FREE ESSAY ON E-LOGISTICS

E-LOGISTICS

Is E-commerce Creating a More Efficient and Effective Logistics Industry?
Electronic commerce has revolutionized not only the way goods are sold, but how they are
delivered. Customers demand products delivered at very high speed with complete order
flexibility and convenience. Moreover, today's online customers want to be able to track
their order instantly, from the moment they place an order until the moment they receive
it at their doorstep. With all new technologies customers became smarter. They want to be
able to re-route shipments, determine delivery costs and time in transit, and break up
their orders for multiple shipments to different addresses. All this implies that the
shift of the power from the seller to the buyer has created a new era of expectations,
and buyers—whether they are consumers or businesses won't tolerate bad experiences
such as partial shipment of goods, poor product return policies or timely back orders.
The most common form of logistics has traditionally been based on moving large shipments
of items in bulk to select strategic customers in a few geographic locations. Shipments
have been tracked by container, pallet, or other unit of bulk measurement, not by
individual item or parcel. Manufacturers have backed up their trucks to loading docks at
retail stores or distribution facilities, relying on those entities to deliver the goods
through the final links of the supply chain to individual customer. Often the various
links of the supply chain have had limited visibility into the operations of one another.
The capability for end-to-end visibility of a package from manufacturer to customer has
been virtually nonexistent in a traditional logistics environment.
With the beginning of electronic commerce traditional logistics has been radically
transformed. Electronic commerce is demanding an active, high speed, approach to
logistics. The typical electronic commerce customer is unknown entity who orders products
on an individual basis, according to impulse, seasonal demand, price, and convenience. A
manufacturer or online merchant must be able o customize an individual order and ship it
directly to the buyer anywhere in the world. It's also necessary to track the location of
the item at any given time along the supply chain with handling customer inquiries,
product return, and even offering gift wrapping—all at ten times the speed and at
fraction of the cost of traditional shipping and fulfillment. Forrester Research sums up
the vastly differing characteristics between commerce site logistics and traditional
logistics. For example, whether for traditional logistics the average order amount is
more than 1,000 items, it is less than 100 with commerce site logistics. The demand style
and inventory/order flow in the first case is push and unidirectional, whereas with
e-commerce logistics it is pull and bi-directional. Destinations for traditional
logistics are concentrated with the stable consistent demand, whereas for e-commerce
logistics destinations are highly dispersed with seasonal, fragmented demand. All these
fundamental differences in traditional logistics versus commerce site logistics are
representing a shift to future of e-logistics. Opportunities are arising along to better
service customer, whether it is another business or a consumer.
E-commerce is a narrow term applied to the process of conducting simple transactions
on-line. Electronic business, however, is the total integration of electronic processes
throughout the critical functions of an enterprise. It is a total solution that takes
into account e-logistics, e-fulfillment, supply chain optimization, enhanced customer
satisfaction, and a combination of other tangible and intangible benefits. Designing,
building and maintaining an e-business site involves both hard costs and soft costs.
Which are usually allocated in three ways: infrastructure costs, direct project costs,
and distributed costs. Hard costs include tangible good such as hardware, wiring,
software, telecommunications lines, and the like. These are for the most part fairly easy
to quantify and allocate. Soft costs include labor, training, loss or gain of sales
opportunities and represent intangible factors that are difficult to quantify and hard to
allocate. This basic principle of e-business today is being implemented in various size
and type organizations conducting their businesses on-line, which have created a new
environment for transportation and logistics.
E-businesses are forcing a fundamental shift in the structure and services of
transportation and logistics businesses. Firms are transporting more on-line purchased
goods and they are actually subordinating their individual business plans and identities
that becoming an integrated part of their electronic business customers' supply chain.
One solution to this change is creation of extranet that links and allows trading
partners—customers, warehouses, suppliers, drivers, rail partners—independent
of their internal resources, efficient interaction with the supply chain. It is that
information technology provides the underlying links as well as the logistics data
collection and analysis platform for all these activities. There is myriad of examples
outside of the companies that have established this kind of relationship within their
supply chain coverage, making this efforts not inexpensive. That is why most of the
businesses try to establish a joint network to streamline procurement of transportation
and logistics services.
SupplyLinks Global Logistics Network is a recent example of multi-modal transportation
services network that provides customers with single, neutral source to plan, book and
manage shipments worldwide. This web-based logistics management company includes AIT
Worldwide Logistics (IL), BAX Global (CA), Central Freight Lines (TX), Central Global
Express (MI), Exel (UK), Watkins Motor Lines (FL), and Schneider Logistics (WI).
SupplyLinks is an example that is actively integrating additional providers into the
network. David I. Beatson, Chairman and CEO of SupplyLinks said, "The formation of this
network is a significant move in transportation industry and for SupplyLinks and it great
to have so many leaders on board and look forward to long term alliances with them." The
SupplyLinks Global Logistics Network enables transportation providers to reach new
customers with lower sales, marketing and customer service exopenditures. Members
establish and maintain pricing through the network by providing pre-negotiated tariffs to
SupplyLinks. This approach differs from many existing e-logistics models, which award
business to the lowest bidding carrier in an auction format. Further, SupplyLinks is
deeply integrated with the information systems of participating providers, reducing
customer integration, shipment processing and operating expenses.
For the customers' benefits, they will have access through the network to a single source
for shipment planning, tendering and tracking across all modes and carriers. It will
enable them to consolidate logistics operations, optimize transportation expenditures and
increase visibility into their supply chains. Customers are also provided with
flexibility of using existing contract tariffs from their transportation partners or
tariffs that SupplyLink has negotiated through the network, allowing to maintain existing
relationships with providers and also providing access to a broader network of
transportation services, which basically, is expanding the network through this demand.
SupplyLinks has created a win-win situation for both shippers and service providers by
enabling to maintain existing relationships and providing the latter with reduced
carrier-established tariffs.
Another company driving attention of their position best-in-class information technology
innovators is American President Lines and APL Logistics, subsidiaries of NOL Group.
InformationWeek ranking of the 500 largest and most innovative users of IT across all
industries shows that the company has advanced to 72nd place from 456th place last year
and is the only global container transportation and logistics entity ranked. The company
has also singled out for IT and service excellence by customers and industry
organizations including Philips Electronics, Sears Roebuck, Kellogg, Colgate-Palmolive,
and through Inbound Logistics, Journal of Commerce, Lloyd's Loading List, Cargo News Asia
and others, solving complex distribution problems for customers. Statistics shows that
about 30% of APL's customers around the world are now using the company's e-commerce
capabilities to conduct their businesses with the company. According to Don Liedtke,
NOL's chief information officer based in Oakland, CA, collaboration is the key. He
described that to meet customer demand for seamless, comprehensive and reliable
information on which to base business decisions today, company must integrate data from
the many sources involved in a customer's supply chain. It means that collaborating with
the customers and own business partners and vendors, and also with the customers other
vendors and even with own competitors is the key to help smooth workflow. 
For the businesses and organizations today IT is the main business process re-engineering
movement that brings the innovation. At this time supply chain management has moved from
low level and highly fragmented set of administrative and overhead operations—to a
strategic enterprise initiative. The evidence for it is the business-to-business
e-commerce explosion and announcements by different industry representatives that they
are launching cooperative logistics hubs. An original solution for Supply Chain Execution
is provided by Voxware's VoiceLogistics. It is their wireless, web-based interactive
speech interface solution, which enhances speed, accuracy and productivity of logistics
and fulfillment operations and seamlessly integrates with IT systems of virtually any
distribution and logistics operation. This solution addresses major logistics market
sectors, including consumer goods manufacturers, consumer packaged goods, direct to
consumer (e-commerce and catalog), food and grocery, package handling, retail,
third-party logistics providers, and wholesale distribution. Voxware's speech recognition
solutions are also deployed in package handling, mail sorting, manufacturing inspection,
and military applications, and have proven they can deliver significant operating
improvements and benefits in customer satisfaction and supply chain visibility in the
recent successful installation at one of the major projects in Midwest. This is just
another example of an e-process—design process for the era of customer relationship
and logistics, which serve as the urgent and critical drivers of today's business
decisions for being in business tomorrow. Isn't this what IT should be about? 
Higher volumes of e-business shipments are not the only reason for these organizations to
boost spending on the technology development. Aggressive e-business want their carriers
to participate fully in the just-in-time process that enable manufacturers to fill orders
as swiftly as possible while keeping inventory to a bare minimum. This implies that
carriers systems must become intertwined with all of the facets of the e-business model
in a variety of ways. The role of the order and its delivery is evolving to one that
includes full-scale logistics, supply chain management and warehousing. For individual
customers, studies have shown that online shoppers check the status of their package an
average of seven times from the moment the "buy" button is clicked until the package
arrives. This basically implies that e-business must be able to initiate, track,
acknowledge shipments online. Fortunately, FedEx and UPS offer free tools that aid in
tracking, tracing, and whole range of other functions. The USPS is also trying to develop
some tracking tools to meet the e-business necessity. All these technological innovations
as for businesses as to regular shoppers create friendly and time saving environment,
however, with all of innovations there are some negative factors, which are affecting the
whole concept of electronic business, particularly with individual customers. 
The moment e-commerce site goes live it becomes a worldwide entity. The international
shipments become a question whether of being accepted or not. The main reasons why the
companies are not willing to go internationally include such obstacles as shipping
difficulties, fraud, different product requirements, taxes and tariffs, and limited
currency support. The global nature of e-commerce creates opportunities for tax
avoidance, as well as double taxation. Vendors are faced with the choice of ignoring
potential taxes on transactions outside their home countries or incurring the very
substantial costs of compliance. Competitive advantage can be lost if the cost of the
good reflects tax liabilities. That is why at this time international e-commerce is more
relevant within business-to-business relationships of bigger volumes, integrating them to
joint networks of business operations. But nonetheless it is a great step toward next
level of trade in globalization, making the world a better place.
Bibliography
Deborah L.Bayles, E-commerce Logistics and Fulfillment. Prentice Hall PTR, Upper Saddle
River, NJ 07458, 2001.
"Transportation Leaders Join SupplyLinks to Launch Global Logistics Network." Business
Wire. Feb.2001. Online. Internet. 10/11/01. Available at
http://web.lexix-nexis.com/universe/document?_m=1363
"Still the Only Global Container Transport and Logistics Provider on the List." PR
Newswire. Sep.2001. Online. Internet. 10/11/01. Available at
http://web.lexix-nexis.com/universe/document?_m=9353c
"Leading Supply Chain Consulting Firm Certified to Provide Implementation Services for
VoiceLogistics." Business Wire. Jul.2001. Online. Internet. 10/07/01. Available at
http://web.lexix-nexis.com/universe/document?_m=9783e