Inside Logistics

The missing link

Materials Handling column from the September-October 2014 print edition


December 9, 2014
by Dave Luton

Dave Luton

Dave Luton

Historically, supply chain visibility was limited to the end links—where shipments started and where they ended up. The transportation links between the two were often a black hole, out of which emerged the product when it was received.

While this may have been acceptable four or five decades ago, it’s not in today’s world of global sourcing and international transportation networks.

Today, longer in-transit times and distances necessitate information to provide a better idea of in-transit progress and projected arrival time. Inventory control practices, which traditionally emphasized only product when it was received, have also changed to reflect in-transit amounts.

With local suppliers using a single mode of transportation, variability in transit times was relatively small The related need for in-transit information was less, as missing shipments could be managed on an exception basis. Larger occurrences of delayed receipts could often be identified in advance and managed because they affected both the user and the transportation supplier (bad weather, for example).

For longer shipments on the North American continent, in-transit supply chain visibility is not new. The major railroads supplied automatic tracing capability over four decades ago, by old-fashioned telex. Car progress problems could often be identified in time to take corrective action. From a production planning perspective, knowing about a problem 48 hours in advance makes a world of difference to one identified only 20 minutes in advance.

In contrast to North American transportation networks, international networks are multimodal and the handoff between modes (for example, between containership and land transportation) increases the risk of delays. The risk of procedural delays also increases with multiple countries, each with their own bureaucratic rules and multiple languages.

In-transit shipments can be visible as never before. Some of the tools available to manage this include:
a) The internet with worldwide access and capability.
b) Mobile devices and real-time communications throughout the world.
c) Track and trace capability coupled with GPS location and tracking information can provide real-time location and availability information.
d) Large scale computer hardware and software resources that provide ability to integrate this information, both on a centralized and a distributed basis to industry participants.
e) Real-time signature data at product handoff locations.

In logistics, the commonplace acronym “WMS” has long stood for “Warehouse Management System”. The major functionalities of a WMS system are well known and include abilities to: Identify and track items as they enter a distribution facility (“receiving”);  identify and track items as they leave a distribution facility (“shipping”); locate and track items within the facility and provide information on their current physical status (including operations from putaway to storage to order selection and packing); and, integrate operations to manage, coordinate and control the operations needed to perform these functions.

Now let’s take this warehouse management software, eliminate the walls and start expanding it like a balloon. In this case we are going to make it large enough to encompass the entire world. What is the computer hardware and software system we need to run this? Let’s call it “Worldscale Management Software”.

I would argue that we have all the tools necessary to do the job today as long as the participants can be be integrated. Once integrated, think of the possibilities for all aspects of supply chain visibility. The key tools the transportation industry can provide us with are the ability to track and locate contents and the transportation vehicles they are on.

Much of this infrastructure exists today, as illustrated by small package shipments. This is an important upgrade compared to full-load information of a decade ago since there are frequently several thousand shipments on a truck.Transfer points are known and there is information on the vehicles, which can be located via GPS and satellite tracking.

Combined, you have a real-time in-transit picture. Add to this the capability for predictive in-transit time and the capability for automatic monitoring and, ultimately, management.

For transportation companies the problems have not changed. The old freight claims summary of O, S and D (over, short and damaged). Damaged shipments will probably always require verification on receipt but short or late shipments can be managed.

In a world that emphasizes increasing transparency, there are still important management decision to be made. In cases of problems, at what stage do you notify the customer? Too early and you drown them with too much information. Too late and you have an upset customer.

Dave Luton is a consultant in the greater Toronto area. dluton@cogeco.ca