April 2001 | Commentary | Supply Chain Technology

Simple Collaboration: The Focus is Transportation

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Reduced to its base element, supply chain management is the transportation of goods from Point A to Point B. At this core, the fundamental players are shippers, receivers, and transport providers. How well they perform together is the basis for creating wealth in companies and nations.

Goods efficiently sourced and manufactured, but not shipped, have limited value to any economy. Products on shelves require transportation from sourcing, transportation to manufacturing, and finally transportation to market to realize their potential value. Transportation, therefore, is the crucial link to economic value. That's why Logistics.com, headquartered in Burlington, Mass., focuses on the transportation business as an application service provider (ASP) that serves both shippers and transport providers, says Kel Kelly, chief marketing officer for Logistics.com.

Logistics.com offers three hosted solutions delivered via ASP or as a plug-in to existing solutions that don't run on the web:

  1. OptiManage offers online transportation management and analysis for shippers. This solution helps automate and optimize processes and transactions between shippers and transport providers, reducing time and costs.
  2. OptiBid is an online procurement solution for shippers. This solution helps shippers identify, secure, and monitor the optimal transportation provider for each movement—throughout the world and across all transport modes.
  3. OptiYield is an online management, analysis, and procurement solution for truckload, LTL, rail, air, and ocean carriers. It automates and optimizes day-to-day decisions and strategic planning to improve efficiency, yield, and profitability.

According to Logistics.com, these solutions have managed $6 billion in transportation procurement, while saving users more than $400 million. More than 2.5 million transactions are optimized annually through Logistics.com's shipper management technology and over 60,000 trucks are optimized daily with its transport provider solutions.

Focusing on Fundamentals

Logistics.com approaches the supply chain in a different, more fundamental way than other ASPs. It focuses on transportation, not complex supply chain collaboration. The company does, however, have relationships with other technology companies. For example, J.D. Edwards acts as Logistics.com's enterprise resource planning (ERP) component, plugging into a supply chain backbone. And, CommerceOne provides an integration platform on the web.

Industry experts, including AMR Research, suggest that there is a lack of meaningful collaboration between supply chain players. In fact, Bob Parker, vice president of B2E Commerce Strategies for AMR, recently published a report titled Collaborative Commerce Has Set a New Marketing Hype Record for Time-to-Meaningless-Term. The report suggests that it is difficult to get people to collaborate in supply chain partnerships, and that's why few online logistics entities are getting any traction.

Logistics.com collaborates in a different way, according to Kelly. "We bring shippers and transport providers together," she says.

"Shippers are looking for three things, according to feedback from Logistics.com customers," Kelly says. "First, they are looking for lower costs, but not at the expense of service. Second, they are clearly looking for improved levels of service. Many online marketplaces were created to drive down transportation costs, but didn't back it up with service. Third, shippers are looking for expanded decision-making capabilities. They want to have the necessary knowledge and insight to make more efficient decisions about their transportation services."

Logistics.com customers say they consider a balance of cost and service when they procure transportation services, Kelly notes. In fact, Logistics.com shippers choose a carrier or a solution based on cost alone less than 15 percent of the time.

"On the other side of the equation, transport providers want to reduce operating costs and improve their margins," Kelly says. "They want to be able to select the right freight, loads that they will make money on.

"In addition, transport providers want to improve the level of customer service they provide to shippers," she says. "And, they want to retain drivers. Driver turnover in the trucking industry reaches 100 percent a year. Imagine how paralyzing that is internally."

Carriers are trying to reduce driver turnover by optimizing the use of the drivers' time. By employing new technological tools, such as those offered by Logistics.com, they are able to give their drivers shorter trips and more time at home. This translates into better customer service, lower costs, fewer accidents, higher employee morale, and driver retention.

For ASPs to be successful, the new technology has to benefit shippers, receivers, and carriers equally. When it works right, the new technology optimizes all the variables, enhances the profitability and efficiency of each player, and shares the wealth.

For more information, visit the web site: www.logistics.com.

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