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E-Business & Logistics

Technology: Collaboration and the Logistics Industry

by Ian Lodge

It wasn’t long ago that logistics providers relied on paper spreadsheets and telephones to ensure that product was transported from Point A to Point B. Now, industry insiders have computers, cellular phones, pagers and global positioning satellites at their disposal. New technology has always helped the industry to meet the needs of customers and technology’s role as a driver of positive change will continue well into the future.

The Changing Face of the Logistics Industry

Almost from the time that corporate executives began recognizing the importance of logistics, the logistics industry has been forced to deal with change. Traditionally, the industry’s role has been to fulfill the promises of others, a goal which, while sounding simple enough, has provided innumerable challenges.

Those challenges became more heightened with the advent of just-in-time (JIT) manufacturing. Under JIT, it was more critical than ever to meet customer demands for on-time delivery. The new production philosophy forced the industry to respond to changes in customers’ manufacturing cycle times and schedules, and to execute delivery based upon when products were available.

But the industry responded, relying on new supply chain management solutions to optimize everything from identifying routes and shippers to configuring individual truckloads. While these technologies are incredibly functional and have generated billions of dollars in value for companies around the world, customers have continued to increase their expectations of the logistics industry.

An Increasingly Complex Marketplace

As with nearly every industry, the pressures the logistics industry faces today are greater than ever. Customers are demanding shorter lead times, instant answers to inquiries and lower costs. Meanwhile, analysts and investors demand higher margins, just as logistics executives believed that they had their margins in line. At no time in the industry’s history has there been a greater need for speed, efficiency and customer service.

While supply chain optimization forms the backbone of the solution, only the Internet and the power of electronic marketplaces can give logistics providers all of the tools they need to compete in this demanding business environment. Perhaps more importantly, these new e-business tools provide logistics professionals (as well as virtually all businesses) with greater potential for revenue generation.

The Key to Success: Internet-Enabled Collaboration

These electronic marketplaces like FreightMatrix™, which exclusively serves the logistics industry, are the next generation of intelligent solutions to the industry’s customer service and other business challenges. These advanced tools enable true, real-time collaboration, connecting suppliers and customers to allow a greater sharing of information.

Logistics-focused e-marketplaces are designed to provide shippers, carriers, third-party management providers, forwarders and brokers the capability to transact shipments with their customers, as well as manage internal workflows, control their financial management, improve customer service and sell services to other participating companies. Some e-marketplaces also provide planning services, enabling logistics providers to get the most out of their equipment and operations. Logistics professionals also have the ability through e-marketplaces to take a greater number of requests in a much shorter period of time.

The value in e-marketplaces hardly ends there. E-marketplace can help to reduce the cost of finding new business, since they allow customers to actively seek out providers. These Internet-enabled tools allow customers to provide cost and delivery parameters for their shipments, and allow logistics providers to bid on only the jobs (or portions of jobs) they are interested in. The best e-marketplaces can provide critical information regarding customer demands and delivery expectations up front, which is vital to achieving high standards of customer service, retaining customer loyalty and sustaining growth.

This kind of customer collaboration, which was once regarded as a competitive advantage, will soon become a necessity in the logistics industry. Consider what happens when a manufacturer sends out a request for quotes (RFQ) via an e-marketplace. Literally within minutes, the company can have responses from logistics providers around the world. And with the increased competition created by e-marketplaces, customers have more power to set demands, demands that can be met only by companies participating in online marketplaces. Clearly, those logistics providers choosing to let the Internet revolution pass them by will soon have themselves passed by in the marketplace.

The Choice: Change or Die

Perhaps more than any other industry, the logistics field has had to change the way it does business in order to adapt to the changing demands of customers. Just as just as air ride and refrigeration units were once optional but are now necessary business components, so too, are the Internet and e-marketplaces. Smart logistics providers will quickly embrace the concept, and provide a key competitive advantage.