collaboration Archives

Guest Commentary: Delivering on the Unfulfilled Promise of Collaborative Transportation Management

Guest Commentary | By Ben Cubitt • 02/09/2011

Adrian Gonzalez posed some thought-provoking questions in his recent article “Unraveling the True Meaning of Supply Chain Collaboration.” No one can argue his point that the term “collaboration” is overused in supply chain management, but in the past 12-18 months I have seen this buzzword actually live up to its hype. There has been a major shift in the mentality of shippers and the way they are approaching the idea collaboration. What was once used for small shipments in a single lane is now taking place on a much larger scale, and the reasons behind it are much broader in scope.

At the outset of his column, Adrian examines the WHY, HOW and WHO with regards to collaboration. For a long time HOW dominated the minds of shippers and carriers, causing a fairly narrow focus with limited results. But with the intense push for network and process optimization that came out of the economic downturn, companies have established processes, systems and execution expertise that they can leverage with their partners. With HOW becoming less of an issue, companies are honing in on the WHY – a focus that can garner much greater results.

Each company has its own set of reasons behind its collaboration efforts, but some of the commonalities I have seen include:

A stronger commitment to collaboration than in years past. Shippers are willing to take on broader projects such as shared, dedicated fleets and joint multi-shipper bids. They understand the value and are willing to invest the people and the time to get projects up and running smoothly.
The availability of software-as-a-service or hosted technology from 3PL partners offers much greater network visibility and the ability to more efficiently identify and execute collaborative opportunities.
The drive to go green has added an important consideration beyond pure cost savings. Shippers and carriers are looking to take miles out of the supply chain and are willing to pursue these initiatives not just for cost savings, but because it’s environmentally responsible.
A shared network of customers, DCs in the same geographic locations provides an overlap that can easily be leveraged.
Carriers have become more open and capable of supporting these initiatives, without the hassle of time and focus spent on fighting to make “back office” activities like freight payment work.
Functionality to support multi-lane collaboration offers benefits that extend well beyond the flawed single lane inbound/outbound match-up initiatives of the past. Working with 3PLs as the facilitator extends the visibility and scale possibilities for shippers.

With many of the traditional methods of establishing strong, efficient processes exhausted, shippers are looking for alternative methods to drive better results and a greater return on investment. Creating a more integrated transportation network is a logical next step. And by working with 3PLs, shippers are expanding their transportation networks even more by broadening their ability to take advantage of collaborative dedicated fleets, multi-LTL bids and collaboration through distribution or sales channels.

While the term “collaboration” may be overused, with the proper focus, technology and partners in place, this effort is infinitely expanding the possibilities for cost savings and efficiencies, not to mention helping the environment along the way.

Ben Cubitt is Senior Vice President, Engineering & Consulting at Transplace. Mr. Cubitt has more than 20 years of industry and consulting experience in freight optimization. He has a deep familiarity with the freight procurement field working for consulting firms and multiple Fortune 500 companies in the consumer products, paper and automotive industries. Mr. Cubitt has led and assisted with bid projects for companies such as MeadWestvaco, Kellogg’s, RockTenn, The Home Depot, Colgate-Palmolive, RockTenn and McCormick Foods. Mr. Cubitt joined Transplace in July 2010 after four years as Vice President, Supply Chain for RockTenn Corporation. At Transplace he leads the engineering, carrier management and consulting teams. He has been a CSCMP member for over 20 years and has served two years as President of the Atlanta Roundtable and is currently a Roundtable Regional Advisor.

Guest Commentary: Finding the Next Level of Value for 3PL Customers

Guest Commentary | By Robert Bianco • 01/20/2011

Traditionally, most third party logistics companies have focused on creating value for customers by taking over their transportation and warehousing operations, and through economies of scale, systems and best practices, removing excessive costs from these functions.

While this ability to help customers reduce these supply chain costs remains important, the outsourcing cycle for warehousing and transportation management has matured for many companies. Efficiencies have been gained. Easily identifiable costs have been wrung out.

Where will logistics providers find the next level of value for their customers? I see it in three areas, all of which drive toward one goal: delivering competitive advantage.

First is innovation. This applies both to systems and in work practices. We must provide supply chain analysis, process engineering and systems capabilities which support our customers’ needs for superior functionality and improvement. This is an exciting area where evolving technologies hold much promise. 3PLs will need to make critical decisions and investments in this area to bring customers that next level of value.

Second is operational excellence. We have to continuously examine, question and improve every process, every work task we touch. The basic question we should always ask: why do we do what we do the way we do? Lean methodologies offer the ideal foundation for this challenge. Lean tools like value stream mapping provide the framework that allows us to remove waste, to design and engineer the best process for a given task, from the warehouse floor on up.

Third is collaboration and connected services. Logistics providers are strategic partners, in effect connecting a business to its suppliers, manufacturers and customers. Clients rely on our ability to flex with their business, to collaborate with their suppliers, plants and customers, as seamlessly as possible, across regions, countries and processes. It’s both science and art. We have to demonstrate an understanding of cultural and business sensitivity in every location we serve the customer. At the same time, regardless of the region, we have to provide the same level of process consistency and operational excellence, at every point we touch the supply chain.

Delivering effective, reliable solutions in these three areas is the key to getting to that next level of value, and the next great growth opportunity for global logistics and supply chain management.

Robert L. Bianco, Jr. is executive vice president of Con-way Inc. and president of San Mateo, Calif.-based Menlo Worldwide Logistics, the $1.4 billion global provider of logistics, transportation management and supply chain services. An executive with nearly 25 years of experience in the logistics industry, Mr. Bianco began his career as a logistics officer in the US Army. He joined the Con-way organization in 1989 as a management trainee and was named to his current role in 2005.

S&OP is Not About Technology. Wrong!

Supply Chain Planning | By Steve Banker • 10/18/2010

At the IE Group’s Sales & Operations Planning (S&OP) Innovation Summit last month, several of the speakers, including some representing software vendors, said that people and process were far more important than technology in achieving S&OP excellence. But interestingly, the companies profiled in the case studies as having the most robust and mature S&OP processes all used advanced Supply Chain Planning tools.

I don’t disagree that managing culture change is the biggest challenge associated with S&OP. However, I do not believe a large manufacturer can achieve a robust S&OP process without good technology. Here are my reasons:

S&OP is a highly collaborative process. Throughout the process, information from key customers is required and various action items have to be completed by demand and supply planners, sales, marketing, and other functional groups. As Rich Sherman, Director North America for the Supply Chain Council, says, “Collaboration needs to be push; pull does not work.” As an example of push, imagine sending a spreadsheet to the sales force with the demand group’s forecast of what a particular salesperson will sell of a particular SKU. If the sales person believes the statistical forecast for them is about right, they will do nothing. If they believe the forecast is 15 percent too low or too high, they can adjust the forecast and provide a reason for the adjustment. In short, companies need a tool to facilitate collaboration, track it, audit it (i.e., see a history of changes and who made them), and alert on it if certain people are not doing what they need to do in the appropriate timeframe.
The S&OP process is about balancing supply with demand in a way that allows companies to achieve their objectives. What if revenues won’t hit the monthly target based on demand and the assumed mix? In this instance, a company might want to explore running a promotion. A demand engine that can calculate the likely sales lift from a promotion becomes an important tool in this instance. Next, the company would want to see if it has the manufacturing, transportation, and warehouse capacity necessary to support a promotion. In these cases, other supply chain tools are needed to run simulations.
Business Intelligence views are important. A supply chain plan is based on units, not dollars. Executives want to understand what the plan means in terms of revenues and profits. BI also helps executives to see whether they are achieving the company’s financial goals in terms of both revenues and costs.

Here is how I view the main steps and the main complementary tools.

Additionally, an S&OP tool, which is essentially a Business Process Management tool, makes sure all of the tasks at each step are completed on time.

In conclusion, when it comes to S&OP, I must politely disagree – technology does matter!

The Supply Chain Team

Just for Fun | By Steve Banker • 09/08/2010

Ideally, the supply chain team includes more than just the folks who work in manufacturing and distribution. For the supply chain to work efficiently and effectively, there are other folks in a company (who may not report to the Vice President of Manufacturing or Distribution) that should also be on the team.

Human Resources – They can help you acquire talent, figure out systems to fairly evaluate personnel, and fire underperforming folks without being exposed to lawsuits. If you have managers that are making employees crazy, HR will often be the first to know.

The CEO and Vice President of Sales – When the CEO or VP of Sales pressures the sales force to meet the quarterly (or annual) revenue targets, watch out! In these scenarios, customers are often given unusually deep discounts near the end of the reporting period that trigger a high volume of shipments. The result is increased overtime in factories and warehouses; machines and equipment that are overworked; increased quality issues and, consequently, more returns; and a higher incidence of late or short shipments. Supply chain folks sometimes get blamed for these problems when the fault really lies with the way the firm is conducting business (see related commentary in “Stuffing the Channel”).

The Vice President of Marketing – Promotions can also lead to the surges in supply chain shipments and excessive costs that are borne by the supply chain organization. There are industries, like consumer goods, where many companies would find it very hard to remain in business if they did not use promotions. But if a company is running different promotions at the same time, they are needlessly yanking the supply chain organization around. If the supply chain does not have sufficient advance warning, and a decent forecast of volume surges, extra costs are incurred. And many companies really do not understand which promotions are truly profitable. In these instances, you are making the supply chain work harder for no good reason.

Cost Accountants – Many manufacturers and distributors sell a variety of high volume and low volume products. High volume products tend to be a lot less costly for the supply chain. They flow through the supply chain with less friction –i.e., fewer factory setups, fewer touches in the warehouse, truckload rather than less than truckload shipments, and lower inventory carrying costs. The supply chain likes high volume products. However, if a company lacks good cost accounting, high volume goods get stuck with overhead carrying costs that really belong to lower volume products. The result is that the high volume products look less profitable than they really are, and low volume goods look more profitable than they really are. If that is the case, a company can end up selling more of these marginal goods with high supply chain costs than really makes sense.

Product Development – When products are being developed, the main goal is to make products that customers want to buy at the right price. Well-run companies include “engineer for manufacturing” and “engineer for logistics” methodologies into their product development process. Sometimes small changes in the components that make up a product, or the dimensions of the product, can lead to large savings in the supply chain.

Chief Risk Officer – Supply chain organizations are often under pressure to do more with less. If your company does not have good risk management processes in place, adverse safety, health, or environmental incidents can occur. If these incidents are frequent enough, or significant enough, they can put the company’s survival into question.

Collaboration is an important word in supply chain management. Is your company collaborating internally, in an effective manner, with these key players?

The Collaborative Enterprise: A Focus on People-centric Collaboration

Logistics Technologies | By Steve Banker • 10/14/2009

Back in 2000, my colleague Greg Gorbach introduced a Collaborative Management Model (CMM) to help companies think through the interdependencies among a company’s various departments and locations, as well as partner networks, when seeking to leverage internet technologies to enhance their competitive position in the market. At the time, the big payoff from collaboration came from integrating systems and business processes across business functions.

ARC's Collaborative Management Model (Source: ARC Advisory Group; click to enlarge)

In an updated report on CMM, Greg writes “New collaboration technologies are once again changing the game. Companies are using Web 2.0 technologies to improve information sharing, decision making, and performance, leading to better business results, more innovation, and more opportunities. Virtual workspaces, wikis, blogs, web meeting, presence indication, instant messaging, and other collaborative tools can help people find new ways to work together to solve problems or achieve goals. Today, many of these tools are used in an ad hoc, experimental way, and companies realize that there are good reasons to move to a more strategic, enterprise-wide, and more supportable implementation of collaboration technologies.”

(Quick aside: For related postings on Web 2.0 and supply chain, see “Facebook in Supply Chain Management” and “Supply Chain Twitter”).

New Collaboration Technologies Are Proliferating, Along with Security, Support, and Management Control Headaches (Source: ARC Advisory Group; click to enlarge)

Greg goes on to say, “[Whereas] the first wave of collaboration focused largely on application integration, the current wave is all about people-centric collaboration: enabling teamwork, innovation, and connectivity. Every company has many potential opportunities to benefit from improved collaboration. Every project and every initiative has a collaborative dimension.”

In addition, recent macro trends make the new collaboration tools increasingly relevant.

Source: ARC Advisory Group (click to enlarge)

However, as Greg points out, “while examining transformational trends is informative, the challenge is to decide specifically what your business should do about them.”

To best leverage these new collaboration tools, Greg writes, “requires understanding the potential benefits of collaboration, familiarity with the new technologies, and attention to organizational, cultural, and change management issues.” Greg’s new ARC Strategic Report, “The Collaborative Enterprise” (available to ARC clients only), provides an overview of the changing collaboration landscape and a framework for industrial companies to improve business performance through better collaboration.

SaaS 2.0: How the Logistics Industry is Driving an Evolution in Software-as-a-Service

Cloud/Software-as-a-Service | By Art Mesher • 09/22/2009

The software-as-a-service (SaaS) model has been widely embraced thanks to the numerous advantages that on-demand solutions deliver to multiple industries. Logistics-intensive organizations, however, were among the first to turn to SaaS to reduce costs, increase operational performance and improve customer satisfaction. As the need for connectivity, collaboration and compliance grows, many members of the global supply chain now realize that SaaS in the logistics market can offer far more than “rented” application software when connected to a “federated” network comprised of several communities (such as airlines, ship and truck carriers, government agencies, logistics providers, etc.), each with a common interest.

Consider the next evolution of SaaS as business social networking for the supply chain – SaaS 2.0, if you will. Leveraging a federated network, SaaS 2.0 extends the value that traditional on-demand solutions offer by not only providing pay-per-use access to applications that businesses need to manage their supply chains, but by also bringing together and enabling multi-party collaboration between logistics service providers, supply chain partners, carriers, customs agencies and customers from around the globe.

Combining SaaS logistics applications with a federated network helps participants build communities, readily connect with trading partners (already connected to the network), and transition beyond the simple interchange of information. In this scenario, SaaS logistics applications and a federated network combine to support multiple multi-party processes and connections within a single environment on a global scale.

The logistics network

A logistics network is a highly complex “organic” group of trading partners that perform any of a wide range of logistics-related business functions (e.g., freight forwarding, customs compliance, etc.). Many industry players have become seasoned users of SaaS applications that pertain to specific functions in order to speed delivery, streamline processes, and reduce errors and complexity.

As supply chain processes become more complex, the need for partners to work together, be more efficient, and keep pace with the latest legislative requirements regarding advance notification, securing trade lanes, chain of custody, accountability and the automation of paper documentation continues to grow. SaaS 2.0, for its part, brings a blend of Hardware, Software, Networks and Business Services to enable multi-party workflow-based applications that need to be shared by thousands of companies on a daily basis.

In the past, SaaS applications tended to serve a specific business function (e.g., order processing, transportation, warehousing) or vertical (e.g., manufacturing, healthcare, pharmaceutical). Today, a SaaS 2.0 platform, such as the Descartes Global Logistics Network (GLN), serves as “all things to all people” by connecting the entire community of logistics service providers and trading partners through a single polymorphic federation.

This state of being united and leveraging multiple network applications through a global network promises to take the industry well beyond its reliance on standalone solutions and individual transactions. Rather, this approach delivers a wealth of advantages, including standardization of documents and data, increased automation of routine functions, and easy accessibility to real-time information for all partners.

It also provides an opportunity for customer intimacy and the prospect to make more money; facilitates operational improvements to dramatically lower the cost of doing business; and ensures compliance to keep up with an increasing number of regulatory changes around the world.

By bringing applications and the trading community together, there are no longer any communication barriers between manufacturers, retailers, carriers, government agencies and other stakeholders. As a result, when one party generates information or implements a change, that data can be disseminated throughout the relevant members of the community in real-time.

Driving the evolution of SaaS

Given the complexity of global trade and the information that must be communicated, it comes as no surprise that the logistics industry is among the first to venture into the concept of SaaS 2.0.

This ability to unite disparate business processes represents a pivotal shift in global logistics practices. The convergence of functions is now taking the logistics industry from a cost-savings oriented mentality that focuses on functionality, integration and risk reduction, to a compliance-oriented one that drives innovation and business networking through automation and real-time access to information.

As we look ahead, SaaS 2.0 will provide the foundation for delivering the next big thing in logistics – the ability to track and manage all elements of the global supply chain (Global Trade Management, Supply Chain Execution and Mobile Resource Management) through a single resource, while collaborating seamlessly with supply chain partners. Undoubtedly, the impact of this evolution will be felt by carriers, logistics service providers, customs filing agencies, and of course supply chain operators such as manufacturers, distributors and retailers. Now is the time for members of the global supply chain to prepare for what lies ahead by embracing SaaS 2.0 today.

Art Mesher is the Chief Executive Officer of Descartes where he oversees the company’s marketing and sales, product development, network operations, and customer and corporate services, with direct responsibility for the executive management team. In his 25 year career, Mr. Mesher has emerged as one of the foremost pioneers, business developers and thought leaders in the logistics industry. Notably and most recently, Mr. Mesher was selected as the 2008 Council of Supply Chain Management Professional’s (CSCMP) 2008 Distinguished Service Award recipient. The CSCMP Distinguished Service Award is presented annually to an individual who has made significant contributions to the art and science of supply chain and logistics management.

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