ELogistics internet impact to logistics management

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E-Logisticsinternet impact to logistics
management
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Outline

• Why e-Logistics?
• Internet impact to logistics management
• What is e-logistics?
• Major players in e-logistics
• e-global logistics opportunities and challenges

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Challenges in Logistics Management

• Challenges
• Poor information flow
• Poor customer services
• High paper intensity, low-tech interactions
• Missing, inaccurate documentations
• Lack of alternatives
• Scheduling difficulties
• High prices
• Lack of qualified people

Source 2001 Mercer Management Consulting Survey,
in concert with Optimum Logistics and theJournal
of Commerce
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Drivers in the Logistics Industry ...
are reshaping the industry

• Global sourcing and distribution
• Industry segmentation
• Increasingly IT driven
• Growing acceptance of outsourcing logistics
• Market leaders continuously raising the bar
  space mgmt, inventory mgmt, JIT, continuous
  replenishment program (CRP), vendor partnership,
  dynamic forecasting, VMI, efficient consumer
  response (ECP), CPFR,

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Paper-based Low-tech Interaction
50
400
Example Shipping 3 pallets from HKG to Tianjin
55
350
170
43
55
Interaction costs
90
10
90
80
230
60
Pick up And delivery
Terminal handling
Line-haul
Order Processing Disposition Sales
Mgmt. Accounting HR IT
Price to shipper
Shipper Interaction costs
Total cost
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Internet is Changing the world

• First came the phone, fax, and e-mail
• Then ERP and EDI
• And now, the internet
• Ubiquity
• Standardization
• Real-time and lower cost communication
• Many-to-many network configuration
• Over 80 large businesses connected
• B2B activity 5.7 trillion in 2004 (AMR
  Research)
• Network/computing cost will come down
• New commerce communities
• Changing buyer and supplier relationship
• eg. Amazon, E-Bay, Cisco, Dell etc.
• Provides better information to customers

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Distribution Logistics

• make the right quantities of the right product
  or services available at the right place at the
  right time.
• Function of intermediaries in the distribution
  channel
• Re-assortment/sorting (consolidation/breakbulk)
• Routinize transactions (transport, lot-size,
  payment)
• Facilitate searching (matching buyers and
  sellers)
• Impact of Internet E-Commerce on the distribution
  channel?

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Impact of Internet on Distribution Channel

• The Death of Distance
• Distance no impact on electronic communication
  and electronic delivery
• The Homogenization of Time
• Website open 24/7, no seasonality
• Seller need not be awake or present to serve
  buyer
• The Irrelevance of Location
• Web accessible from any place on earth
• Retail location not important or even necessary
• From marketplace to marketspace
• Content? Context? Infrastructure?

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Marketplace vs. Marketspace

• Conventional Bookstore
• Content
• Sell books
• Context
• Shop (physical space) with shelves and tables
  (and a café?)
• Infrastructure
• Retail space with display and large stock of
  books, helpful (human) staff
• Convenient location, pleasant surroundings, high
  traffic

• Amazon.com
• Content
• Provide information about books
• Context
• Interface via a screen
• Infrastructure
• Hugh database, fast (computer) server
• Warehouse stocks no books yet stocks all books
  in print
• Location immaterial

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Impact of Internet on Distribution Channel
Opportunities? Benchmarking? Competition?
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Long term effects of E-Commerce

• Distribution media instead of distribution
  channel
• No longer passive conduits for products but
  active element in the production and market
  transaction of goods
• Rise in commoditization
• Information availability minimizes price
  differentiation
• Drives towards mass customisation
• Disintermediation and Reintermediation
• Insurance brokers and travel agents bypassed
• New intermediary search engines, auction sites,
  call centres, etc.

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Supply Chain Technology Evolution
Intra-Enterprise Transactional Integration
Intra-Enterprise Transactional Optimization
Inter-Enterprise Transactional Integration
Inter-Enterprise Supply Chain Execution
Real time Supply Chain Optimization
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New Logistics Landscape
Supply Chain Configuration and SC Execution
services
Customer interface
Front-end marketplaces
E-Logistics Space
3PLs / Freight Forwarders
IT Network providers
Systems management
Revenue managers / risk traders
Transaction aggregators
Back-end integration and optimization tools
Carriers
Leasing companies / asset owners
Component provision
Maintenance
Labor pools
IT services
Traditional integrated transportation company
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What is e-logistics?
E-Logistics Information Liquidity
The ability to acquire and use information when
it is needed, what is needed, and in an
appropriate context
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The Grand Vision of Global E-Logistics
Suppliers, manufacturers, distributors, packaging
plant, etc.
Banks, credit authority Invoicing, funds
transfer
Carriers, ship, truck, etc. Transport manifests,
insurance contracts.
Freight forwarders, 3PL Import/export
declaration, quota compliance, etc.
Customs Office, Inspection Authority, Certificate
of Origin Issuer, Customs brokers.
Source Stephens Inc.
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E-Logistics Services
Marketplace, Execution and Collaboration

• Freight exchange/auction
• Purchasing portal
• Automated billing and settlement
• Lane optimization
• Documentation
• Automated booking
• Service failure notification and resolution
• Automated tracking and tracing
• International trade compliance and landed costs
• Product development collaboration
• Pricing, revenue and profitability management
• eMarketing
• eFulfillment
• Data mining (performance management)

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E-Logistics Value Proposition

• Logistics exchanges will bring price efficiency
  to the most segmented market
• Load matching and other optimization tools will
  improve asset utilization
• Integrated supply chain execution and
  collaboration tools will dramatically reduce
  business interaction costs and achieve a leaner,
  quicker and more reliable supply chain
• Collaborative product development and revenue
  management tools will allow business to improve
  its return on investment
• eLogistics will greatly improve the industrys
  information liquidity

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E-Logistics PlayersSystem Providers Turned
e-Logistics Service Providers

• Players in the space - examples
• Manugistics, Manhattan Associates, EXE
  Technologies(SSA Global), Descartes, SAP, JD
  Edwards/PeopleSoft/Oracle, Siebel Systems,
• Strengths
• Domain knowledge, Proven solution components,
  Customer base, Critical mass, Existing
  partnership, Established
• Weaknesses
• Old tech infrastructure Have to teach an old
  dog new tricks?

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E-Logistics Players DotComs

• Players in the space abound
• Aspen Associates, Capstan.com, Celerix.com,
  Clear Cross, DigiLogistics, Logistics.com,
  FreightWise, NTE, Global Freight Exchange, iShip,
  myCustoms, RightFreight, Savi Technologies,
  Nistevo, SameDay, Tradiant, Vestera, Retek, ,
  Ariba, CommerceOne,
  FreeMarkets, PurchasePro,
• Strengths
• Tech savvy, Faster in product development,
• Weaknesses
• E-Logistics network takes time and money to
  build, Lack of funding, Challenge in building
  customer trust, Shifting from heavy
  transaction-fee-based business model to
  value-added model,

FreightWise/NTE,
OpenHarbor,
GT Nexus,
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Freight Exchanges
after the dust settles
Dot.com vision perpetual on-line global
exchanges, carriers and shippers bid for
match-ups, the exchanges take a commission.

• Reality Smaller in scope and more focussed
• Long-term (gt 1 yr) tenders rather than day-to-day
  match, (FreightTraders)
• Private cooperative community of traders rather
  than open auctions and exchanges.
• Membership fees and transaction (e.g. search)
  fees, not commissions (Teleroute)
• Value-added service invoicing, POD processing
  and credit risk (X4freight)
• Web-enabled software services, not exchange.
  (eLogistics)
• Niche e.g. same-day courier-style deliveries,
  value-added service, e.g. mobile communications
  for proof of delivery and postcode lookup
  (Courier Exchange)

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Driving Force for e-global logistics

• Government regulatory pressure
• Global customs modernization convention
• U.S. Exporter/Importer of Record Rules, Ocean
  Shipping Reform Act
• Security regulations C-TPAT (Customs Trade
  Partnership Against Terrorism), 24-hr advance
  manifest
• Market pressure
• Globalization of trade
• E-Commerce
• Internal operational pressure
• Demand for better customer service
• Demand to minimize duty and tax payments

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e-global logistics for international trade

• International trade compliance
• International transportation management
• International trade settlement
• Language and cultural awareness solutions

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Business Process of an International Trade
Source Stephens Inc.
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Market Opportunities for e-global logistics

• Global sourcing
• Searching trade leads
• Buyer/supplier screening and qualification
• Contract negotiation
• Global logistics
• Arrange international shipping
• Customs clearance
• Document preparation
• Shipment of goods
• Global settlement
• Credit management
• Financing and settlement

(See handout from Stephens, Inc.)
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Hong Kong

• Electronic Transactions Ordinance (2000)
• Give electronic records and digital signatures
  used in electronic transactions the same legal
  status as that of their paper-based counterparts
  and
• Establish a framework to promote and facilitate
  the operation of Certification Authorities (CAs)
  so as to ensure trust and security in electronic
  transactions.
• Public Key Infrastructure (PKI) Certification
  Authorities (CA)
• HongKongPost, DigiSign (subsidiary of Tradelink),
  HiTrust.com
• Tradelink
• Joint venture of HKSAR Government and private
  firms
• Facilitate electronic transactions between
  businesses and HKSAR government
• Import/export declarations, certificate of origin
• Automated manifest service for the 24-hr rule for
  U.S. Customs
• Customer base of 53000 companies, 80000
  transactions per day

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Hong Kong the future

• Closer Economic Partnership Arrangement (CEPA)
• Trade liberalisation, zero-tariff for 273
  categories of import to China
• E-logistic services JingMaoLink, China-HongKong
  Cargo Manifest Interface, Road manifest (ROMAN)
• Pan-Asian E-Commerce Alliance
• Secure Cross Border Trade Transaction Service
• pilot between Hong Kong, Japan, Korea, Singapore
  and Malaysia
• Digital Trade and Transportation Network (DTTN)
• Hong Kong Logistics Council initiative
• neutral, open, non-exclusive, transparent
  electronic document exchange
• 1) Standards and protocols
• 2) Core message infrastructure
• 3) Value-added service
• Tradelink to be non-exclusive DTTN service
  provider
• launched in 2006, 40 members so far

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Integrated e-logistics service

• Streamlined information flow for planning
• Seamless integrated Logistics Management and
  Enterprise Resource Planning function
• Real-time tracking and exception reporting

(From DigiLogistics.com Ltd.)
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E-logistics systems

• Business benefits
• On-time delivery and fulfilment, lead-time
  reduction
• Customer service improvements increased
  collaboration and co-ordination
• Increased sales
• IT benefits
• Reduced time for data entry, management and
  integration
• Plug Play, easy integration with existing and
  third-party systems
• Transaction processing and monitoring
• Network effect benefits
• Lower transportation cost, improved capacity
  utilisation
• Flexible and responsive supply chains
  (co-mingling, merge-in-transit)
• Single point of connection for participants

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References

• Changing Channels The Impact of the Internet on
  Distribution Strategy, L. Pitt, P. Berthon and
  J.-P. Berthon, Business Horizons, Kelley School
  of Business, Indiana University, 1999.
• e-Global Logistics The Engine Powering
  Globalization, R. Y. Roberts, Industry Report,
  Stephens, Inc., November, 2000.
• Freight exchanges Finding their second wind?,
  e.logistics magazine, Spice Court Publications
  Ltd., January, 2003.