I am fortunate. The supporting facts behind this blanket statement are gleefully numerous, but for the purposes of a blog focused on transportation and logistics, I am going to whittle it down to the cumulative opportunities I have had to fly, quite literally, around the world and see a multitude of logistics challenges and best practices. From Greenville, South Carolina to Guangzhou, China, I have witnessed incredible challenges as well as quite clever innovations. As an aside, I call out the latter on purpose as I have seen a considerable number of our newer and more sophisticated capabilities being driven by requirements outside of North America.
This tremendous set of experiences has served me well as I have observed a growing number of organizations working to expand their horizons and drive the success of their transportation solution deployments beyond the confines of their initial implementations to the far reaches of the global economy. A large part of what I am tasked to speak about are the differences that I have seen, the key challenges, solution approaches and a ranking of priorities. Clearly, this would be a lot to cover in a short blog, so let’s start by covering a few key observations that I have accumulated.
Spoiled by Space
North America is a large place (respectively, Canada and the United States of America are the second and fourth largest countries, by area, in the world) and as such is generally free from the limitations of physical geography. Massively-sized facilities are a norm rather than an exception. Consequently, while the issues of dock capacity and scheduling are becoming hotter topics, their criticality here pales in comparison to areas such as Europe and parts of Latin America where space is constrained and hence the management of throughput is more critical.
Economies of Density
Justifying a transportation solution deployment in North America is not particularly hard. I can make a similar statement about other geographic centers such as Western Europe, Brazil and even India. The commonality across these regions is their economic density. The justification becomes more challenging in smaller or less dense geographies such as Thailand or Laos. I specifically use economic density over other metrics such as economic development because there are examples like Australia where despite being an established, economically developed country, its ratio of population to area causes it to often become a less ideal target for driving transportation value. It is interesting to note that while my home nation of Canada has similar density characteristics to Australia (i.e. big geography, smaller population) it has the advantage of being conjoined to the United States.
It’s About Consolidation, Right?
The primary value driver of any transportation business case is the efficiency gained through advanced consolidation and routing strategies. I take smaller consignments of pallets and cartons that might have previously travelled independently, and group them together into larger assets maximizing overall capacity usage. There is a fundamental premise that is a key underpinning to this strategy, that we in North America take for granted, which is we generally know what those larger assets look like and how many we have. Outside of North America, this is a flawed premise. On a trip to China a few years ago I learned that in a nation where there are millions of carriers and the assignment of freight is often managed through groups of brokers, the knowledge of what asset you are going to get and when is not so readily available.
Distance and Time
In addition to space, two other areas where we are particularly spoiled in North America are infrastructure and data. A robust infrastructure enables an environment where we can assume that air is faster than truck, truck is faster than rail and that there is an abundance of geo-centric data sources to model distance and transit times accurately and efficiently. These two items cannot be assumed elsewhere. An immature infrastructure can lead to a re-ordering of modal efficiency, reliability and predictability, and the unavailability of accurate distance and postal data can lead to significant challenges in trying to model a network in any practical and useful way.
Value Available
Do not be daunted. There is significant value to be attained by expanding your transportation capabilities internationally, but like anything else, you need to be cognizant of the challenges that await and not fall into the ever-so-common trap of assuming the principles are basically the same everywhere. Forearmed is forewarned as the saying goes; the trick is in figuring out the how, but let’s save that for the next installment.
As Vice President of Global Logistics at JDA Software, Fabrizio Brasca (@FabBrasca) is responsible for developing innovative transportation and logistics strategies across all industry verticals, strengthening executive-level relationships with JDA’s key customers and prospects, and advising companies on best practices to become more profitable. He holds an Honours Bachelor of Mathematics co-op degree with a specialization in business and information systems from the University of Waterloo, Waterloo, Ontario.
Interesting post, Fab. A couple of other observations on using a TMS, globally. 1) Geographic data, and how you represent it in the system is a challenge. It’s not that easy to find it (as opposed to, say, the US and Canada), and older US-centric systems don’t treat geographic location data flexibly enough to represent, say, a Japanese address with ease. 2) There are few standards such as we have in North America for rates, such as LTL rating based on CzarLite. You also mentioned distance calculators–same deal. 3) In some countries you have a wider use of 3PLs than in North America. China and Europe are examples. And those 3PLs are typically doing some consolidation. So you need to ask yourself what the value proposition of the TMS is in that case. Are you taking back the consolidation responsibilities from the 3PL? Maybe you want to do that, but you’d better make sure you know what you’re doing if that’s the case, since the 3PL has probably been doing it for years and may not have an incentive to help you take it over.