April 2007 | Commentary | Checking In

IT's Unexpected Benefits

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When you invest in logistics IT, you expect to net the obvious results: implement a TMS and transportation operations run without a hitch; buy a WMS and goods flow smoothly in and out of the warehouse.

But when shippers and logistics service providers adopt demand-driven ideas, and implement the technology and/or services to put that new business practice into play, some unexpected ROI tick points can float to the top of business operations. You can skim those like cream and use them to drive business process change, or maybe kick your career up a notch or two.

For example, suppose your carrier or private fleet invests in a satellite tracking service to gain trailer visibility. The immediate ROI is evident: your carrier improves customer service because its time is used more efficiently; and you benefit from less cash tied up in inventory, a reduction in waste, an overall reduction in infrastructure and warehouse space, and sometimes a drop in theft and damages thanks to fewer "touches."

But some unexpected benefits bubble up for fleet owners and carriers when they optimize the trailers that carry your inventory:

Chargebacks for holding trailers too long can almost become a profit center for carriers. Many fleet owners and carriers have a negotiated window within which they have to unload trailers. Miss the window and consignees pay. We recently met with the executive of one up-and-coming company providing satellite trailer tracking services who says that, for one fleet owner, satellite tracking made chargebacks so deadly accurate that its monthly revenue grew from $3,000 to better than 10 times that.

"We don't want to charge. All we want is our equipment back as quickly as possible," the company said. With the certainty of more accurate chargebacks, they get their equipment back fast!

Preventing specially outfitted trailers—such as garment on hangers—from being mixed in with the general trailer pool. That saves carriers—and in turn, shippers—time and money because the hooks do not have to be ripped out to use the trailers for general commodities.

Security gets a boost when fleets and carriers can more easily find and recover loads and equipment. Lower insurance rates can also result, benefitting all parties involved.

How about some corporate recognition?Technology can reap such real benefits that a user could get noticed, and promoted.

As you will see in this issue, technology can help companies reduce and/or optimize return on inventory in many ways. Some benefits will be touted during the sales pitch, but smart managers stay on the lookout for unexpected ROI points.

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