Global freight management is an oxymoron in the minds of many logistics practitioners. With an estimated 17 parties touching a typical international shipment in one way or another as it moves between carriers, across borders and through customs, the information that enables door-to-door visibility and control has been woefully lacking. Inland moves in many parts of the world are considered a "black hole" of information since small, technology-deficient carriers often handle them. And while major carriers and forwarders provide reliable tracking, this information until recently has been static and isolated from execution.
Service fragmentation, information gaps and the complexity of global shipping are reasons why the intelligent tools used to manage and optimize domestic transportation have been slow to spread to the global arena. Specialists in international shipping departments remain separate from domestic shipping in most companies. They still are largely working off spreadsheets and Post-it notes and communicating via phone, fax and a little EDI messaging, says Beth Enslow, vice president of strategy at Descartes, a software company providing transportation applications and a communications hub for global shippers and carriers.
Forwarders Still Needed
However powerful the new global logistics solutions, they will never replace freight forwarders, says Mike Nixon, vice president of market strategy at Global Logistics Technologies, or G-Log. "Software is no substitute for the strength of relationships and having people on the ground in foreign countries and ports," he says.
This situation is beginning to change as shippers increasingly look for the same visibility and shortened cycle times from their global providers that they have come to expect on the domestic front. Software vendors like Descartes, G-Log, GT Nexus and Bridgepoint - along with traditional supply-chain and transportation management system providers such as Manugistics, i2 Technologies and PitneyBowes/Vertex Interactive - are leveraging the web to create a new generation of global freight solutions that enable management by exception across multiple enterprises, modes, carriers and geographies.
A confluence of events has made this development possible. As with so many aspects of business-to-business technology, the biggest factor is the use of the internet and recent increases in available bandwidth. The net not only enables easier integration between companies that want to share electronic data directly, it also provides an inexpensive means for little players to participate in the network, so that 100 percent visibility is attainable.
"The question has been, if I get 80 percent of the data I need via integration, how do I get the rest?" says Peter Weis, director of products for GT Nexus, a provider of global e-logistics solutions. "How do I capture information from the small forwarder down in Costa Rica without spending a lot of money?" The GT Nexus platform allows anyone with access to the internet to key in necessary information on a web form or to upload information from an Excel spreadsheet.
"Companies in the Pacific Rim and Latin America may not have 24/7 super-fast connections, but they have some degree of up-time on the internet every day," says David Landau, director of product management at Manhattan Associates, a logistics execution vendor. And it is "quite common" for manufacturers in places like Pakistan, Sri Lanka and Bangladesh to fax documents to a central location such as Singapore to have them keyed into the web, adds Weis.
Many companies are exchanging information through a messaging and connectivity hub. Descartes' Global Logistics Services, for example, has preconnected more than 5,000 carriers and forwarders around the world. "Companies don't have to start from square one hooking up electronically; it is like hooking into a telephone network," says Enslow. GLS also addresses the spectrum of technology capabilities within a global supply chain, handling anything from direct XML messages to faxes that are then keyed in by Descartes employees.
It is not unlike the messaging services that value-added networks provided to EDI users. "But traditional EDI was affordable and useable by less than 10 percent of the supply chain," says Enslow. "Here we have the ability to connect 100 percent of the chain. That is the fundamental difference."
Connecting 100 percent is crucial. "When you get a true 100 percent solution, which means having visibility to all the events you want to see for all the trade lanes, then you can manage by exception," says Weis.
Getting access to the data is only the first step, however. There also must be processes to ensure data quality.
"When you start to automate, you highlight every single data failure and that has to be addressed before a system will work as it should," says Christopher Shawdon, vice president of logistics solutions for Unisys Global Transportation Division, which now is commercially marketing a visibility and event-management solution that it developed for the military. "I don't mind saying this has fleshed out a lot of data quality and process issues for us. It's a learning exercise that I think everyone is going through."
"For our software to do what it is meant to do, we need information as quickly as possible and as clean as possible," says Matt Tucker, CEO of Rely Software, a global transportation management solution. Noting that Rely can track the reliability of carriers as information providers, Tucker predicts these performance ratings will become key criteria on which shippers assess their carrier partners in the future. "If carriers don't provide clean and timely information, their contracts won't be renewed," he says.
GT Nexus claims to measures the data quality of every carrier, forwarder and supplier that integrates or collaborates on its platform. "At the end of the day, even if data quality issues are not our fault, if a customer doesn't have a positive experience with our software, we are not going to get a license renewal," says Weis. "So data quality is part and parcel to our offering. It is built into our onboarding methodology and into our relationships with ocean carriers and other providers that participate in our network."
Similarly, Bridgepoint offers tools to ensure and measure data quality as a core part of its global logistics networking solution and emphasizes data quality in its marketing materials as the "key to increasing the overall performance of your entire supply chain."
Another boost to data quality, says Weis, lies in simplifying and streamlining the amount of data that is collected and dispersed. "We focus on as few events as possible," he says. "Every event you take out that is not really necessary to your business or your customer's business improves the data quality situation. We challenge with rigor what a customer really needs as opposed to their getting a big repository of events that they can't make heads or tails of."
And this points to the central differentiating factor in global logistics applications: how information is used.
"It is not enough to just have visibility to the status of shipments because the next question becomes 'what are you doing with that visibility?'" says Razat Gaurav, director of transportation solutions at i2 Technologies. "So along with visibility, and tightly tied to visibility, is a need for intelligent event management or exception management. Say you have a customs delay at the origin port of Singapore that is going to delay a shipment by five days. How are you propagating that information across all your trading partners and how are you actually dealing with that delay? Are you looking for an alternate sourcing location? Are you notifying the store or warehouse there will be a delay so they can do some alternate planning?" The key to intelligent SCEM, Gaurav says, is to have decision support capabilities that can help determine what action to take when an exception occurs.
"Whereas in the past people might plan in weekly buckets or monthly buckets, now things change so quickly that people are continuously re-planning and re-optimizing."
TNT Logistics, which recently partnered with Tibco to better integrate its Vector 21 software and to improve messaging capabilities, refers to this as "closing the loop."
"Providing immediate actions people can take and being able to confirm that action without walking away from your desktop is important," says Keith Goldsmith, vice president for technology services.
SCEM also can prevent global freight managers from being overwhelmed with information on every shipment. For exception management to be effective, however, planning and execution need to be tightly linked.
That linkage is strongly emphasized by Mike Nixon, vice president of market strategy at Global Logistics Technologies, or G-Log, which offers a web- native platform and solutions for what it calls "global enterprise logistics."
"The problem that we saw (when developing the G-Log solution in 1999) was that planning and execution need to be intrinsically one solution, one data base, one piece of technology," says Nixon. "If the execution system that's providing the visibility does not have access to what was supposed to happen, i.e. the plan, you are going to get alerts that can't be evaluated," he says. "For example, if a carrier sends you a message that a shipment will be one day late, it could be that your planning engine allowed one day of latency or maybe even two days because such delays often happen. But if you don't have the plan in the same system, you won't know that."
If such a situation occurred using G-Log, he says, no alert would be sent because the event engine could see that the shipment would still arrive on time. "We can accurately evaluate the event because we have visibility to the plan," he says. "So we only send messages that really require action."
Having this linkage is important from the very beginning because the original plan needs to be based on real-world execution constraints, notes Jim Kowalski, group vice president for automotive, transportation and 3PL at Manugistics. For that reason, planning and execution are run off a common data model in its Networks Transport solution, he says.
Using the real-time data of execution systems to feed planning solutions "updates the models to make them more true to life," says Adrian Gonzalez, senior analyst at ARC Advisory Group. "The gap between planning and execution systems in the past is one reason that planning alone failed to deliver the full return on investment that was promised."
G-Log also stresses another important characteristic of global visibility and event-management solutions: order and shipment independence. "You have to be able to see not just shipment status but order status to evaluate an event's impact on the customer," he says.
Underscoring its focus on orders, GT Nexus took the name "Orders" for its global SCEM application. "There is an unsexy connection that has to be made between the purchase order and the container," says Weis. "Matching up the contents of a container with the actual order with 100 percent accuracy is really key." The container moves intact and typically is tracked by carriers as a unit, he explains, "but once you have made that linkage between the container and the order you can provide visibility to the contents." Feeding into that activity are the customer, the supplier and the logistics provider or freight forwarder that is loading the container at origin, he says. "But all of these are working off different systems, so historically this has really been an Achilles heel. If you don't get that information right, then all the follow-on transactions that come from the carrier and customs brokers and warehouse won't be right. What I call the heavy lifting of Orders is about making sure we absolutely match the orders with the container content."
While this sounds straightforward, "you have to apply a lot of intelligence around this process," he says. "If there is an extra space in a product code or an extra dash in a bill of lading or container number, you won't get a match."
Manhattan Associates uses its InfoLink product to get order-level detail in advance ship notices. "Our customers want to see the contents of an incoming container at the individual pallet level," says Landau. "This is important for being able to handle shortages and to arrange for substitutions." Also, he says, having better visibility to when specific goods will arrive allows companies to cut down by 70 or 80 percent the time it takes to receive a container.
Exel, a global third-party logistics provider, emphasizes this aspect of its proprietary software called Supply Chain Integrator. "SCI allows customers to use their own purchase order number to access information," says Martin Neil, e-commerce director. "It pulls together and publishes all information relating to that PO, irrespective of the fact that it might be split into 25 shipment orders and each shipment order might be on a different carrier. We pull all that information back to the original PO number and that becomes the primary means by which our customers have visibility of what is happening to their freight worldwide."
Some 18 months ago Exel undertook a major initiative to upgrade SCI. After looking at a variety of software companies it decided to add functionality provided by G-Log and is in the process of re-implementing its global solution with 21 customers. "We liked the fact that G-Log fit with us strategically in terms of its global nature," says Neil. "The whole design is top-down, global, multimodal, multi-leg, multi-time zone, whereas a lot of other TMS products we evaluated grew up in one particular mode, or one particular geography, mostly North American road.
Combining SCI with G-Log, Exel says, will allow customers to "plan shipments while they are in-transit, receive proactive shipment status notification and re-plan shipments if necessary - all in real time via the web.
The ability to re-plan and re-optimize in a dynamic fashion is another key feature of next generation global logistics management solutions.
"Everyone talks about the speed with which business takes place today," says Gonzalez of ARC. "Whereas in the past people might plan in weekly buckets or monthly buckets, now things change so quickly that people are continuously re-planning and re-optimizing." This is one more reason, he says, that "both planning and optimization capabilities need to be integrated with real-time execution systems that are able to feed the planning systems with real-time data."
"The old world is about planning for the next 90 days and working off that plan," says Goldsmith of TNT Logistics. "In the new world you still have that 90-day plan, but on day two you are going to look at what happened last night and see how you need to deviate from that, and on day 3 you do the same again, so that you perpetually re-optimize based on what is actually happening. That is what the internet and dynamic messaging has brought us. Before you couldn't get that information out quickly enough for everyone to react."
Manhattan Associates has integrated transportation planning functionality acquired last year with its purchase of Intrepa into its overall execution suite, says Landau. "That gives us the capability of providing real-time transportation planning, where a customer can look at all orders it has to ship today and actually plan that out in real time considering delivery expectations and service level commitments. He also emphasizes that this doesn't obviate the need for longer-term planning, for which Manhattan has a close relationship with Manugistics. "You get an optimal plan, then using real-time planning you can fine-tune it based on what is happening right now."
Vendors of global logistics systems also offer a variety of other functionality, such as electronic RFQ and bid analysis for transportation procurement, online booking services and invoice settlement. Virtually all have an analytic component that enables users to see how well various partners and parts of their network are operating. And many have alliances with international trade logistics vendors to provide import/export documentation and compliance checking before orders are released.
Command and Control
The end game is one of command and control, enabling shippers to manage all the transportation activities of the enterprise - domestic and international, inbound and outbound - in a centralized way, while still allowing execution to occur in a distributed fashion.
This means having visibility internally as well as externally. "In this industry we have always spoken about the promised land of transportation management systems and warehouse management systems and inventory deployment all being considered simultaneously," says Goldsmith of TNT Logistics. "We are doing that now and eliminating all the inefficiencies of the silo effect." TNT recently connected the various parts of its solution using enterprise application interface (EAI) technology from Tibco.
"You can begin to build a global data repository one business unit at a time, one region at a time and then roll out without significant re-implementation of software."
Similarly, Pitney Bowes Distribution Solutions recently announced its new version of PB TMS, a completely web-based and fully integrated solution powered by Vertex Interactive. It enables companies to manage and optimize, for example, the transportation processes of multiple warehouses and distribution centers from a centralized server with each location having access to the server via the web. "The move to a truly enterprise-based solution was a big technology leap for us," says Steve Smith, president. "We had to start from the ground up and architect it this way, including the ability to translate into multiple languages, multiple currencies and multiple data formats.
"Our customers told us that what they wanted was to have all this data in one place so they can leverage it," he says. "Knowledge is power and you can't really start figuring out how to do better if it takes forever to pull all the pieces together." Just one advantage of centralized control, he says, is being able to present data from all enterprise locations to carriers to ensure the best service at the best price."
Descartes' Enslow makes a similar point, noting that central control can help solve the common problem of contract non-compliance. "One of our major customers did a survey internally and found they spent about $10m a year in what they call maverick spending - excess spending that occurs because people expedite shipments or use a carrier they went golfing with last weekend instead of a carrier the company has contracted with," she says. "This is a big issue, especially among multinationals that have lots of different manufacturing plants or offices all over the world.
"Our web-based transportation execution system has centralized planning, monitoring, control and analysis, but people all over the company can use their web browsers to do the actual execution processes - to select carriers and tender out loads and track order status, all following corporate guidelines," says Enslow. "It's a very affordable way to ensure compliance." She notes that key suppliers can be given similar web access "so that they can come into the system and be told how they should ship in compliance with my rules."
G-Log describes its GC3 web-native platform as a "revolutionary way to achieve command and control across all logistics operations." But Nixon acknowledges that "building a large centralized global freight management system encompasses some process change." Most companies, he says, are not ready or willing to swallow this in one gulp. "That's why we designed our system so you can implement the software in phases," he says. "You can begin to build a global data repository one business unit at a time, one region at a time and then roll out without significant re-implementation of software."
All of G-Log's customers are taking a phased approach, he says, with a typical customer implementing 20 percent to 40 percent of functionality in the first phase. "They all have the vision but they are very smart about not placing too much change on their organization," he says.
Other vendors report similar experiences. "We have customers today using only planning, only execution, only Orders," says Weis of GT Nexus. "But virtually every customer is asking about other product lines or pushing us to extend offerings, by taking our ocean planning products into airfreight, for example. It's not a question for them of what the house needs to look like, but of which door to enter."
Gaurav says i2 has a large retail customer whose first phase was getting visibility into imports coming into the U.S. from Southeast Asia. Now they have plans to add domestic inbound freight, so they can manage these together. "The shipment that is coming in from a foreign country will have some sort of inward move, and there could be some synergies combining that domestic leg with other domestic freight," he says. "Also it could enable better handling of unforeseen events. Say there is a delay in transit of shipments coming in. As a result of that, you may actually need to reroute some domestic freight or reallocate inventory in order to still meet a customer commitment. Having a combined view across domestic and international freight has clear benefits and we see leading shippers starting to move in this direction."
Manugistics' Kowakski believes that one result of this trend may be that companies will bring back in-house logistics management that was previously outsourced. "As companies see what technology like this can do, they will want to use logistics as a strategic weapon and will bring it all together in a command-and-control center," he says.
Adoption is expected to occur slowly, however, and Enslow has a word of advice for companies that are far from beginning this transition. "There is still a lot of low-hanging fruit out there - relatively simple things you can do with new web technology that should be tackled first." Just focusing on procurement and compliance issues, she says, can save companies a lot of money. "After you take these steps, then you can worry about some of the harder stuff."
Enjoy curated articles directly to your inbox.