when the shipment is picked up, when it leaves the origin city and arrives at the destination city, when it’s put out for delivery, and when the consignee has received it.
Customers can view the status of their freight on the web site or receive e-mail notifications.
Integres primarily serves the United States, although it has delivered freight to Canada and Mexico, Thomson says.
Although Integres officially launched its service in September, one early customer—Video Products Distributors (VPD), Folsom, Calif.—has been using it since last June. A leading distributor of movies on DVD and VHS, VPD has a tight window for delivering movies in time for their official release dates. It uses UPS to handle the majority of its shipments to retail stores and other customers in the United States.
When it acquired its first customer in Puerto Rico, VPD used UPS to ship there as well and was pleased with the service, says Rick Roberts, VPD logistics manager. But when an Integres sales rep approached him in 2001, he was interested to learn whether the company could beat UPS’s pricing. “They did,” he says.
There’s No Turning Back
UPS’s contract with the Teamster’s Union was due to expire Aug. 1, and VPD needed a backup in case of a strike. So it began tendering freight for Puerto Rico to Integres. The strike did not occur, but working with Integres “has been such a pleasant experience that nobody wants to go back,” Roberts says.
Each week, VPD ships videotapes, DVDs, and video games to its customer in Puerto Rico, a Blockbuster franchise with 39 stores. At VPD’s Perrysburg, Ohio, facility, workers receive the movies from Hollywood studios, package them for rental, enter the orders in their computer system, and prepare the videos for shipping. They scan a bar-code on each video to add it to a shipment in the company’s manifest system. When the shipment is complete, a worker types in the weight, tracking number, and air waybill number.
Rather than type shipment data into the Integres system at its web site, each Wednesday VPD extracts a file from the manifest system containing all the necessary information and then e-mails that to Integres. The pickup driver signs a printout of that shipping information. Integres ships on Wednesday for delivery in Puerto Rico on Friday, so the retail stores will have the movies before their release date the following Tuesday.
Roberts says he particularly likes tracking the progress of his packages through Integres. Every Friday, when the Puerto Rico customer’s sales rep arrives at work in California, she checks the system to make sure the packages have been delivered. So far, Roberts says, there have been no service problems, though reports on the web site sometimes don’t show the most recent deliveries.
If a service problem did occur, however, “we would know before the customer knew,” he says. “That was one of the things we were really excited about, to be able to go to the site and see if there’s a customer service issue.”
VPD is considering whether to use Integres for deliveries to Alaska and Hawaii, the two other regions where it ships by air, Roberts says. “We want to see what Integres can put together in terms of price and service, then work with our customers in those areas to make sure they’re comfortable with it.”
Log-Net Logistics Goes “Lite”
To smaller shippers, the gap between management based on spreadsheets and e-mails, and management based on fully-automated transactions, might look like the Grand Canyon.
“A lot of studies show that small shippers have the perception that they can do it better themselves, or there is no benefit” to harnessing electronic commerce and other 21st century tools, says John Mottley, president of Log-Net, Little Silver, N.J.
Mottley and his team had those skeptical shippers in mind last year when they introduced Log-Net:Lite, a scaled-down version of the company’s web-based logistics system. Log-Net:Lite offers a lower-cost entree into online collaboration for companies that can’t—or can’t yet—justify an enterprise-wide EDI system.
The full Log-Net system automates functions such as order processing, transportation management, customs management, freight auditing, and inventory visibility. It provides a private web site for conducting business with trading partners and uses EDI to transmit data. Log-Net users tend to be companies that ship more than 500 trailer loads per year, Mottley says. Dollar Tree Stores, Jones Apparel Group, and Oxford Industries are among the shippers using the system.
Log-Net first developed Log-Net:Lite so that users of the enterprise system could allow overseas factories and other small suppliers to exchange data with their larger partners. The company created “role-based security features” allowing a small company to conduct just the transactions that apply to its role in the larger partner’s supply chain.
“It gives them the ability to come in on a single-seat basis and use just as much of the product as they want,” Mottley says.
Small Shippers, Big Savings
Out of this grew the new Log-Net:Lite system. Instead of paying $500,000 or more to implement the enterprise system, and perhaps $100,000 per year thereafter, small shippers can use Log-Net:Lite for $6,000 to $10,000 per year, depending on their shipping volume. They don’t get a private site, they conduct only a subset of the transactions available to enterprise users, and they enter data on screen rather than transmitting it directly from management systems via EDI. But, Mottley says, they gain a more efficient way of doing business.
“The typical Log-Net:Lite user is somebody who has been using Excel and e-mail to track everything,” Mottley says. “They’ve got one million e-mails and one million spreadsheets. They can move all that information to the web, and put all their order and shipping information on the Internet. Rather than get an e-mail, they can have a partner in Singapore or Shanghai log in and update the system,” he says.
Log-Net:Lite also provides automated alerts, notifying users when certain events occur, or fail to occur.
Developing a Profile
A new customer works with a Log-Net representative to develop a profile, defining which transactions the company will perform on Log-Net:Lite and how the user interface will appear.
For customers who want to test the benefits of EDI, the company offers Log-Net:Lite+. While this does not offer full EDI communication among trading partners, it does allow shippers to receive status updates that ocean carriers transmit through EDI.
LTD Shippers, a shipping association for small- to medium-sized companies, offers Log-Net:Lite+ to its members. LTD leverages the purchasing power of its members to obtain space and negotiate rates with ocean carriers. Its main focus is on transportation from Asia.
About 20 of the association’s members use Log-Net:Lite+ to send purchase orders to suppliers and manage the progress of those orders. Members who use the service say they like it because “they don’t have to re-key information into e-mails and faxes,” says Tom Craig, general manager at Philadelphia, Pa.-based LTD Shippers.
The electronic system gives shippers greater flexibility, because it allows them to communicate easily with overseas suppliers if they want to delay, expedite, or otherwise change the conditions of an order, Craig says. “And they have visibility. They can get up in the morning and see what’s going on” by checking order status on the system. Available information includes updates on goods that have arrived in the United States and are moving to their final destinations.
The system also allows users to indicate when they want to receive alerts on the progress of their orders. “For people who have been used to, ‘I’ve got to remember, I’ve got to make ticklers, I’ve got to follow up with e-mails,’ this process is now very simple,” Craig says.
Another benefit is that Log-Net:Lite+ provides tracking information at the purchase order level. Carriers’ shipment tracking portals don’t offer this kind of detail. “Carrier portals require that users know the bill of lading or the container numbers, and LTD’s shippers generally don’t have that information,” Craig says.
LTD also plans to use Log-Net:Lite+ in a new fourth-party logistics (4PL) business. The company will place employees in Asian cities where its customers source products, to serve as “the eyes of our members and the voice of our members on site,” Craig says. Those local representatives will use Log-Net:Lite+ to track orders and take action with suppliers when necessary.
Small U.S. companies will no longer have to deal across time zone and language barriers with their vendors in Asia. Instead, “we’ll have people on the phone managing suppliers, working with them in the same time zone,” Craig says.
Open Harbor: Global Declaration
As a new year begins, DHL Worldwide Express is poised on the brink of a new era. The air express carrier will soon decide whether to roll out a single, highly automated system for making customs declarations in countries around the world.
DHL is co-developing its Worldwide Clearance System (WCS) with Open Harbor, the San Carlos, Calif.-based developer of web-based global trade management systems. Among the capabilities Open Harbor brings to WCS is a database of more than eight million international trade rules, which it updates continuously.
The main goal for WCS is to improve productivity, says Jeffery Bass, DHL’s WCS program director, based in Brussels. DHL is operating pilot systems in Malaysia and Ireland and will launch a third in Brazil early this year.
Interviewed in December, Bass said it was too soon to project the results of these trials. But, he adds, “all indications are that we will get these productivity gains.” If WCS proves itself in the pilots, DHL will roll it out to its top 60 countries—representing about 95 percent of its business—in the next three to four years.
WCS will give DHL “a single, standard, and configurable declaration system worldwide,” Bass says. Today, DHL uses a different customs declaration system, provided by a local vendor, in each country where it operates. These systems can’t exchange data with one another, nor do they offer the advantages of technology based on the latest architecture, he says.
Centralized Clearance Function
A single, global clearance system will provide transparency, allowing DHL’s brokers to follow uniform procedures even though customs regulations vary from country to country. Also, because users can access the web-based WCS from anywhere, “it facilitates a centralized clearance function,” Bass says. One broker, for example, could file customs declarations for shipments entering a country through several gateways.
While shippers are ultimately responsible for presenting accurate customs declarations, DHL and other global carriers help their customers with quality control. Licensed brokers employed by DHL have the expertise to ensure that shipments are declared correctly and the authority to file the actual declarations.
At DHL today, the customs broker does all the work of preparing and filing a declaration. But with WCS in place, assistants will take on much of the labor, leaving the more highly paid broker to supervise and make expert decisions.
When a shipment leaves its point of origin, DHL’s Clearance Paperwork imaging system will transmit electronic images of the commercial invoice and air waybill to WCS. A clerk in the destination country will examine the commercial invoice and supply any missing data. This first step in the clearance process is called data cleansing.
In the second step, an employee called a classifier will make sure the shipment receives the correct tariff classification code. “That person has the benefit of certain databases within WCS to assist in classification,” Bass says. In some cases, the system will attach a classification number automatically; then the classifier will simply verify that the code is correct.
In the third step, the licensed broker will review the work of the two assistants, make changes if required, then file the customs declaration.
At any point within this workflow, exceptions might occur, triggering a fourth step known as query support. The system will trigger this step “when something special has to be done with the shipment, either because of an error or because of an extraordinary procedure,” Bass explains. For instance, the classifier might suspect the goods have been misdeclared, or there might be instructions to contact the consignee when certain kinds of goods arrive.
Experts and Assistants
With assistants handling the parts of the process that don’t require expert judgment, licensed brokers using WCS should become more productive. “It’s a question of declarations per man/hour,” Bass says.
Along with its database of country-specific import regulations, Open Harbor is providing WCS with a database of rules specific to DHL’s needs.
For example, Bass explains, DHL might add extra charges for shipments that require especially complicated clearance procedures. And some of its high-tech customers have negotiated duty-free entry for some of their products into certain countries. WCS automatically takes special provisions of this sort into account. The databases of rules and regulations that WCS taps will improve with time because the system includes a “feedback loop,” Bass says. If a broker finds the system has assigned a piece of clearance information incorrectly and makes a change, that change is logged in the system. At the end of the work shift, a manager reviews the correction. If he or she agrees, the change is written to the database.
The Best Possible Fit
Before it started working with DHL, Open Harbor did not offer customs clearance as part of its global trade management system. Officials at DHL became acquainted with Open Harbor when they used its technology to obtain landed costs for a logistics service the company developed for web-based retailers. When DHL’s developers explored possible partners for WCS, “they made the decision that from a strategic technology standpoint, and what their content would do eventually, it was the best possible fit,” Bass says.
In the past, Open Harbor has aimed its product mainly at multinational corporations. It used its content and technology to help shippers prepare documentation before shipping their goods from one country to another.
“DHL has turned that model on its head,” Bass says. “It’s the same data our declarants need to clear the shipment. So we use it on the back end. Open Harbor has its databases, and we have now designed a different view of them, to create an operational clearance declaration system view and function.”
Along with the customs clearance application, Open Harbor and DHL worked together to develop an engine to manage the workflow. Also, “we automated all the data directly into their billing system and their logistics system, as well as into the government filings,” says Linda Ciabatoni, chief marketing officer at Open Harbor. Once DHL rolls out the system around the world, “we’ll have connections to the government clearing organizations worldwide” and will be able to provide those to other customers as well, she says.
Ultimately, Bass says, WCS will make the entire clearance process more transparent. While the difference in procedure from country to country “can be fairly superficial,” experts who understand the ins and outs of local customs regulations have jealously guarded that knowledge, he says. A central system will make all the regulations for DHL’s top 60 countries accessible from anywhere.
“This is going to change the industry,” he says. “It’s going to change the world.”