Executive Briefings

Supplier Logistics: The Other End of the Supply Chain

Having realized most of the efficiencies to be gained on the outbound side, companies are taking a serious look at controlling freight on shipments from vendors.

With sales last year of around $850m, Bozzuto's Inc. is no Wal-Mart Stores. The Cheshire, Conn.-based owner of Adams Super Food Stores, and regional wholesaler to the Independent Grocers Alliance (IGA), doesn't seem large enough to dictate terms to major suppliers, such as Procter & Gamble and Unilever. Yet the company has had some success in taking control of a previously untouched part of its supply chain: inbound logistics.

Control has always been important to Bozzuto's. It maintains a 115-unit private truck fleet at its one million square-foot distribution center in Cheshire. The operation serves chain and independent supermarkets throughout New England, New York, New Jersey and Pennsylvania. For local IGA members, Bozzuto's also handles store design, administrative duties, marketing and inventory management.

So it's no surprise that Bozzuto's might start casting about for ways to control inbound. Currently less than a quarter of the company's inbound shipments are hauled via Bozzuto's own fleet, with the balance of inbound volume shipped on a prepaid basis, according to vice president of transportation Joseph Callahan.

Bozzuto's was eager to expand its control over shipments beyond those handled by its private fleet. It began looking at the whole inbound load-tendering process, including submission of the tender and everything that follows, depending on whether the carrier accepts or declines. According to Callahan, the company saw a chance to control 35 percent of its inbound in the first year of the new program.

Bozzuto's isn't the only company to have recently discovered the possibilities of inbound control. For a long time, retailers and manufacturers focused on outbound logistics because that portion was more visible to the end customer, says Adrian Gonzalez, senior analyst with ARC Advisory Group. "But now that outbound operations have been streamlined and extracting additional benefits has become more difficult," he says in a recent report, "companies are turning their attention to inbound, and they're realizing that plenty of money is being left on the table." That's one reason why companies spent more than $804m on transportation management systems (TMS) in 2001, giving the software market one of its "few bright spots," Gonzalez says.

Among the biggest money-saving opportunities is the conversion of pricey less-than-truckload (LTL) shipments to full truckload, a strategy that is feasible only if the receiver controls inbound freight from multiple suppliers. But Bozzuto's took a different approach. It tackled truckloads first.

As justification, Callahan cites the old 80-20 rule - 80 percent of the business is generated by 20 percent of one's business partners. By starting with truckload, Bozzuto's could convert hundreds of loads a year from a single vendor. Savings would materialize much faster than if it had focused on suppliers shipping one or two pallets at a time. Those smaller vendors are being targeted in the second phase of the company's inbound conversion program.

The goal isn't just cost cutting, says Callahan. Boosting operational efficiency is equally important. That's why Bozzuto's added just one person to internal staff when it began dealing directly with inbound carriers. To take on a slew of new duties without creating an "administrative nightmare," it needed a system that could streamline logistics processes through use of the internet.

Focus on Inbound
The answer came in a TMS package from Charlotte, N.C.-based Elogex Inc. Unlike most TMS providers, Elogex started out three years ago with a focus on inbound, says Travis Parsons, president and chief executive officer. It saw the problem as extending beyond pure transportation to internal processes within the broader supply chain. That included the need for real-time shipment visibility through supply-chain event management (SCEM), says executive vice president Jerry Overcash.

Elogex's web-based system allows for the transmission of some purchase orders directly to carriers, without being seen by Bozzuto's inbound department. And that's fine with Callahan. There's no need for internal staff to deal with tenders that are routinely accepted by carriers, he says. Should the first carrier decline, the system automatically relays the tender to the next one on the list. That information later becomes available to Bozzuto's in the form of reports that aid in planning and management of the inbound program.

When a carrier accepts the tender, it is given a confirmation number and bay door within the Bozzuto's DC to which to report. The dock-scheduling tool is central to the Elogex system, says Callahan. The vendor considers that feature essential to attaining shipment visibility - and allowing shipper and receiver to schedule dock arrivals collaboratively.

Callahan also touts Elogex's freight auditing and payment capabilities, a task that is frequently outsourced because of its onerous administrative requirements. Bozzuto's, which expects to process 12,000 freight bills a year, prefers to keep the payment process in-house. Carrier rates are kept on file in the Elogex system, which relays the data directly to accounts payable, once load arrival is confirmed. "The goal," says Callahan, "is to be almost paperless when bills come in."

Padding Freight Bills
Yet another benefit of inbound control is the visibility it gives the receiver of actual freight costs. With prepaid shipments, freight is rarely broken out from the base cost of merchandise. The resulting murkiness has many companies suspecting, often rightly, that the vendor is padding its freight bills and treating outbound logistics as another profit center.

At Bozzuto's, visibility of inbound shipments and freight costs is enjoyed by both transportation and procurement - two departments that historically have functioned as separate "silos." They worked closely together to install the Elogex system, Callahan says.

Bozzuto's is ever on the lookout for fresh opportunities to save money and streamline business processes. From the beginning, it drew on the experience of other food wholesalers for guidance in launching the program. Callahan sees a chance for further collaboration with his nominal competitors, by combining shipments from common vendors into cost-efficient truckloads, or cooperating on backhauls. Even without that radical step, Bozzuto's is on track to control 50 percent of its inbound freight scheduling within two years of acquiring the Elogex system. And Callahan calls that figure "conservative."

Parsons says mid-sized retailers like Bozzuto's are under increasing pressure from Wal-Mart and other giants to boost efficiency wherever possible. In the process, they have reached out to supply-chain partners, especially on the inbound side. "Inbound," he says, "is the one area of logistics that's a multi-party operation, both within the company and across a broad range of partnerships."

Companies have long tried to take control of inbound, says Deby Veneziale, chief product officer of Arzoon, the San Mateo, Calif.-based TMS vendor. "The problem is, it's always been outside their control relative to the enterprise." With the advent of internet-based software, it has become possible to make strides in that direction.

Veneziale believes inbound offers more opportunities for cost savings than any other part of the supply chain today. Early beneficiaries include some of the largest companies, such as General Electric.

Since the attacks of Sept. 11, Veneziale says, the need for end-to-end control of supply chains has become more vital than ever. Companies are required to have intimate knowledge of their trading partners, including lists of denied parties and records of compliance. The sluggish economy is yet another factor driving business to squeeze out cost and promote the flow of data wherever it can. "You can't reap the benefits if you don't manage it," says Veneziale.

Arzoon has focused on building business rules within trading communities. Through shared processes, receivers can take some of the work out of suppliers' hands, Veneziale says. All the supplier has to do is send a signal when it's ready to ship. The receiver's system automatically triggers a tender to the appropriate carrier.

Direct control of inbound means a retailer can exercise more flexibility over the ultimate destination of product in transit. That, too, can lead to savings through more efficient deployment of inventory. In all, Veneziale estimates, companies managing inbound can cut transportation costs by 5 to 15 percent, with another 5 percent still to be realized from additional efficiencies on the outbound side.

Of all business sectors, retailers stand to gain the most from an inbound program. The majority have focused on moving product from distribution centers to stores, says Derek Gittoes, vice president of product solutions with Shelton, Conn.-based G-Log Inc. "Inbound to the DCs was just a line-item cost, buried in the cost of purchasing," he says.

Still, making the shift from outbound to inbound is no easy task. "There's a major difference in the level of collaboration that needs to take place," says Gittoes. "On the inbound side, it's much higher." The corresponding TMS must be more sophisticated, able to move data between multiple partners. Security is also an issue, especially post-Sept. 11.

Inventory at Rest
Using an inbound-oriented TMS, the retailer can consolidate shipping across multiple suppliers, saving between 10 and 30 percent on transportation costs, Gittoes says. But the supporting system must contain a number of elements that govern the inbound process. G-Log's software, known as Global Command & Control Center, or GC3, features four separate components: shipment optimization, shipment execution, logistics order management, and visibility/event management. Outbound logistics systems tend to be limited to the first two.

By the end of this year, G-Log was planning to have in place one more critical component of its inbound-management software: the ability to view inventory at rest. Most warehouse systems are still not tied into transportation execution software, a gap that is only now being bridged by vendors. Some progress has been made in vendor-managed inventory (VMI) programs, but those efforts could be viewed as giving companies less control, not more, of their inbound freight.

Art Mesher, executive vice president and chief logistics officer of Waterloo, Ont.-based Descartes Systems Group, isn't convinced there's a wholesale trend toward receivers taking control of inbound.

"There's been a lot of talk in the past three to four months," he acknowledges. But some of that talk may be overstated, especially among TMS vendors looking to sell new systems. Depending on their size and buying power, suppliers might still be better off booking the freight. Says Mesher: "On a landed basis, nobody can deliver potato chips cheaper than Procter & Gamble."

In any event, retailers aren't always looking for direct control. CVS/pharmacy, a Descartes customer that controls more than 4,000 stores, didn't set out to convert the terms of sale. What it wanted was control over information, in the form of a system that provided real-time visibility of incoming product.

Mesher sees multinational companies struggling to manage inbound, forced to build in long lead times because they lack the data to control product flow efficiently. "With every handoff," he says, "the inventory planner adds an extra day." The result is large caches of safety stock, weighing down corporate balance sheets.

Inbound control may be desirable in some cases, Mesher says, "but I see as much opportunity in the predictable flow of materials through the supply chain." When there are deviations in that flow, he adds, the receiver must know why.

Who's in Control?
The decision as to who should control inbound is largely a question of company size, agrees Mark Johnson, vice president of product marketing with Viewlocity Inc. (Atlanta-based Viewlocity, which focuses on supply-chain visibility, recently announced a merger with SynQuest, the supply-chain planning vendor, and Tilion, a provider of SCEM software.) "There's a huge advantage to doing it if you're positioned right in the supply chain," he says. "But you've got to carry some weight."

Companies of roughly equal size can split the benefits, Johnson says. In fact few retailers or manufacturers have adopted an all-or-nothing approach to inbound logistics. Even Bozzuto's accepts that half its inbound freight will still be controlled by vendors. The key is to remain flexible - and sensible - in dealing with communities of suppliers.

Many manufacturers find it advantageous to control inbound as they approach a just-in-time (JIT) delivery environment, says Johnson. At one end of the spectrum is VMI, where responsibility for inventory management and parts shipments is pushed upstream to vendors. At the other is direct inbound management, which could prove the better solution when a manufacturer is coordinating hundreds of shipments a day, while attempting to minimize parts inventories.

Either way, the receiver in a JIT world must be able to stave off disaster when the system breaks down. Viewlocity has been focusing on event management, with systems warning users of glitches in time to prevent the shutdown of assembly lines. Such tools can be viable whether or not the receiver directly controls inbound, Johnson says.

One relatively untapped market for inbound-logistics systems is that of third-party logistics providers (3PLs). The St. Louis, Mo.-based Arthur Wells Group (AWG) recently took a step toward correcting that oversight, with acquisition of a TMS from Nistevo Corp. It was the first time that Minneapolis, Minn.-based Nistevo had sold its software to a 3PL, says AWG principal Hilton Kahn.

Kahn says the poor economy has been a major factor in driving companies to manage their inbound. Another is the incursion of mega-retailers like Wal-Mart into the grocery industry, AWG's area of focus.

Currently the 3PL has some 600 carriers under contract on behalf of its 150 grocery customers. It plans to use the Nistevo Network product to plan and execute more than 550,000 shipments annually. Some of its biggest customers, including Food Lion and Harris Teeter, have managed at least a portion of their inbound freight for years, says Kahn.

Rick Parker, vice president of marketing with Nistevo, sees inbound control as a "giant trend." Yet most companies prefer to approach the idea gradually. By starting small, he says, they can realize immediate savings in at least a portion of their networks.

The first step is better connectivity with suppliers. With many retailers, up to half the supplier base still communicates via phone and fax, says Parker. What's needed is a web-driven system, coupled with optimization of routing and dock-appointment scheduling.

The last, he says, "has turned out to be a critical item." Retailers must move beyond their use of spreadsheets and magnetic boards into a system that allows any facility manager to profile local operations and manage all dock doors electronically. In such an environment, select carriers, vendors and 3PLs can self-schedule deliveries.

Vendor Obstacles
For years, transportation was viewed as the "poor stepchild" of the supply chain, Parker says. Now, with companies seeking a faster return on their information technology investments, "the desire and knowledge is there for retailers to start taking control of their inbound."

Assuming, of course, that suppliers are willing to play along. The biggest obstacle to inbound control is vendors who are powerful enough to resist it. They might be unwilling to sacrifice the scale economies of their own transportation programs. Others may jealously guard the profit opportunities they see in continued control. That remains a challenge for mid-sized retailers like Bozzuto's, which lacks Wal-Mart's ability to set the rules unilaterally.

The solution, says ARC's Gonzalez, rests in a more collaborative approach, whereby supplier and customer realize that neither is in the transportation business. Control of freight should rest with the party that can do it most cheaply and efficiently.

New software tools such as dock-door scheduling, with decisions made jointly in real time, could make the issue moot in any case. Said Parsons at a recent Elogex forum: "Collaborative scheduling is a key step towards control indifference - a point at which shipper and receiver ultimately do not have a preference for which party controls the freight."

With sales last year of around $850m, Bozzuto's Inc. is no Wal-Mart Stores. The Cheshire, Conn.-based owner of Adams Super Food Stores, and regional wholesaler to the Independent Grocers Alliance (IGA), doesn't seem large enough to dictate terms to major suppliers, such as Procter & Gamble and Unilever. Yet the company has had some success in taking control of a previously untouched part of its supply chain: inbound logistics.

Control has always been important to Bozzuto's. It maintains a 115-unit private truck fleet at its one million square-foot distribution center in Cheshire. The operation serves chain and independent supermarkets throughout New England, New York, New Jersey and Pennsylvania. For local IGA members, Bozzuto's also handles store design, administrative duties, marketing and inventory management.

So it's no surprise that Bozzuto's might start casting about for ways to control inbound. Currently less than a quarter of the company's inbound shipments are hauled via Bozzuto's own fleet, with the balance of inbound volume shipped on a prepaid basis, according to vice president of transportation Joseph Callahan.

Bozzuto's was eager to expand its control over shipments beyond those handled by its private fleet. It began looking at the whole inbound load-tendering process, including submission of the tender and everything that follows, depending on whether the carrier accepts or declines. According to Callahan, the company saw a chance to control 35 percent of its inbound in the first year of the new program.

Bozzuto's isn't the only company to have recently discovered the possibilities of inbound control. For a long time, retailers and manufacturers focused on outbound logistics because that portion was more visible to the end customer, says Adrian Gonzalez, senior analyst with ARC Advisory Group. "But now that outbound operations have been streamlined and extracting additional benefits has become more difficult," he says in a recent report, "companies are turning their attention to inbound, and they're realizing that plenty of money is being left on the table." That's one reason why companies spent more than $804m on transportation management systems (TMS) in 2001, giving the software market one of its "few bright spots," Gonzalez says.

Among the biggest money-saving opportunities is the conversion of pricey less-than-truckload (LTL) shipments to full truckload, a strategy that is feasible only if the receiver controls inbound freight from multiple suppliers. But Bozzuto's took a different approach. It tackled truckloads first.

As justification, Callahan cites the old 80-20 rule - 80 percent of the business is generated by 20 percent of one's business partners. By starting with truckload, Bozzuto's could convert hundreds of loads a year from a single vendor. Savings would materialize much faster than if it had focused on suppliers shipping one or two pallets at a time. Those smaller vendors are being targeted in the second phase of the company's inbound conversion program.

The goal isn't just cost cutting, says Callahan. Boosting operational efficiency is equally important. That's why Bozzuto's added just one person to internal staff when it began dealing directly with inbound carriers. To take on a slew of new duties without creating an "administrative nightmare," it needed a system that could streamline logistics processes through use of the internet.

Focus on Inbound
The answer came in a TMS package from Charlotte, N.C.-based Elogex Inc. Unlike most TMS providers, Elogex started out three years ago with a focus on inbound, says Travis Parsons, president and chief executive officer. It saw the problem as extending beyond pure transportation to internal processes within the broader supply chain. That included the need for real-time shipment visibility through supply-chain event management (SCEM), says executive vice president Jerry Overcash.

Elogex's web-based system allows for the transmission of some purchase orders directly to carriers, without being seen by Bozzuto's inbound department. And that's fine with Callahan. There's no need for internal staff to deal with tenders that are routinely accepted by carriers, he says. Should the first carrier decline, the system automatically relays the tender to the next one on the list. That information later becomes available to Bozzuto's in the form of reports that aid in planning and management of the inbound program.

When a carrier accepts the tender, it is given a confirmation number and bay door within the Bozzuto's DC to which to report. The dock-scheduling tool is central to the Elogex system, says Callahan. The vendor considers that feature essential to attaining shipment visibility - and allowing shipper and receiver to schedule dock arrivals collaboratively.

Callahan also touts Elogex's freight auditing and payment capabilities, a task that is frequently outsourced because of its onerous administrative requirements. Bozzuto's, which expects to process 12,000 freight bills a year, prefers to keep the payment process in-house. Carrier rates are kept on file in the Elogex system, which relays the data directly to accounts payable, once load arrival is confirmed. "The goal," says Callahan, "is to be almost paperless when bills come in."

Padding Freight Bills
Yet another benefit of inbound control is the visibility it gives the receiver of actual freight costs. With prepaid shipments, freight is rarely broken out from the base cost of merchandise. The resulting murkiness has many companies suspecting, often rightly, that the vendor is padding its freight bills and treating outbound logistics as another profit center.

At Bozzuto's, visibility of inbound shipments and freight costs is enjoyed by both transportation and procurement - two departments that historically have functioned as separate "silos." They worked closely together to install the Elogex system, Callahan says.

Bozzuto's is ever on the lookout for fresh opportunities to save money and streamline business processes. From the beginning, it drew on the experience of other food wholesalers for guidance in launching the program. Callahan sees a chance for further collaboration with his nominal competitors, by combining shipments from common vendors into cost-efficient truckloads, or cooperating on backhauls. Even without that radical step, Bozzuto's is on track to control 50 percent of its inbound freight scheduling within two years of acquiring the Elogex system. And Callahan calls that figure "conservative."

Parsons says mid-sized retailers like Bozzuto's are under increasing pressure from Wal-Mart and other giants to boost efficiency wherever possible. In the process, they have reached out to supply-chain partners, especially on the inbound side. "Inbound," he says, "is the one area of logistics that's a multi-party operation, both within the company and across a broad range of partnerships."

Companies have long tried to take control of inbound, says Deby Veneziale, chief product officer of Arzoon, the San Mateo, Calif.-based TMS vendor. "The problem is, it's always been outside their control relative to the enterprise." With the advent of internet-based software, it has become possible to make strides in that direction.

Veneziale believes inbound offers more opportunities for cost savings than any other part of the supply chain today. Early beneficiaries include some of the largest companies, such as General Electric.

Since the attacks of Sept. 11, Veneziale says, the need for end-to-end control of supply chains has become more vital than ever. Companies are required to have intimate knowledge of their trading partners, including lists of denied parties and records of compliance. The sluggish economy is yet another factor driving business to squeeze out cost and promote the flow of data wherever it can. "You can't reap the benefits if you don't manage it," says Veneziale.

Arzoon has focused on building business rules within trading communities. Through shared processes, receivers can take some of the work out of suppliers' hands, Veneziale says. All the supplier has to do is send a signal when it's ready to ship. The receiver's system automatically triggers a tender to the appropriate carrier.

Direct control of inbound means a retailer can exercise more flexibility over the ultimate destination of product in transit. That, too, can lead to savings through more efficient deployment of inventory. In all, Veneziale estimates, companies managing inbound can cut transportation costs by 5 to 15 percent, with another 5 percent still to be realized from additional efficiencies on the outbound side.

Of all business sectors, retailers stand to gain the most from an inbound program. The majority have focused on moving product from distribution centers to stores, says Derek Gittoes, vice president of product solutions with Shelton, Conn.-based G-Log Inc. "Inbound to the DCs was just a line-item cost, buried in the cost of purchasing," he says.

Still, making the shift from outbound to inbound is no easy task. "There's a major difference in the level of collaboration that needs to take place," says Gittoes. "On the inbound side, it's much higher." The corresponding TMS must be more sophisticated, able to move data between multiple partners. Security is also an issue, especially post-Sept. 11.

Inventory at Rest
Using an inbound-oriented TMS, the retailer can consolidate shipping across multiple suppliers, saving between 10 and 30 percent on transportation costs, Gittoes says. But the supporting system must contain a number of elements that govern the inbound process. G-Log's software, known as Global Command & Control Center, or GC3, features four separate components: shipment optimization, shipment execution, logistics order management, and visibility/event management. Outbound logistics systems tend to be limited to the first two.

By the end of this year, G-Log was planning to have in place one more critical component of its inbound-management software: the ability to view inventory at rest. Most warehouse systems are still not tied into transportation execution software, a gap that is only now being bridged by vendors. Some progress has been made in vendor-managed inventory (VMI) programs, but those efforts could be viewed as giving companies less control, not more, of their inbound freight.

Art Mesher, executive vice president and chief logistics officer of Waterloo, Ont.-based Descartes Systems Group, isn't convinced there's a wholesale trend toward receivers taking control of inbound.

"There's been a lot of talk in the past three to four months," he acknowledges. But some of that talk may be overstated, especially among TMS vendors looking to sell new systems. Depending on their size and buying power, suppliers might still be better off booking the freight. Says Mesher: "On a landed basis, nobody can deliver potato chips cheaper than Procter & Gamble."

In any event, retailers aren't always looking for direct control. CVS/pharmacy, a Descartes customer that controls more than 4,000 stores, didn't set out to convert the terms of sale. What it wanted was control over information, in the form of a system that provided real-time visibility of incoming product.

Mesher sees multinational companies struggling to manage inbound, forced to build in long lead times because they lack the data to control product flow efficiently. "With every handoff," he says, "the inventory planner adds an extra day." The result is large caches of safety stock, weighing down corporate balance sheets.

Inbound control may be desirable in some cases, Mesher says, "but I see as much opportunity in the predictable flow of materials through the supply chain." When there are deviations in that flow, he adds, the receiver must know why.

Who's in Control?
The decision as to who should control inbound is largely a question of company size, agrees Mark Johnson, vice president of product marketing with Viewlocity Inc. (Atlanta-based Viewlocity, which focuses on supply-chain visibility, recently announced a merger with SynQuest, the supply-chain planning vendor, and Tilion, a provider of SCEM software.) "There's a huge advantage to doing it if you're positioned right in the supply chain," he says. "But you've got to carry some weight."

Companies of roughly equal size can split the benefits, Johnson says. In fact few retailers or manufacturers have adopted an all-or-nothing approach to inbound logistics. Even Bozzuto's accepts that half its inbound freight will still be controlled by vendors. The key is to remain flexible - and sensible - in dealing with communities of suppliers.

Many manufacturers find it advantageous to control inbound as they approach a just-in-time (JIT) delivery environment, says Johnson. At one end of the spectrum is VMI, where responsibility for inventory management and parts shipments is pushed upstream to vendors. At the other is direct inbound management, which could prove the better solution when a manufacturer is coordinating hundreds of shipments a day, while attempting to minimize parts inventories.

Either way, the receiver in a JIT world must be able to stave off disaster when the system breaks down. Viewlocity has been focusing on event management, with systems warning users of glitches in time to prevent the shutdown of assembly lines. Such tools can be viable whether or not the receiver directly controls inbound, Johnson says.

One relatively untapped market for inbound-logistics systems is that of third-party logistics providers (3PLs). The St. Louis, Mo.-based Arthur Wells Group (AWG) recently took a step toward correcting that oversight, with acquisition of a TMS from Nistevo Corp. It was the first time that Minneapolis, Minn.-based Nistevo had sold its software to a 3PL, says AWG principal Hilton Kahn.

Kahn says the poor economy has been a major factor in driving companies to manage their inbound. Another is the incursion of mega-retailers like Wal-Mart into the grocery industry, AWG's area of focus.

Currently the 3PL has some 600 carriers under contract on behalf of its 150 grocery customers. It plans to use the Nistevo Network product to plan and execute more than 550,000 shipments annually. Some of its biggest customers, including Food Lion and Harris Teeter, have managed at least a portion of their inbound freight for years, says Kahn.

Rick Parker, vice president of marketing with Nistevo, sees inbound control as a "giant trend." Yet most companies prefer to approach the idea gradually. By starting small, he says, they can realize immediate savings in at least a portion of their networks.

The first step is better connectivity with suppliers. With many retailers, up to half the supplier base still communicates via phone and fax, says Parker. What's needed is a web-driven system, coupled with optimization of routing and dock-appointment scheduling.

The last, he says, "has turned out to be a critical item." Retailers must move beyond their use of spreadsheets and magnetic boards into a system that allows any facility manager to profile local operations and manage all dock doors electronically. In such an environment, select carriers, vendors and 3PLs can self-schedule deliveries.

Vendor Obstacles
For years, transportation was viewed as the "poor stepchild" of the supply chain, Parker says. Now, with companies seeking a faster return on their information technology investments, "the desire and knowledge is there for retailers to start taking control of their inbound."

Assuming, of course, that suppliers are willing to play along. The biggest obstacle to inbound control is vendors who are powerful enough to resist it. They might be unwilling to sacrifice the scale economies of their own transportation programs. Others may jealously guard the profit opportunities they see in continued control. That remains a challenge for mid-sized retailers like Bozzuto's, which lacks Wal-Mart's ability to set the rules unilaterally.

The solution, says ARC's Gonzalez, rests in a more collaborative approach, whereby supplier and customer realize that neither is in the transportation business. Control of freight should rest with the party that can do it most cheaply and efficiently.

New software tools such as dock-door scheduling, with decisions made jointly in real time, could make the issue moot in any case. Said Parsons at a recent Elogex forum: "Collaborative scheduling is a key step towards control indifference - a point at which shipper and receiver ultimately do not have a preference for which party controls the freight."