Collaborative Logistics is Trapped within Four Walls

Collaborative Logistics is Trapped within Four Walls

The second half of this paper has been excerpted from: 7 Immutable Laws of Collaborative Logistics, Dr. C. John Langley, JR www.idii.com/wp/7ImmutableLaws.pdf)

Collaborative relationships between shippers and carriers (or, between shippers) result in greater efficiency and profitability, while satisfying the interests of all parties. An ideal collaborative logistics network promotes a high degree of visibility and activity coordination between multiple shippers, carriers, ancillaries and third-party providers. This results in optimum utilization of assets and benefits for all trading partners.
Shipper to shipper collaboration can mean co-loading trucks to make same route deliveries or co-occupying warehouses. Carriers gain by keeping their assets moving and full, assured of regularly scheduled assignments and hence dedicated revenue streams.
The ideal network should contain an optimizer that can determine the mode to be used for each shipment, whether LTL, truckload, parcel, rail, airfreight, or other. This optimizer should receive information electronically from shippers and use the information to create optimal shipments based upon many criteria. The rules that need to be programmed into the optimizer should consider such factors as what mode/carrier provides the lowest rates for the required transit times, the density, skid height and packaging of the product shipped (stackability), the dimensions/weight for loose carton (carton weight/dimension rules for parcel companies), acceptable hazardous goods classification for each mode (airfreight/truck/parcel), perishability of products shipped, appointment scheduling requirements (time limitations for truckloads with stop-offs and LTL transit time requirements), inside delivery requirements, tail-gate delivery requirements, and other possible accessorial charge considerations.
The ideal network should provide shippers with the carriers that offer the best rates within the prescribed transit times. After that, the optimizer must make sure that the truckload rates in place for each destination with the shipper’s truckload carriers will “kick in” at the point where the LTL rates match the truckload rate. LTL rates should not exceed published truckload rates in place for the same destination. The truckload rates must act as LTL caps and the optimizer must be able to determine when these thresholds are reached. In addition, the optimizer should be able to determine when the LTL carrier’s minimum charge exceeds the parcel rate for the same shipment weight and also determine situations where the number of cartons in a parcel shipment cause it to be more expensive than an LTL minimum (even though the shipment’s weight may be low). As far as I know, no optimizer currently on the market does a good job of optimizing between LTL and parcel.
In addition, collaborative networks employ customer-centric tools like tracking and tracing, which can be leveraged by the transportation service provider to better implement strategies like cost effective route planning, dynamic routing and rerouting. These networks can provide considerable savings on fuel, driver scheduling and help to avoid traffic congestion.
One big problem with providing this high level of optimization, tracking and tracing is that the networks currently capable of providing this level of IT sophistication must force their members to operate within their four walls. How can we accomplish the same goals, while opening up the network to a much larger group of shippers, carriers, third parties and ancillaries, such as warehouses?

(The following has been excerpted from: 7 Immutable Laws of Collaborative Logistics, Dr. C. John Langley, JR www.idii.com/wp/7ImmutableLaws.pdf)
“Co-suppliers have enormous opportunities for collaboration centering on logistics. The possible cost savings are huge for both truckload and less-than-truckload shipments: avoiding the potential problems associated with spot rates, arranging complementary backhaul (or reverse direction) movements, planning routes and consolidating shipments.
If only two shippers could know what each other is doing, they could leverage each other in innumerable ways. The payoffs start with lower costs but extend into even more important areas such as reliability, shorter cycle times, and greater flexibility. Multiply these benefits many-fold as more players get involved. All that is needed is a place on the Internet where communities of shippers and carriers can do business together.
Shippers want increasingly consistent service, predictable capacity, and lower freight charges on a unit cost basis. Carriers are interested in expanding revenue opportunities and asset utilization. Through the agility and efficiency of Web-based technology, everyone in the supply chain has the potential to achieve those objectives. Excellence in logistics is a must for many shipper firms, with the consistent delivery of product to the customer viewed as an ongoing, strategic objective.
Transport providers have stated repeatedly that they are operating on thin or non-existent margins, with little or no room for price negotiation. Thus, the e-commerce winners will be those companies that can deliver more efficient solutions that impact both the buy and sell side of the equation. For the shipper, that translates to increased product velocity in the logistics pipeline while reducing logistics unit costs. For the carrier, it means a dramatic improvement in logistics asset utilization and improved transaction efficiencies.
The Internet has become the key enabler for shippers and carriers to collaborate for mutual benefit. Winning e-commerce solutions will be integrated with shippers’ ERP and order systems, delivering forward visibility to demand for logistics services to carriers, while efficiently re-circulating and sharing excess capacity through collaborative networks.
Application developers are offering logistics software that they claim will create efficiencies, despite the inability of the application to allow collaboration outside of the organization’s four walls.
The degree to which organizations share information and resources depends on their needs and the rules established jointly by members. The more an organization participates, the greater the potential benefits.
1. For collaboration to be successful, all members of a specific collaboration must be able to quantify the benefit they are enjoying from the process.
2. Rules for shippers and carriers when joining a collaborative network:
Investigate – Understand the value proposition prior to joining the network.
Integrate – Synchronize individual firm business process with those of the network.
Acclimate – Find potential partners on the network that may add value.
Negotiate – Establish the rules of engagement with a collection of partners.
Cooperate – Share resources according to the rules of engagement, transact on the network creating gains via shared resources.
Evaluate – Measure the benefit/cost of collaboration for each member firm.
Regenerate – Extend or regenerate the collaboration assuming it has benefited each of the member firms.”
7 Immutable Laws of Collaborative Logistics, Dr. C. John Langley, JR www.idii.com/wp/7ImmutableLaws.pdf)

How can we accomplish these goals, while opening up the network to a much larger group of shippers, carriers, and ancillaries, such as warehouses? How can we optimize the allocation of costs and benefits, so that the gains of a collaborative network will be equitably shared by all participants?