IT Vo Logistikata

The Role of IT in Logistics: A REPORT ON HOW COMPANIES ARE LEVERAGING INFORMATION TO FORECAST, CREATE FLEXIBILITY

AND ACHIEVE THE RIGHT LEVELS OF INVENTORY

PM40032602

IDEAS FOR LEADERSHIP IN LOGISTICS AND TRANSPORTATION

The Official Magazine of The Logistics Institute

Volume 13, Issue 4, September 2007

David J. Closs, Ph.D.,LQ Executive Editor, Michigan State UniversityJim Davidson, CEO, Wheels GroupRichard L. Dawe, Ph.D.,Golden Gate UniversityDavid Faoro,Director of Supply Chain, The International Group, Inc.Terri Ferraro,Director, Supply Chain and Transportation, Famous FootwearThomas J.Goldsby, Ph.D.,University of KentuckyBill Graves,President and CEO, The American Trucking Associations (ATA) Cameron Joyce,President of McKesson Logistics SolutionsEd Kearns,President of Kearns Transportation ServicesJohn Langley Jr., Ph.D., M.B.A.,Georgia Institute of TechnologyJohn Motley,President and CEO, LOG-NETDiane Mollenkopf, Ph.D.,University of TennesseeThomas Nightingale,Vice President of Communications and CMO, Con-wayChris Norek, Ph.D.,SupplyChain Connectors Peruvemba S. Ravi,Wilfrid Laurier UniversityKurt Ritcey, Partner, DeloitteKeith Robson,President and CEO, Hamilton Port AuthorityNicholas Seiersen,B.Sc.(Hons.), M.B.A., P.Log., LQ Executive Editor, Senior Manager, KPMG

Logistics providers and 3PLs are spending millions of dollars on IT to provide firms

with order and shipment visibility as well as accurate and timely performance

measurement... In terms of performance,were getting to the point where the bytes

are more important than the atoms. Evan Armstrong,

Armstrong & Associates(LQs May 16, 2007 Symposium)

6 Announcements 7 Contributors 10 How Can Supply Chain InformationTechnology

Enhance Competitiveness?With transaction-oriented IT systems such as ERP, WMS and TMS systems now a basic requirement for doing business,and communication-oriented IT systems

such as supply chain event management, RFID and collabo-rative planning, forecasting and replenishment systems becoming more and more the norm, the battle for the realcompetitive advantage has shifted to the area of relationship systems.

12 Executive Interview with John MotleyCEO of LOG-NETAn executive overview of trends in technology from an end-to-end logistics management company.

16 An Interview with Cameron JoycePresident of McKesson Logistics SolutionsHere are some executive insights from a leading Canadian company on 3PL trends based on interview questions prepared bymembers of LQs Board: Tom Goldsby, Ph.D.,

John Langley, Ph.D., Diane Mullenkopf, Ph.D., Tom Nightingale, Chris Norek, Ph.D., and P.S. Ravi, Ph.D.

19 An Interview with Keith RobsonPresident and CEO of the Hamilton Port AuthorityA Great Lakes Report: An overview of the Hamilton Port Authority and marinedevelopments logisticians and shippers

should consider.

22 Helping 3PLs and Their Customers Leverage VisibilityThe reactive nature of traditional 3PLcustomer relationships doesnt give 3PLsenough advance warning to plan their operations efficiently. The answer is for

3PLs to gain more visibility into the business operations of their customers, resulting in increased efficiency andbetter service.

26 Highway Infrastructure FundingThe deterioration of U.S. highway infrastructure as dramatically illustratedby the recent Minnesota bridge collapse has implications for shippers and carriersalike. Both NASSTRAC and ATA believe that

private funding is not the answer.

27 Techno-reality: Still a Matter of PerspectiveAs an industry, we still arent using existingtechnology to our best advantage. It seemsalmost pointless to explore the new frontiers in technology when we haventexplored or thoroughly utilized the

old ones. Logistics providers need to do a better job of persuading their customers to invest in existing technologythat will save time and eliminate waste.

29 Rolling Back the Rules Not a Step ForwardA recent Court of Appeals decision may actually reduce road safety and cost trucking companies money.

CONTENTSLQ

3LQ September 2007LogisticsQuarterly.com

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David J. Closs, Ph.D.Department of Marketing and Supply Chain Management,Michigan State UniversityExecutive Editor, LQKaren CooperSenior Media Relations Specialist,FedEx Canada Ltd.Jim DavidsonCEO,Wheels GroupBruce DanielsonExecutive Communications Manager, UPS Richard Dawe, Ph.D.Associate Professor,Golden Gate UniversityRuss DixonSenior Manager,CEVA LogisticsRuss J. DoakDirector, Global Logistics, Kodak Graphics & CommunicationsDavid FaoroDirector, Supply Chain, The International Group, Inc.Sue Gadsby, C.P.P., C.P.M., Director, Procurement, Apotex Inc.Thomas J. Goldsby, Ph.D.Associate Professor,University of KentuckyMelissa GraceyPresident, DTA Services Ltd.David GriffithVP Global Supply Chain Management, BAX GlobalJoe GrubicSenior Manager, Alliance/Network Management, Nortel Networks Global LogisticsEd KearnsPresident, Kearns Transportation ServicesArun KumarDirector of Americas Logistics, Dell Inc.John C. Langley Jr., Ph.D.Director of Supply Chain Executive Programs,The Logistics Institute (TLI), Georgia Institute of TechnologyRobert MartichenkoPresident, LeanCor

James MahoneyVice President of the Supply Chain Excellent Practice,Auxis, Inc.Diane Mollenkopf, Ph.D.Assistant Professor, University of TennesseeJeff MooreManaging Director,Lakeside Logistics Inc.Tom NightingaleVP Communications and Chief Marketing Officer,Con-way Inc.Christopher Norek, Ph.D.Senior Partner, Chain Connectors, Inc.NASSTRAC Contributing EditorRobert Novack, Ph.D.Associate Professor,Business Logistics,Penn StatePeruvemba S. Ravi, Ph.D.Associate Professor,Wilfrid Laurier UniversityKurt M. RitceyPartner, Deloitte ConsultingMichael RubinfeldDirector, Solutions, Execution & Standards, Ryder Logistics & TransportationSolutions Worldwide Nicholas SeiersenSenior Manager, KPMGExecutive Editor, LQAllan SmithPresident & CEO, BCG Logistics GroupMichael SneddenManager of Distribution Operations, IBM-Canada Ltd. Donald Tham, Ph.D., P.Eng.Ryerson UniversityWalter Zinn, Ph.D.Professor,Ohio State University

LQ ADVISORY BOARD EMERITIBenjamin GordonManaging Director, BG Strategic AdvisorsGeorge KuhnJean Ltourneau

PUBLISHER & EDITORFred [email protected]

CPLI PRESIDENT & EDITORIAL DIRECTORVictor [email protected]

CREATIVE DIRECTORCraig [email protected]

COPY EDITORSTrish [email protected] Speers [email protected]

CIRCULATION MANAGERBill [email protected]

ACCOUNTINGChristine Raffan, CGA Independent [email protected]

ADVERTISING SALES

Michael SkinnerDirector, North American Sales, [email protected]

Kevin SharpSales Manager, North American, [email protected]

Fred MoodyEditor & Publisher, [email protected]

WHAT'S AHEAD:

October / NovemberNorth Americas Top 3PLsAdvertising Closing October 5

December / JanuaryTransborder TradeAdvertising Closing December 19

February / MarchWomen in Supply Chain ManagementAdvertising Closing February 2

LQs Fall SymposiumNovember 8, 2007

LQ Inc.2 Bloor Street West, Suite 100, Box 473Toronto, Ontario M4W 3E2Telephone: (416) 461-8355Toll Free: 1-800-843-1687Fax: (416) 465-7832 Email: [email protected]

Logistics Quarterly (LQ) (ISSN 1488-3309) is published sixtimes annually by LQ Inc. LQ iswritten for professionals in logistics.

Subscription Services at: www.LogisticsQuarterly.comCanada Post Publications Mail Sales Agreement Number: 40032602. CANADIAN POSTMASTER: send subscription orders, address change notices and undeliverable copies to LQ, 2 Bloor Street West, Suite 100, Box 473, Toronto, Ontario, Canada M4W 3E2

EDITORIAL POLICYThe opinions expressed in this publication do not necessarily reflect the policy of LQ Inc. The editorsreserve the right to select and edit material submitted for publication. Not responsible for unsolicited material. LQ Inc. is a Toronto-basedcorporation and publisher. All rightsreserved by LQ Inc. 2007.Reproduction without written permission of the publisher is forbidden. LQ welcomes your comments, letters to the editor, or written submissions for consideration.(LQ is available on-line at:www.LogisticsQuarterly.com)

LQ MAGAZINES STATEMENT OF OWNERSHIP The trademark LQ, LQ Magazine (ISSN 1488-3309), LQ Newsletters andthe LQ Conference, including theExecutive Exchange, its trade marksand published material are wholly ownedby LQ Inc., private-owned and operatedcorporation. LQs valued sponsors areindependent of LQ Inc., and LQs editorsdo their utmost to uphold independentand impartial views in all of their publishing initiatives.

LQ is honored to have the status of the official magazine of The LogisticsInstitute. The Logistics Institute and LQ are independently owned and operated organizations.

Volume 13 Issue 4

LQ ADVISORY BOARD

LogisticsQuarterly.com6 LQ September 2007

ANNOUNCEMENTS

Kevin Sharp Joins LQs TeamLQ is pleased to announce that KevinSharp has joined the LQ sales team asSales Manager, North America.

As the former National Sales Managerfor Materials Management & Distribution(MM&D) and former Publisher ofCanadian Transportation & Logistics(CTL) magazine,Kevin brings many yearsof sales and marketing experience to LQ.Kevin is based in our Toronto office andis responsible for servicing the needs ofLQs North American advertisers.

We are also pleased to announcethat Michael Skinner has been promot-ed to the position of Director, NorthAmerican Sales.

LQ Magazine is a leading source ofideas for leadership in logistics andtransportation for 36,000 Canadian and

American logisticians. LQs articles arewritten by professionals and Ph.D.s forleaders in the field of logistics andtransportation affording authoritativeand critical thinking on these complexand fast-changing subjects.

To reach Kevin Sharp, please call:905-604-1510 or email Kevin at:[email protected].

WERC and LQ Initiate NewPartnershipLQ has a new partnership with WERC,the Warehousing Education andResearch Council. Beginning immedi-ately WERCs U.S. and Canadian mem-bers will receive Logistics Quarterly.

WERCs Executive Director, BobShaunnessey, will be a regular con-tributing columnist in LQ, serving uplively advice and opinions. Bob bringshis 25 years of experience in the ware-housing business to the LQ editorialteam. Look forward to Bobs first col-umn in our next issue where he tack-les the what and why, pros and cons ofoutsourcing.

WERC is where distribution expertscome together to share practical knowl-edge and professional expertise withthe aim of improving individual andindustry performance.

Through membership in WERC, sea-soned practitioners as well as thosenew to the industry stay at the forefrontof innovation,master best practices andestablish valuable professional relation-ships. For more information aboutWERC, please visit: www.werc.org.

Ryder Acquires Pollock NationaLease in CanadaRyder System, Inc. has announced ithas reached agreement to acquiresubstantially all the assets of PollockNationaLease, one of Canadas largestprivately-owned full service truck leas-ing companies based in Strathroy,Ontario.

Ryder Canada will acquire Pollocksfleet of more than 2,000 vehicles andover 187 contract customers served bythe Ontario locations of Sarnia,Windsor, London, Baden, and Milton,as well as the New Brunswick locationof Moncton. The combined networkwill operate under the Ryder name,complementing Ryder Canadas mar-ket coverage and service network.

Pollock NationaLease is a wellknown and respected name inCanadas transportation industry withan outstanding reputation of deliver-ing high levels of customer service,notes Ryder Chairman and CEO GregSwienton in a press release. Thisacquisition allows us to expand ourCanadian network, establish a foot-print in the Milton area of GreaterToronto, and continue to build on thestrong foundation of quality serviceand best practices to further our valueto customers of both companies.

This acquisition is expected to befinalized in October 2007. Completionof the acquisition is subject to custom-ary conditions, including the receipt ofapplicable regulatory approvals.

LogisticsQuarterly.com 7LQ September 2007

SEPTEMBER CONTRIBUTORS

LQs mandate to provide Ideas for Leadership in Logistics is clearly evidenced thisissue, with articles written by professionals and logisticiansfrom America and Canada who are leading and transforming

business by creating new roadmaps and definitions for leadership in this exciting field.

OUR CONTRIBUTORS

DAVID J. CLOSS, Ph.D., LQ ExecutiveEditor. Dr. Closs is the John H. McConnellChaired Professor of the Eli Broad Collegeof Business, Department of Marketingand Supply Chain Management, MichiganState University. He has consulted withmore than 100 of the worlds Fortune 500corporations regarding logistics strategiesand systems. He is an active member ofthe Council of Supply Chain ManagementProfessionals (CSCMP).

JIM DAVIDSON, CEO, Wheels Group,began his career in logistics at the FordMotor Company in 1963 working in allaspects of logistics for 17 years. Mr.Davidson joined TNT in 1983 and heldvarious management roles, includingroles in operations, staff, administra-tion and general management for anumber of different divisions. He alsoserved as the TNT board member repre-senting North America at theirEuropean-based board meetings. Hehas served on the executive of theCanadian General Motors SupplierCouncil as well as Executive VicePresident of the ATA Council of Logisticslocated in Alexandria, Virginia.

RICHARD L. DAWE, Ph.D., is AssociateProfessor of Operations Management,The Ageno School of Business, GoldenGate University, San Francisco. Prior tobecoming a full time faculty member atGolden Gate University of San Franciscoin 1998, Mr. Dawe had extensive manage-ment experience in all areas of global sup-ply chain operations, working with Intel,HP, Samsung, Packard-Bell, Del Monte,Colgate, Southern Pacific, National Semi-conductor, Lucent Technologies, Veba

Electronics, U.S. Borax, and CiscoSystems. He has written numerous arti-cles on supply chain management for pro-fessional publications and his book oninformation technology in operationsmanagement was published by Penton in1994. Professor Dawe is an active partici-pant with the Council of Supply ChainManagement Professionals (CSCMP),where he is the Co-Education chairman ofthe Global Virtual Roundtable. He is theeducation advisor to the Golden GateChapter of APICS and regularly attendsmeetings of the Warehouse Educationand Research Council (WERC), Womenin Logistics, and the Institute of SupplyManagement (ISM). With the Distribu-tion Business Management (DBM) organ-ization, he has served as a track chair andhas also been a presenter at many of theirannual conferences.

DAVID FAORO is Director of SupplyChain for The International Group, Inc., a$400-million manufacturer of waxes andwax-based industrial products. In thisrole, he is responsible for customer serv-ice, purchasing, logistics and inventorymanagement. For over 20 years, David hasworked in the chemical, food and bever-age, office products and wholesale distri-bution sectors in all aspects of supplychain management. He holds an M.B.A.from the Ivey School of Business and aBachelor of Commerce (Logistics) fromthe University of British Columbia. A Past-President of the Toronto chapter of theCouncil of Supply Chain ManagementProfessionals (CSCMP) and a member ofthe Advisory Board of Logistics Quarterly,David is married with two children andlives in Aurora, Ontario.

TERRI FERRARO is Director, SupplyChain and Transportation, FamousFootwear and Brown Shoe Retail Logistic.Famous Footwear is the U.S.A.s numberone retailer of name brand shoes for lessfor the entire family. One in every 10American families shops at FamousFootwear for back-to-school shoes eachyear. Famous Footwear is one of the topfive retailers for great brands such asSkechers, Nike and Timberland.

THOMAS J. GOLDSBY, Ph.D., Universityof Kentucky. Professor Goldsbys areas ofresearch include logistics strategy andsupply chain integration. He has served asa logistics analyst and researcher in thecorporate and public sectors and hasreceived awards for his teaching andresearch. He has published articles in sev-eral academic and professional journalsincluding the Journal of Business Logistics, theInternational Journal of Logistics Management,the International Journal of Physical Distribu-tion and Logistics Management, ManagementScience, Supply Chain Management Reviewand the Journal of Operations Management.He currently serves as a member of theCouncil of Logistics Management (nowCSCMP), the American Society of Trans-portation and Logistics and the Ware-housing Education and Research Council.

BILL GRAVES, a former governor ofKansas, is the President and CEO of theAmerican Trucking Associations (ATA).

CAMERON JOYCE is President ofMcKesson Logistics Solutions, a companythat evolved from the merger of the 3PLhealthcare businesses of McKessonCanada and Associated Logistics Solu-

tions. McKesson Logistics Solutions isresponsible for the supply chain of over$2 billion in prescription drugs, over thecounter medications, health and beautyaids and medical devices on behalf oftheir clients. His current focus is onensuring the organization is at the fore-front of providing clients with innova-tive, customized solutions to suit theirbusiness needs.

Cameron is currently on the Boardof Directors of the InternationalWarehouse Logistics Association(IWLA) and is Co-Chair of theCanadian Council of the IWLA.

ED KEARNS is the President of KearnsTransportation Services. His areas ofexpertise encompass operational plan-ning, marketing and sales of intermodaltrucking, railway and marine freightservices. In addition, his areas of spe-cialization include promotion, marketdevelopment and sales for Canadianports, as well as warehousing, distribu-tion and processing. Prior to his con-sulting practice, Mr. Kearns was theSenior Vice President of Fraser WharvesLtd. He has also held senior-level posi-tions at K Line Canada Ltd. and KerrSteamships (Canada) Ltd. His tenureincludes management positions atCrossland Containers Limited and theSaint John Port Development Commis-sion. Mr. Kearns is a member of TheToronto Transportation Club.

JOHN LANGLEY JR., Ph.D., M.B.A. Dr.Langley is Professor of Supply ChainManagement and Director of SupplyChain Executive Programs at theGeorgia Institute of Technology inAtlanta, Georgia. Dr. Langley is a formerPresident of the Council of LogisticsManagement (now CSCMP), and arecipient of the Councils DistinguishedService Award. In 2004 he was honoredas one of the professions top five logis-tics executives at the Richmond EventsLogistics and Supply Chain Forum. Hereceived his Ph.D. degree in BusinessLogistics from Penn State University. Dr.Langley has co-authored several books,including The Management of BusinessLogistics, a 7th edition textbook pub-lished in 2003. He also serves on theBoards of Directors of UTi Worldwide,Inc., Averitt Express, Inc., and ForwardAir Corporation. He is also lead authorof the annual study on the 3PL industry,

the most recent of which is titled 2004Ninth Annual Study of 3PL Service Providers:Views from the Customers.

JOHN MOTLEY is the founder, Presidentand CEO of LOG-NET. Since he wrote theinitial computer program that serves asthe cornerstone of the companys supplychain execution application, he has ledLOG-NETs global growth as a leadingprovider of logistics technology to third-party logistics providers, importers andexporters. Today LOG-NET systems man-age the detailed movement of 600,000intermodal containers per year almost10% of the U.S. import trade. LOG-NET isalso the worlds largest processor ofocean-carrier electronic messages.

Motley began his career in internation-al trade at 17, entering the prestigiousUnited States Merchant Marine Academy.While at the Academy he studied engineer-ing and sailed aboard international mer-chant vessels. Prior to founding LOG-NETin 1991, he worked for American PresidentLines (APL) in container freight opera-tions, equipment management, inter-modal operations, logistics and sales.

Drawing on his years at APL he usedhis engineering and computer program-ming skills to design the LOG-NET systemthat features best practices for interna-tional multi-modal logistics.

In addition to his degree fromUSMMA, Motley studied at New YorkUniversity and graduated with anM.B.A. in Information Systems. Heserved nine years as a Naval Reserve offi-cer with the Maritime Reserve andMilitary Sealift Command and facilitatesthe development of global standards forlogistics e-commerce and business prac-tices as a member of several industryand technical associations including theData Interchange Standards Associationof ANSI X12, the Council of LogisticsManagement (now CSCMP), the Inter-national Mass Retailers Association, theNational Retail Federation, the Ameri-can Trucking Associations, ebXML, theAmerican Purchasing and InventoryControl Society and the NationalIndustrial Transportation League.LOG-NET is also the founding sponsorof the Shippers for InternationalElectronic Logistics Data (SHIELD), agroup that specializes in facilitatingelectronic compliance informationrequirements of Department of Home-land Security regulations.

DIANE MOLLENKOPF, Ph.D., is anAssistant Professor in the Department ofMarketing and Logistics at the Universityof Tennessee, Knoxville. She was on facul-ty at Michigan State University from 2002to 2005 and a faculty member at LincolnUniversity in Christchurch, New Zealand,for eight years prior to moving to theUnited States.

Before pursuing an academic career,Dr. Mollenkopf worked as a logistics andproduct manager for several internationalorganizations, primarily in the cosmeticsindustry. Her responsibilities includedmanaging U.S. inventories and coordinat-ing production/shipping from Europeanfactories, as well as managing transporta-tion and delivery activities, both interna-tionally and domestically.

As an academic, Dr. Mollenkopfsresearch coalesces under the broadumbrella of corporate value creation.Her research can be categorized into twomain research streams, one relating tologistics/supply chain integration andthe other relating to environmentallyresponsible logistics/supply chain prac-tices. Her interest in integration andenvironmental issues stems from herbelief that these are two areas in whichfirms can create value for themselves,certainly, but also for their customers,supply chain partners, communities andother stakeholders. Much of her workhas been conducted in an internationalenvironment. While living overseas, Dr.Mollenkopf worked with several majorNew Zealand organizations. She devel-oped and presented a variety of logisticsand supply chain seminars throughoutNew Zealand and Australia. She contin-ues to work with executive developmentprograms in the U.S. She is a member ofthe Council of Supply Chain Manage-ment Professionals (CSCMP).

THOMAS NIGHTINGALE is the VicePresident of Communications and ChiefMarketing Officer of Con-way Freight.Prior to joining Con-way he was the VicePresident of Corporate Marketing,Schneider National, Inc. And before that,he worked in senior marketing, sales lead-ership and operations roles for severaltransportation, logistics and supply chaincompanies, including Clareon, a B2B pay-ment software subsidiary of FleetBostonFinancial; Paxis, a supply chain servicesjoint venture between GATX andLockheed Martin; CSX Transportation;



and United Parcel Service. Mr. Nightingaleholds a Bachelors degree in InternationalMarketing/Management from SienaCollege and received his M.B.A. fromSyracuse University, where he completedgraduate studies in Organization andManagement.

CHRIS NOREK, Ph.D., has 15 years ofexperience in supply chain andlogisticsrelated consulting across severalindustries including retail, consumerproducts, industrial products, servicesand internet business fulfillment. He hasconsulted for both CSC (ComputerSciences Corporation, formerly ClevelandConsulting Associates) and Accenture(formerly Andersen Consulting) and alsohas extensive consulting experience as anindependent consultant. He spent threeyears as a professor of logistics and trans-portation, two years on the faculty of theUniversity of Tennessee and one year onthe faculty of Auburn University. In addi-tion, he has worked for Kimberly-ClarkCorporation as an area planner, AppleComputer as a worldwide materials plan-ning analyst and Office Depot as an inter-nal logistics consultant. His independentconsulting engagements included workfor amazon.com, Aramark UniformServices, The Sports Authority and Accen-ture/Andersen Consulting.

Dr. Norek has his B.S. in BusinessLogistics from Pennsylvania State Univer-sity, an M.B.A. with a concentration inlogistics and transportation from theUniversity of Tennessee and an M.A.B.A.and Ph.D. in logistics and transportationfrom The Ohio State University. He is alsoa frequent presenter at industry confer-ences including the Council of LogisticsManagement (now CSCMP), the Ware-housing Education and Research Council(WERC) and the National Retail Federa-tion (NRF). He is also a recurring invitedspeaker to supply chain executive develop-ment programs at the University ofTennessee, the University of North Flori-da, the University of Louisville and ITRAN(a professional group headed by theGeorgia Freight Bureau). Dr. Norek is amember of CommerceNets EvolvingSupply Initiatives advisory board.

PERUVEMBA S. RAVI is an Assistant Pro-fessor in the Operations and DecisionSciences area at the School of Businessand Economics, Wilfrid Laurier Universi-ty, Ontario, and a member of the Supply

Chain Management faculty group atWilfrid Laurier. Professor Ravi holds aB.Tech. in Chemical Engineering fromthe Indian Institute of Technology inDelhi, India, an M.B.A. from the IndianInstitute of Management in Calcutta,India, an M.S. in Operations Researchfrom the University of Rochester inRochester, New York, and an M.S.B.A.and Ph.D. in Operations Managementfrom Washington University in St. Louis,Missouri. Prior to joining Wilfrid LaurierUniversity, Dr. Ravi was a visiting facultymember at the University of Missouri-Columbia. He has taught undergraduateand graduate-level courses in operationsmanagement and supply chain manage-ment. Dr. Ravis research interestsinclude logistics and supply chain man-agement, the marketingmanufacturinginterface and scheduling. He was award-ed the Petro-Canada Young InnovatorAward at Wilfrid Laurier University in2001, an award that is granted annuallyto only about twenty researchers inCanada. He also holds a research grantfrom the Natural Sciences andEngineering Research Council of Canada(NSERC). Dr. Ravi is a member of theDecision Sciences Institute (DSI), theInstitute for Operations Research andthe Management Sciences (INFORMS),the Production and Operations Manage-ment Society (POMS) and the CanadianOperational Research Society (CORS).

KURT RITCEY, Partner, Deloitte, is amanagement consultant and specializesin improving supply chain operations forclients in many industries including manufacturing, consumer business andenergy. He has directed improvementprojects throughout the supply chainincluding strategic sourcing, e-procure-ment, demand management, inventorymanagement, distribution and ware-house operations. Mr. Ritcey leadsDeloittes Canadian Sourcing and Pro-curement practice, focusing on assistingclients to improve business results byimplementing strategic sourcing, pro-curement transformation, supplier rela-tionship management and electronic pro-curement solutions. In addition to hiswork in Canada and the U.S., Kurt hasworked in Hong Kong, Germany andMexico. He holds a B.Sc. (Hons.) in CivilEngineering from Queens University andan M.B.A. from the Ivey Business Schoolat the University of Western Ontario.

KEITH ROBSON graduated from theAston University in Birmingham, England,and joined the automotive industry inmarketing and product planning roles.He then spent 20 years with MasseyFerguson/Verity Corporation in variousroles including Vice President, Corpo-rate Controller and President of a divi-sion involved in parts warehousing anddistribution. Since 1990 he has workedas a consultant in strategic manage-ment, including the turnaround ofCanadian Pacif ic Trucks. In 2001, hetook on the role of President of theInstitute of Corporate Directors, wherehe was instrumental in establishing aneducational program for corporatedirectors. In 2002, he was appointedPresident and CEO at the HamiltonPort Authority, which manages the portoperations and recreational uses ofHamilton Harbour.

In this role he has demonstratedleadership in the community, workingwith the United Way to create new port-focused programs. He has just complet-ed four years as Chair of the Transporta-tion Committee of the Ontario Chamberof Commerce. He is a member of theEducation Committee of the Institute ofCorporate Directors and a board mem-ber of Friends of HMCS Haida. In 2005,Keith completed his ICD certification asa Corporate Director and also becameChairman of the Canadian Chamber ofCommerce Transportation Committeeas well as serving on several industryrelated organizations. In 2006, the Uni-versity of Aston in England recognizedKeiths career achievements by honour-ing him as a Fellow of the AstonBusiness School.

NICHOLAS SEIERSEN, B.Sc. (Hons.),M.B.A., P.Log., LQ Executive Editor, is aSenior Manager with KPMG, based inToronto, Ontario. He specializes in supplychain consulting, with particular atten-tion to strategic sourcing and supplychain planning and operations. Mr.Seiersen is the Canadian Service Line leadfor Operations Cost Management atKPMG. Mr. Seiersen holds a B.Sc. (Hons.)in Biochemistry and an M.B.A. inIndustrial Management. He teaches exec-utive development courses at top universi-ties in Europe and North America. He isthe past President of the TorontoRoundtable of the Council of LogisticsManagement (now CSCMP).


EDITORIAL

EMPLOYING INFORMATION technolo-gy as a means to enhance supply chaincompetitiveness is an ongoing chal-lenge for both supply chain and infor-mation technology (IT) executives.There are the perennial questionsabout which applications to invest in,which suppliers to use and when a ver-sion update is appropriate. To answerthese questions,it is important to under-stand the individual roles and relativecontributions of supply chain IT appli-cations. While supply chain IT applica-tions can be described in a number ofways,one approach categorizes them astransactional, communication or rela-tionship management.Table 1 lists eachcategory and the typical applications.

The transaction category includesthe IT systems to complete the businessprocesses related to order manage-ment, warehouse management, trans-portation management, and account-ing. The typical supply chain relatedapplications include enterprise resourceplanning (ERP), warehouse manage-ment systems (WMS) and transporta-tion management systems (TMS).Theseapplications represent standardizedprocesses that should focus on accura-cy, consistency, economies of scale andefficiency. These systems typicallyinvolve a wide range of users within afirm, as customer orders are trans-formed into cash and supplier ordersare initiated and paid for. While thereare some unique characteristics, theprocess flows generally share a basicstructure and display substantial com-monality across firms.

By David J. Closs

How Can Supply Chain Information Technology Enhance Competitiveness? With transaction-oriented IT systems such as ERP, WMS and TMS systems now a basic requirement for doing business and communication-oriented IT systems such as supply chain event management,RFID and collaborative planning, forecasting and replenishment systems becoming more and more the norm, the battle for the real competitive advantage has shifted to the area of relationship systems.


The communication categoryincludes the IT systems to exchangeinformation between firm locations,global sites and supply chain partners.As Table 1 indicates, this includes sys-tems such as supply chain event man-agement (SCEM), radio frequencyidentification (RFID) and collaborativeplanning, forecasting and replenish-ment (CPFR).The primary objective ofthese systems is to facilitate the accu-rate exchange of supply chain informa-tion between locations and supplychain partners. Supply chain eventmanagement is the generic name fortrack and trace ability embeddedwith the capability to determine andcommunicate to the shipper or con-signee when a shipment may not arriveon the specified delivery date. Whiletrack and trace will let you knowwhere the shipment is, SCEM canproactively determine when shipmentsare not going to be where they are sup-posed to be and make suggestions foralternative plans regardless of the glob-al location or carrier.While there havebeen independent IT firms offeringsuch applications, the major providerstoday are the integrated transportationfirms such as DHL, FedEx and UnitedParcel Service. However, even the glob-al integrators experience difficulty intracking shipments when multiplemodes or carriers are involved. Theeffectiveness of such systems will con-tinue to improve as the majorproviders offer more integrated capa-bilities as a means to enhance theircompetitive advantage. As noted inTable 1, these systems focus on accura-cy, coordination, speed and visibility ofproduct and product information as itmoves throughout the supply chain.While the information content is fairlystandardized, the structure and inter-pretation often differs by firm or coun-try. The result is a major challenge forfirms offering supply chain event man-agement to provide information thatallows for a common understanding.

The relationship category includesthe IT systems to manage the strategicand tactical relationships betweenfirms and their customers. Customerrelationship management (CRM) sys-tems can provide the information

regarding specific account require-ments, history, transactions and uniquecharacteristics. The information con-tained in or extracted from a CRMallows firms to provide a more valueadded offering for critical customers.Advanced planning and scheduling(APS) systems facilitate balancing thesupply and demand resources at a timewhen firms are trying to reduce inven-tory and capacity resources. In general,such systems attempt to minimize thetotal cost of material acquisition, pro-duction, inventory carrying cost andstorage in an environment where cus-tomers have ever more precise productand timing requirements. They desire

unique product offerings with very spe-cific delivery requirements. Ability todeliver critical customers with morecustomized products and solutionswithin more precise time specificationrequires more precise management ofresource capacities. Relationship sys-tems require extensive data bases thattrack demand and sales characteris-tics, related marketing tactics, supplychain resource constraints and com-parative resource costs. An effectiverelationship system must be capable ofcomparing the total cost of customerand APS alternatives and searching forthe most effective solution. While rela-tionship systems require extensiveexpertise to implement and maintain,they allow the firm (and often supplychain partners) to make their offering

more relevant for critical customerswith better asset utilization.

Firms will continue to be challengedby decisions regarding where to maketheir information technology invest-ments to enhance their global compet-itiveness. While there are still somefirms (particularly small to medium-sized that is, less than US$1 billion inrevenue) that have not made the movetoward some form of ERP, most majorfirms have made the investment, so theuse of an integrated ERP will not likelybe a competitive advantage of thefuture. The SCM technology battle-ground today is focusing on communi-cations and track and trace capability.

However, since these capabilities ofteninterface with and require the involve-ment of third party providers, it is likelythat these applications will becomemore generic and less of a differentia-tor. I believe that the battle for the realcompetitive advantage has just begunas firms (and often supply chain partners) begin to orchestrate theresources to implement and sustainthese relationship systems. While thechallenges to implement transactionand communication systems havebeen significant, they will be evengreater for implementing relationshipsystems as this requires a balancedcombination of people, processes andtechnology in environments that havehistorically been relatively independ-ent and unstructured.

Table 1 Supply Chain Information Technology Applications

Transaction

Communication

Relationship Management

Typical Applications

Enterprise Resource Planning (ERP)

Warehouse Management Systems (WMS)

Transportation Management Systems (TMS)

Supply Chain Event Management (SCEM)

Radio-Frequency Identification (RFID)

Collaborative Planning, Forecasting and Replenishment (CPFR)

Customer Relationship Management (CRM)

Advanced Planning and Scheduling (APS)

Accuracy Consistency Economies

of scale Efficiency

Accuracy Coordination Speed of

communication Visibility

Customer relevance Resource

utilization Responsiveness

Required to support business operations today

May maintain position relative to competitors but will not be a sustainable competitive advantage

Can provide extended competitive advantage by achieving more precise customer service capability and better resource utilization

Application Focus

Contribution to Competitiveness


LQ: To begin,please provide us withsome background information onyour company.

John Motley: We are an end-to-endlogistics management company, fromplanning and optimization through toexecution: thats our space. We aremore focused on the internationalmultimodal logistics area than ondomestic planning and operationsmanagement. Companies need toknow where every single container orcarton on a plane has been, whatsinside it and who has touched it. Weoffer the combination of order andoperational management on an end-to-end basis.We can show clients whohas touched their product after leav-ing a factory in Asia until the time it isdelivered to a store in North America.It sounds straightforward. The chal-lenge is how do you get bulk volumeacross the ocean and distributed efficiently in North America?We offer planning and optimization capabilities.Our clients aregetting pretty close to being able to pack multiple SKUs per car-ton and to do this electronically with bar coding andhave product tracked across the entire supply chain. More ofour clients are heading in that direction and utilizing thingslike radio-frequency identification (RFID) codes to ultimatelylook at their return on investment. These are the top areas ofinterest that we see from our clients.

We market to both the 3PL community and logisticians.Ourbusiness in this area is evenly split between these two groups.On the 3PL side, companies such as DHL, Eagle, Agility,Summit Logistics and Norsewood, for example,are importantclients. We are a high-end end-to-end solution provider withorder management capabilities that our 3PL clients use to

provide to some of their clients. Wealso work with manufacturers andretailers, including companies suchas Avon,Jones Apparel Group and theDollar Tree stores.

LQ: To what extent might we seetechnology providers collaboratingwith 3PLs to improve their softwarethat might be used by 3PLs to managethemselves and the customers rela-tionships? (John Langley,Ph.D.)

John Motley: All of our 3PL clientsare interested in configuration capa-bility because they realize that everyclient wants a custom solution, butthey need to have a common opera-tional backbone. They can build ascaleable solution. We have workedwith 3PLs for over 15 years with thisspecific objective: to build a commonoperational backbone with a customfront end. The customization is creat-

ed through configuring the application,not by writing customprograms. One example is in the high fashion arena: In thisindustry, you have shade lots, which are created each timethey set a dye. Lets say, for the sake of convenience, its a redcolor that they use to dye a shirt and when they run out of dyethey will make another batch that is similar, but not exactlythe same color. In high end apparel, they cannot ship apparelto a store thats across a shade lot, because they dont wanttwo shirts, blouses or dresses hanging next to each other anda customer perceiving a difference in color. So for logisticsoperations with clients in high end fashion, the software mustbe capable of tracking this shade lot information.We enable3PLs to configure those capabilities for their clients, add it toa computer screen or an internet board and put theirrequirements into our electronic data interchange (EDI)

An Interview with John MotleyCEO of LOG-NET Questions for this

interview have been prepared by LQs Board: Tom Goldsby, Ph.D., John Langley, Ph.D., Diane Mullenkopf, Ph.D., Tom Nightingale, Chris Norek, Ph.D., and P.S. Ravi, Ph.D.


system without any programming required on their part.LQ: What is going to happen long term to the supply

chain software companies who clearly have a narrow func-tional focus instead of a broader supply chain focus? (JohnLangley, Ph.D.)

John Motley: I think the generalist who lacks depth will notsurvive. If you do cross-planning optimization and executioncapabilities,you must be very capable.This might be as a nicheplayer.There are many niche players those areas,but the indus-try is in the process of consolidating. With the many compli-ance issues from customs entities and legislation such asSarbanes Oxley (SOX) [the 2002 U.S. law that establishes newor enhanced standards for all U.S. public company boards,management,and public accounting firms],executives want toinvest in software that has deep capabilities.You might be plan-ning and optimizing and require routing information as well asschedules from multiple carriers. If you show informationgraphically with maps,youll need GPS data.All of those thingsrequire a robust system for executives in logistics who use mul-tiple modes of transport internationally.If youre only providinga service that relates exclusively to truck moves or is limited toa particular geographic area,youll probably be gobbled up bysome of the other players.

LQ: What are the likely directions for technologyproviders being able to successfully combine enterpriseresource planning (ERP) and supply chain functional soft-ware? Who are or who will be the leaders in making thishappen? (John Langley, Ph.D.)

John Motley: All of the technology companies with ERPcapabilities are making a push to get into the supply chain.We have not really seen them do the multimodal and interna-tional supply chain as well.They offer solutions for domesticsource or one-tier of product allocation.We just finished sev-eral deployments with two leading technology companies.Weve led the process in their deployment of these capabili-ties and finished an implementation where SAP hands off allthe purchase orders to us. We embellish them with interna-tional purchasing information and send them to suppliers,because we have an infrastructure that permits delivery ifsuppliers are automated.

If you took a snapshot of the world today the 80/20 rule isaccurate: 80 percent of the shipped volume is coming from 20percent of suppliers who have EDI capabilities. But then youhave 80 percent of the suppliers that dont have this capabilityand to get 100 percent of the supply chain managed electroni-cally, wed be required to provide accommodation for that 80percent that lack EDI capabilities.Our key players tend to leaveout that 80 percent.

LQ: What are the major impediments to achieving globalsupply chain visibility and how will the technology sector stepup to help improve in this area? (John Langley,Ph.D.)

John Motley: Weve switched to offering on-demand models.This means you pay when you use the software.If you dont useit,its very easy to leave and easy to replace.This has shifted the

risk of deployment from the purchaser of the software to thesupplier. We have had to completely change our deploymentmodel.The resources that deploy up front now are a hundredtimes bigger than what they were.We are prepared to go to aclient, show them our system,configure the system for the waythey do business and then write standard operating proce-dures. In the majority of our deployments we write their stan-dard operating procedures. From a business process perspec-tive were finding thats one of the big keys,but we have to takethe leadership position to help them mitigate that inertia.Thesecond impediment is something we call internally simplesophistication.They want everyone to link in electronically,butthats difficult.Weve processed more for example,ocean car-rier interfaces than probably anyone in the world.

LQ: How are you using that to create competitive advantagefor their supply chains? (Diane Mullenkopf,Ph.D.)

John Motley: One involves day-to-day operations. How doyou collaborate effectively? I think between a supplier and amanufacturer a lot of work has been done with collaborativeplanning and forecasting and replenishment. Transportationand logistics, however, has not matured as quickly.Were tryingto push a few initiatives in the areas of automatic communica-tion regarding both the manifest as well as the process of fore-casting volumes,booking those volumes and getting the docu-mentation that goes with those volumes all integrated withcarriers.Today,unfortunately,particularly in international trade,a lot of those requests go to centralized service centers thatcould be anywhere. If youre managing a global network forlogistics you might submit a request that first goes to the datacentre in India and then gets forwarded to the office in Brazil,which is where you want to send your freight. In that model, itsoften 24 hours before you know whether or not you can movewith that carrier.Theres also the practical problem of the truckdriver who drives to the pier to drop off a full load from the fac-tory and pick up an empty and knows it will take two hours toget there. So the constraint is that we need an answer withintwo hours.Its service oriented architecture that allows for com-munication to go real time to a carrier, request required spaceand convey an answer back immediately.You can do that inExpedia now for an airline seat, but you cant do that today inmost of the transportation world.Were getting a group of cus-tomers together to work with carriers and their intermediariesto find out why we cant get to a two-hour response time oran instantaneous response time.

LQ: How are technologies helping to overcome theuncertainties we face in supply chain management andspecifically the uncertainties of supply and demand? (TomGoldsby, Ph.D.)

John Motley: A lot of people cite visibility as one of thebiggest ways to improve risk mitigation. I think you must alsoadd management and control to visibility. If you can integrateall three of those capabilities then youre doing the best jobpossible.A good example would be if youve got complete end-to-end visibility on product that ships out of China and theres


a port strike somewhere in the United States.Provided you havethe management control to divert freight and move it aroundthat area of congestion or a strike, you are in good shape.Another alternative would be to find alternative sources ofproduct and supply to adjust and accommodate thosedemands.Conversely, if your demand drops,you can slow stuffdown.You can go out, find out where it is, take it off those fastor medium methods of transportation and put it in a little bitslower mode of transport.

LQ: In your opinion are companies willing to share criticaland strategic operational information necessary for supplychain collaboration? What are the most effective ways to sharethis information? (Tom Goldsby,Ph.D.)

John Motley: In order to be successfulcompanies have to share very detailedinformation, and I look again at the 80/20rule of suppliers and third parties beingeither e-commerce enabled or not.Whenpeople throw technology around, theyalways think about EDI and commercecapability.We still get 100 percent compli-ance across the board on data require-ments and integration. In general, we seethat the most integrated 3PLs are doing aan excellent job of developing a deeprelationship with their clients in order tounderstand whats essential for success.When you outsource that process yourebasically saying the outsource party is part of my compa-ny. If you dont take that approach, they will operate in adisconnected way and that is not going to work.

LQ: Given the lengthening of supply chains,how can supplychain technology help build resiliency into global supplychain networks? (Tom Nightingale)

John Motley: A lot of systems can provide event manage-ment,usually involving matters regarding a container or a truckor plane and where it was last seen.This is often not fully inte-grated with the purchase order and product informationdescribing whats in a container. So to get management andcontrol working with visibility, you require multiple tiers ofinformation. I think the level of visibility today has gone fromthe shipment on a truck or plane down to the individual itemin the case; now we want to know the fact that its the red, size6 wide shoe,not just that its this shipment on a plane thats fly-ing over the ocean.

LQ: Does the use of supply chain technology with a poorlydesigned, poorly configured supply chain provide any bene-fits? Have you come across instances where technology result-ed in a negligible improvement or even deterioration of supplychain performance? (P.S.Ravi,Ph.D.)

John Motley: If there is a negative to implementing our tech-nology, its the fact that we can be as detailed as an electronmicroscope if a client wants, and that blemish may not lookthat bad from a distance,but when you turn on a microscope,

its heinous looking.People tend to find what theyre looking forand when they do its not always what they wanted to find.When you provide end-to-end solutions, you cant make mis-takes at one end.

Weve developed what we call our Logistics Maturity Model(LMM),and when youre a level 1 in that maturity model,yourestill sending paper purchase orders and advance ship notices,whereas a level 5 client has every single process from freightaudits to purchase orders e-enabled.We may meet a client whohas hired a well-meaning vice president who thinks at level 5and walks at level 5, but theyre in a company thats at level 1.Its a four- or five-year journey to get to that fifth level.The matu-

rity model basically assesses what level ofmaturity youre at and prioritizes processesto improve.

LQ: Does the initiative for increased useof technology always come from the P&Gsand Wal-Marts of the world? In other words,from large and dominant members of thesupply chain. Or does it occasionally comefrom the smaller and weaker players in asupply chain? (P.S.Ravi,Ph.D.)

John Motley: I think that a side benefit ofthe shift to an on-demand model is that itspay-as-you-go, which is great for small tomedium-sized companies. We have seen abig surge in our volume of business fromthat kind of company.For instance,a compa-

ny we just deployed with was the Boy Scouts of America.Theywanted to buy overseas and create an international supplychain,but their scale wasnt there.We trained them and traineda group of suppliers overseas for them and theyre now reapingthe benefits. I would say they started at that first level of matu-rity and now they are hitting our third level of maturity.The on-demand model helps enable smaller groups.

LQ: Are the barriers to the implementation of supply chaintechnology solutions primarily (i) technological (existence oflegacy systems), (ii) organizational (presence of power struc-tures and information gatekeepers who feel threatened byincreased information visibility and transparency resultingfrom new systems), (iii) human resources-related (lack ofskilled supply chain professionals in the client organization),or(iv) structural (poorly designed and poorly configured supplychain networks)? (P.S.Ravi,PhD.)

John Motley: We have the Logistics Maturity Model to iden-tify any potential problems and barriers.This model assessesabout 50 business processes in the end-to-end supply chain.We try to get people to slow down and acknowledge, forexample,that if you dont have an automatic way to do freightaudit and payments today, you will first need a group of peo-ple from multiple departments to agree on the best processfor this new automated system.Too often we see that peoplewith the five-star vision try to get too aggressive on deployinginside a two-star company.

The growth in containerization andworld trade during

the last few years hasmeant that we must be in the container

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around how do we do that?

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LQ: How do you structure opera-tion supply chain in order to deliverflexibility to your customers needs?(Kurt Ritcey)

Cameron Joyce: We rely heavilyon operations planning. We look atbudgets and projections to plan forpeaks and valleys collaborativelywith our clients. This ensures werewell informed on where they mightexpect peaks in their business, andwe make allowances for the unex-pected in our swing analysis. Werealso able to draw on multiple facili-ties to pull resources together inorder to balance all of those needs.

LQ: Could you elaborate on whatthe swing analysis encompasses?

Cameron Joyce: Generally ourclients provide us with the averageamounts of activity that they fore-cast for each month,as well as infor-mation on what constitutes a high-average day and a light-average day.We develop a map to show what thebookends of the activity might beon any given day and then we conduct an analysis on the his-tory of what has actually occurred. By continually trackingthe actual levels of business we smooth out potential spikesto run the business efficiently.The client or market ultimatelycontrols the actual activity,but we do our best to plan for andabsorb the bumps.

LQ: What are the characteristics of your most successfulcustomer relationships? (Kurt Ritcey)

Cameron Joyce: In a single word its partnership. In thosetypes of relationships were fully integrated with the client,

and in regard to the supply chain,the line where they end and webegin becomes invisible in allaspects. The best relationships arewhere we can collaborate, sharedata both ways and effectively plan.Were helping our client be success-ful,which helps us to be successful.

LQ: In terms of governance inthe relationship would you say thatits characterized by C-level man-agement getting together on amonthly basis from your side andthe clients?

Cameron Joyce: Its probably lessfrequent than a monthly meeting interms of C-level management,assuming it is a mature relationshipthats past implementation.We havea structure of communicationthrough our Client Solutions Man-agers, at an operating level and at acustomer service level that is muchmore frequent. There is an escala-tion information process to ensureC-level executives are well aware of

whats going on,and we generally meet quarterly with a strate-gic focus at our meetings.

LQ: What are the biggest challenges to cross-border logis-tics activity? (John Langley)

Cameron Joyce: When it comes to cross-border activity, thefirst challenge is time and the second is unpredictability.Theprimary factors that cause unpredictability pertain to securi-ty and compliance or the lack of compliance by a carrier ora shipper and anybody along the supply chain can intro-duce delay and uncertainty. Managing all of the variables to

An Interview with Cameron JoycePresident of McKesson Logistics Solutions

Questions for this interview have been prepared by: Kurt Ritcey of Deloitte; John Langley, Ph.D., The Georgia Institute of Technology; David Faoro, The International Group; David Closs, Ph.D., Michigan State University.

ensure there isnt any delay is probably the biggest challenge.LQ: What are the advantages and potential disadvantages

of one-stop logistics, where the customer counts on the 3PLto provide a range of integrated supply chain solutions?(John Langley)

Cameron Joyce: With a single source you have a knownpartner and one contract to manage a bundle of services.Operationally and administratively there are significantbenefits. The principal disadvantage is that it may be diffi-cult for one provider to be world class throughout theirportfolio of services. If this is a client requirement, they maybe hard pressed to find that level of expertise from a singlesource.A client should look at their priorities and ask them-selves if they prefer a service provider capable of meetingall of their requirements completely versus some servicesat world class levels.

LQ: My concern is that the consolidated 3PLs willbecome less flexible with service offerings and less agile.(David Faoro)

Cameron Joyce: We see evidence of this as specialized andsmaller 3PLs are consolidated into larger ones.They lose theiridentity and some of the things that made them unique. Insome cases key people and their knowledge are lost with thecentralization of management, particularly as the larger enti-ty begins to set the strategy and direction. We think its anadvantage to maintain focus and maintain an identity withinyour target market. In a consolidation the resources dedicat-ed to the smaller divisions within the larger companies canbecome restricted, losing flexibility, which was probably ahallmark of the smaller 3PL to begin with.

LQ: As compliance challenges continue to grow for ship-pers,do you see adjustments in 3PL fee structures based oncompliance capabilities? And if a customer has invested incompliance and training and technology and had fewcross-border problems, will this customer be rewarded witha low fee structure based on your lower cost to serve?(David Faoro)

Cameron Joyce: Yes.If its a cross-border inbound shipmentto us for domestic distribution, its going to arrive on time andwont require overtime, special handling or outbound expe-diting, our cost to serve is lower and therefore our fees arelower. Our costs are lower when our client has good invento-ry management, good EDI [electronic data interchange]compliance and data integrity.The shippers that are late,non-compliant, dont manage their inbound supply chain or theirraw materials for their manufacturing operations will contin-ually require excessive management, which is a lot moreexpensive than having a predictable operation.

LQ: Given consolidation in the 3PL industry, what can asmall 3PL do to enhance its long term sustainability?(David Closs)

Cameron Joyce: We see two schools of thought in our field.In some cases a company wants to do business with a globalprovider and have a single source supplier, in others they

want to select a regional or niche best-of-breed 3PL. Its aphilosophical matter on the clients end. An advantage of aniche player is they develop expertise in a specific marketand specialize in being world class in that area.Consolidations can create the opportunities for smaller 3PLsto stand out as being more flexible, having faster decisionmaking capabilities and being strong regional players.

LQ: What are the primary requirements regarding visibilitythat firms expect from their 3PLs, particularly those involvedin international movement? (David Closs)

Cameron Joyce: Even on domestic movements supplychain visibility has become more critical and beyondjust EDI or data integration. I think there is an expectationof good web visibility tools to enable logisticians to makead hoc enquiries on a number of different status levels,whether its on the operational side of the supply chain oron inventory management.

LQ: How have your customers increased their demandsregarding security and sustainability? (David Closs)

Cameron Joyce: Certainly Sarbanes Oxley (SOX) compli-ance,SAS-70 reporting and this type of corporate compliancehave increased demands on our business.Since were also inhealth care and deal with controlled substances, this is espe-cially important. There are many audits required by ourclients as well as internal audits, and audits by external regu-latory agencies are the norm.We just expect that to happenon a daily basis across our client base.Disaster-recovery planshave become kind of table stakes for any new clients. Theyexpect to see robust and functional disaster-recovery andbusiness contingency plans everywhere, in systems and inoperations, including pandemic planning.

LQ: In what ways has your firm changed its business devel-opment efforts when approaching potential clients? How hasthe value proposition changed in recent years?

Cameron Joyce: Our company has transitioned itself andmoved away from being a service offerings provider to beinga solutions provider and a supply chain integrator.

LQ: How has the value proposition changed in recent years?Cameron Joyce: Weve really become integrated with our

clients businesses and take pride of ownership in thisapproach, becoming an extension of their business, even interms of our appearance to their customers. We are veryaware that we cannot just be selling a service from a menuof services; we have to really understand their business andplay an important role in it.Weve also recast our companyto become a provider of technology and infrastructureservices. Our system is built specifically for supply chainexecution for our clients and then they gain many benefitsby using it, accessing this technology and infrastructure ata much lower cost through us than it would be for them todo it develop it themselves.Thats been one of our differen-tiators and a key part of our value proposition.Weve beena technology leader all along.We develop our own web vis-ibility tools and several of our data integration tools.



LQ: What advantages does Hamiltonhave over other ports for the importer/exporter in terms of rail and transittimes and those good things like laborstability and so forth?

Keith Robson: The major advantageHamilton has is our location at the endof Lake Ontario in the heart of theGolden Horseshoe, where we havegood road and rail connections. TheQueen Elizabeth Way (QEW) links toToronto, Buffalo, New York and, throughHighway 403, links us to theWindsor/Detroit area. Both CN and CPserve the port. CN serves Hamiltonthrough the short-line railway, SouthernOntario Railway. CP serves the portdirectly. In addition we have an excel-lent strike-free labor force.

LQ: What would you attribute that to?Keith Robson: Our labor force is a

keen, professional group, well paid fortheir work. Also, their work activity is for 9 or 10 months sowhen they are working they try to make up for the threemonths of inactivity.

LQ: What changes are taking place in the market thatmight cause Hamilton to refocus for the future?

Keith Robson: The growth of containerization and worldtrade during the last few years has meant we must be in thecontainer business. Our whole strategy is focused aroundhow do we participate and assist our shipping community inthis area. Some of our traditional bulk cargoes are now mov-ing in containers. For example, some specialty grains, paperand pulp. Other bulk products such as specialty oils and fin-ished steel get moved in containers. It is estimated that 80 per-cent of the world trade is now in containers. Due to our loca-tion,we can be an excellent distribution center for this wholeregion.We are a multi-modal port and hub, capable of provid-ing all of the links that are required to establish distributioncenters in the Port of Hamilton. Cargo for the U.S. Buffaloand Detroit and beyond can be loaded/off loaded inbondand shipped to/from customers.

LQ: Whats are the geographic areas in which Hamilton

could assist manufacturers andtarget markets. What are yourtarget markets?

Keith Robson: We work withcompanies in terms of theirimports/exports, wherever theyare going in the world.Our log-ical market is Europe for bothimports and exports. SouthAmerica, China, India andJapan are also important mar-kets for us.Their shipments canmove through the Panama andSuez canals via the east coastof North America on a feederservice, or directly into theGreat Lakes Waterway System.These options bypass some ofthe congested areas now expe-rienced by shippers.

As far as the North Ameri-can market is concerned, our

cross-lake truck ferries would be designed to help manufactur-ers ship product back and forth across the border,which wouldavoid border complications and traffic congestion at thebridges the Lewiston-Queenston Bridge, the Peace Bridgeand the Ambassador Bridge in the Windsor/Detroit area. Thisalso helps ease the continuing and increasing driver shortage.

LQ: Thats going to become even more important in afairly short time. Do you foresee more terminal operators atthe Port and, if so, why?

Keith Robson: It depends on what you define as a termi-nal operator. In terms of stevedoring,we dont see any termi-nal operator changes in the short term. In the longer termwe will have more warehousing operators as we developdistribution centers.

LQ: How do you see the change of ownership in themajor shippers in the Port changing activities of the Port?

Keith Robson: Thats a very difficult question to answer.The biggest uncertainty right now is the future of the steelindustry, particularly since Dofasco has recently been takenover. At some point we will have a clearer picture of howthese developments will impact the Port of Hamilton.

An Interview with Keith RobsonPresident and CEO of the Hamilton Port Authority

Questions preparedby Ed Kearns

MQ REVIEW


Hamilton receives large amounts of coal, iron ore and coketo support the steel industry. Coke is also exported. Dofascois now part of a bigger organization and it is going to com-pete with all the other world locations in the metal sector.What that means to Hamilton is not known right now.

We have diversified our commodities substantially overthe last five years: We handle a lot more bulk liquids, andtheres a major grain exporter from Southern Ontario nowthrough J. Richardson. Slag is also a big export cause thesedays the byproduct of the steel. Food oils, part of the liq-uid bulk,are new. In addition we have Biox,a biodeisel facil-ity, on the Port. So weve diversified substantially.

LQ: What is the potential for feeder container service onthe Great Lakes and in particular for Hamilton?

Keith Robson: Hamilton is a natural inland terminal fordirect feeder container services (short sea shipping). Westraddle the Greater Toronto Area and the Golden HorseshoeRegion, where there is a significant population. We havealready talked about our good road and rail access.We havevessel operators located in Hamilton, Toronto and St.Catharines who have expressed an interest in developing ashort sea or feeder service. I expect others will come forwardas well. There are some challenging factors to be resolved,however, by the federal governments of Canada and the U.S.These are pilotage, large duties to bring in a foreign ship andthe HMF (harbor maintenance fee) on the U.S. side.

LQ: Environmental issues have always been important.What has been done in this area and what are the plans(policies) for the future?

Keith Robson: Hamilton Harbor has a Remedial ActionPlan Committee, which has been active for approximately15 years.A lot of cleanup has occurred here and I would saywe are leading the charge in terms of environmental issues.Were the first port in the Great Lakes to establish an environ-mental manager whose sole job is to look at sustainabilityand how we can improve our environmental performance.We also work with the industry as part of the Green Marineprogram.

LQ: What is the Green Marine program?Keith Robson: Thats an industry initiative to minimize the

environmental footprint of the marine industry and at thesame time demonstrate that the marine sector is the mostenvironmentally friendly way of moving product, particular-ly in terms of reducing greenhouse gasses.

LQ: And what about todays other hot issue: security.Keith Robson: Weve done everything we need to do

under the ISPS code (International Ship and Port FacilitySecurity) and probably more than the Canadian govern-ment and the U.S. government have established as essentialsteps for ports. We are investing, with funding from theCanadian government, substantial amounts of money intosecurity technology fencing, cameras, electronic sensingdevices.Were securing parts of the port and limiting accessto the port,particularly the cargo and shipping areas,and bythe end of next year, security clearance will be required forall of the employees and essential for tenants in the high-security regions.

LQ: Thank you.


Here are some of the comments from participants who have attended LQs previous symposiums.

When to Renew Outsourcing Agreements with Logistics Service Providers (LSPs), Discontinuing Them or Opting for Other SolutionsLogistics outsourcing is now a pretty mature space. The trade press has run a full spectrum of articles on how to decide whether to outsource, how to go about it,and how to manage the relationship. Many of these agreements are now up for renewal and there is limited insight available to help supply chain executives at this important crossroads in their strategic options. Join us on November 8th to participate in this program and others on this exciting day.

LQs Executive Exchange

Thanks for having me participate. I really enjoyed it.Rick Blasgen, President and CEO, The Council of Supply Chain Management Professionals (CSCMP)

I definitely found value in this event.Greg Cunningham, Director of Supply Chain Optimization, Maple Leaf Frozen Bakery

LQs Symposium was great and well organized.Sue Gadsby, C.P.P. C.P.M., Director, Procurement, Apotex Inc.

Thank you for a wonderful and insightful day. I enjoyed the executive exchange.Joseph Gallick, Senior Vice President of Sales, Penske Logistics

Fred, it was a real pleasure participating in the symposium. You had all of the right elements:interesting topics, good speakers, excellent attendees, and nice venue... In sum, it was a

great success, and a very worthwhile day for all involved. I look forward to the next one.Thomas Goldsby, Ph.D., University of Kentucky

I greatly enjoyed the idea of the table discussions. It was way more interesting than conventional formats.

Claude Germain, Executive Vice President and COO, Schenker of Canada Limited

Thank you for including me on your speakers platform at this years executive conference. I was impressed with the quality of the forum and the insightful audience.

Alan Gershenhorn, President, UPS Supply Chain Solutions,Asia Pacific, Europe, Middle East, Africa

You folks did a great job organizing and presenting this event. I enjoyed the interaction at the tables, and the quality of the speaker content.

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pertinent to todays market environment. I look forward to the next session.David Griffith, Vice President of Global SCM, BAX Global

The LQ Symposium was a fantastic opportunity to connect and re-connect with many individuals, and a tremendous opportunity to

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LQs Executive Exchange offers: Thought leadership from across North AmericaShort, insightful presentations by keynote speakers Discussion-based sessions - LQs ExecutiveExchange of ideasLimited seating to ensure a friendly and personalizeexchange of ideas

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IN LAST ISSUES Technology Toolbox,we discussed the opportunity for 3PLsto capitalize on increasing theirvalue-add to customers via technol-ogy. Specifically, we covered how3PLs can use technology to improveinternal operations and planning but,perhaps more importantly, also toimprove relationships with clients via bet-ter integration of business functions. Wefinished by suggesting that 3PLs have totake the initiative in building these solu-tions and get over the chicken and eggconcept of developing a solution inadvance of customer need. This article

takes the next step and shows thepotential technology solutions that

could truly provide new value-add3PLs and their customers have beenseeking.

Lack of Visibility into CustomerPlans Causes Inefficiency In many traditional 3PLcustomeroperations, the 3PL responds when thecustomer notifies them of an action totake, which is often an order to fill outof a distribution center. Then, the 3PLcompletes the order out of the currentinventory that is available.This reactive

Helping 3PLs and Their Customers Leverage VisibilityThere is a need in the 3PL arena for better connectivity and collaboration with both

customers and supply chain partners. The reactive nature of traditional 3PLcustomer

relationships doesnt give 3PLs enough advance warning to plan their operations efficiently.

But if 3PLs can gain more visibility into the business operations of their customers,

they can better plan their operations which will result in better service and increased

efficiency for their customers. There is a need for a systematic and repeatable solution

kit and platform for achieving this greater level of connection and visibility.

By C. John Langley Jr. and Christopher D. Norek


nature of the traditional relationshipsdoesnt give 3PLs enough advancewarning to plan their operations moreefficiently. As a result, 3PLs have tocarry additional inventory and haveenough capacity to handle lastminute orders.

Illustrative Retail ExampleConsider a situation where a 3PL ishandling delivery of product for amanufacturer to its retail customer.Frequently, the retail customerplaces a product on special anddoubles the amount of productrequested by the manufacturer with-in a one week delivery window. Inthis case, the 3PL has to scramble toget enough of the product deliv-ered. A solution would be to get vis-ibility into the retailers media planfor product that is being promotedin an advertisement in advance.Obviously, confidentiality would behonored so that the retailers com-petitors dont easily match the advertised products price.

SolutionTo the extent that 3PLs can gain more visibility into the busi-ness operations of their customers, they can better plan theiroperations and thus better serve their customers.This shouldallow the 3PL to lower costs a savings that could then bepassed on to their customers.The technology solution to thisproblem will require combining several traditional supplychain software functionalities.

Based on the available research, there are significantopportunities for 3PLs to develop IT-based services that willbe viewed by customers as strategic, integrative, and solu-tion-based. To effectively create a solution that will addressthe visibility issues mentioned, the following elements ofsupply chain functionality will have to be integrated seam-lessly by the 3PL: Supply Chain Visibility and Event Management

3PLs will not only need to have IT-connectivity withtheir customers but will need to have visibility into the cus-tomers relationships with their customers. This increasesthe likelihood that the 3PL will be aware of needs of its cus-tomers as early as possible and increases the ability of the3PL to respond to problems before they occur.

Supply chain visibility is valuable not for its own sake butas a means for 3PLs to better identify and understand cus-tomersneeds and requirements and to enhance the levels ofservice provided to their customers. Transportation Management

3PLs need to link TMS capabilities directly with the trans-port providers that have been selected. This helps to selectthe most appropriate carriers for individual shipments and tomake sure the timing and availability of services will bestmeet the needs of individual customers.

Advance knowledge of the potential shipment will alsohelp the carrier to be more efficient in utilizing their equip-ment,which should result in lower rates for the 3PL over time. Warehouse Management

With advance knowledge of potential orders, inventoryavailability and location can be arranged so that sufficientquantities of product are at the appropriate facilities to meetcustomer demand.

WMS solutions should be able to respond to current andforecasted levels of demand (including both scalability andfunctionality). Order Management

The order initiates actual shipment to customer after theorder is placed.

3PLs are able to participate meaningfully in the overallorder management process. Demand Planning

Potential customer needs should be communicated tothe 3PL to allow alignment of product with geographies inneed.

In addition to projected shipment volume information tobe shared on a daily basis in the 3PLshipper relationship,3PL visibility into customer demand management systemswill provide added benefit to the ability of the 3PL to antici-pate demand and better serve the customer.This goes a stepbeyond the volume projections agreed to in the 3PLcustomer initial negotiation at the start of the relationship. Collaboration

Forecasts can be shared and agreed to in advance andany variations may be communicated among the partners assoon as they are detected.

To achieve maximum benefit from collaboration, 3PLinformation technologies should be integrated with busi-ness processes and information systems at customer


organizations. Therefore, IT infrastructure and integrationcompatibility can be as important as functionality.

Rod Strata, Industry Principal,SAP Americas,elaborates onthese points, in noting:

Growth and margins pressures remain prevalent in theglobal transportation markets. Providing a true businessprocess and technology platform that will enable LSPs tofurther have upstream visibility into demand of their ship-pers and consignees is extremely valuable. Reliability andcapacity planning are equally important, hence the abilityfor the LSP to serve up capacity and equipment trans-parency to their end customers is critical to providingvalue as well. Intense competition without differentiationdrives margins downward while moving many LSPs intocommodity-based relationships. In todays environment,LSPs receive one-to-two days notice on demand that caus-es a reactive mode in many cases, which in turn causesuncertainty along with inefficiencies for planning theirnetworks and capacity plans. From the shippers perspec-tive, this also creates risk on executing against the commit-ments within their supply chains and customer satisfac-tion. Providing Demand Visibility Capability (The abilityto have an aggregated, time-bucketed view into futurerequirements [days, weeks, months] and demand streams)will enable the LSPs to plan their networks and capacityaccordingly, while giving them visibility to offer additionalvalue added services.

BenefitsThere is significant value in 3PLs having greater visibility intotheir customers order management/supply chain planningactivity to provide longer lead time windows with which toplan for logistics activities. In many instances, 3PLs are noti-fied with little time to plan for efficiencies and contingenciesforcing a reactive fulfillment operation. The following activi-ties could benefit from advanced operational and strategicinformation from 3PL customers: Forecasting

By receiving customer forecasts in advance,3PLs can usethe forecasts to plan their equipment,labor and facility needs

This will help lower 3PL costs and perhaps allow a costreduction to their customers Inventory planning and management

Inventory objectives (e.g., turnover) can be enhanced.

Overstocks and out of stocks can be reduced in totalDCscheduling of labor

By having more advanced knowledge of pending orders,3PLs can better plan DC labor to ensure enough resourcesare available without requiring overtime.

Scheduling objectives are best met by coordinationbetween 3PLs and customers. Sourcing and procurement

More accurate purchase volumes can be known inadvance allowing the right amount of material to be pur-chased, rather than the need plus a buffer, which is currentlyrequired to account for changes that werent communicatedin advance. Mode and carrier selection

Provides enhanced ability to select carriers and equip-ment types most appropriate for individual shipments.

Facilitates development of meaningful core carrierprogram. Transportation route design

Transportation providers to be given more advancenotice of individual shipment needs to allow for better andmore efficient scheduling. Improved ability of 3PL to provide/manage value-addedtransport services

Contingency planning for merge-in-transit. Downstream multi-carrier collaboration and coordina-

tion for multi-stop movements Synchronization across 3PLs and the carriers,coupled withmore shared demand/capacity visibility from shippers, cre-ates a great total supply chain opportunity.

Pain PointsWith the needs and benefits defined, what might be keepingthis 3PL visibility solution from being realized? There aresome pain pointsassociated with getting systems connectiv-ity established: Lead time to integrate

Although the pieces of this solution already exist, someeffort will have to be invested to tie them together and makethe solution a reality. Up-front costs

There will obviously be an investment needed; however,the market desire should justify the investment. On-going costs

LQ September 2007 25LogisticsQuarterly.com

Good working solutions will require continual updatingand integrating. Confidentiality

Safeguards will have to be put in place to ensure thatdata is secure and that parties out of the direct line of thetransaction do not have any access or visibility to the databeing exchanged. Market need of solution

Because the solution is new, the market opportunity issubjective until its value has been shown to prospectivecustomers.

However, these pain points can be lessened or eliminatedwith the right approach, and the opportunity for the applica-tion provider who creates this solution is significant.

Applicability to Transportation CompaniesThe benefits of visibility are not lost on any type of LSP. Thetransportation companies, including trucking companies,railroads, ocean carriers and parcel companies, can alsogreatly benefit from visibility across the supply chain. Withbetter visibility,all carriers regardless of mode should be ableto better plan, optimize, and execute solutions.The goal is tosynchronize carrier capacities with shipper needs.

In todays capacity-constrained transportation environ-ment,customers want to know if there will be enough capac-ity to meet their needs. However, in order for carriers to pro-vide the right amount of capacity at the right time, carriersneed adequate forecasts far enough in advance to plan fordemand. It is this sharing of information between shippersand carriers that offers promise.

While railroads are investing significantly in expansionprojects, these investments take time to put into place. Withimproved visibility into our customers future demand, wecan not only better plan when and where to invest, but alsobetter plan our operations to have crews, equipment, andtrains in the right place at the right time. Improved visibilitynot only benefits the railroads with their capital and opera-tions planning, but also benefits shippers by ensuring theirservices needs are met, says Todd A. Olsen, Assistant VicePresident, BNSF Railway Company.

It would also be helpful if the industry changed its focus tothe end point of the shipment rather than the origin. Forinstance, what if a customer could give a carrier all Memphis

shipments on Monday? Rail runs 24 hours a day, 7 days aweek and would run more efficiently if it were possible to fillin gaps of the volumes during a shipping week. Given thenature of railways, the equipment has to be planned in aclosed loop. Intermodal does a lot of shipping over the week-end and therefore is always moving as compared to mostother modes. What if capacity on lanes could be known bylane, by day of week, and by time of day? Most people wantpickups and deliveries between 8 a.m. and 5 p.m.; however, alot of freight moves continuously.How could moves be mademore efficiently not only with advanced information from thecustomers but by using the information to synchronize acrosscarriers tied into a single move?

Benefits of this information sharing leading to better visi-bility and synchronization should include increased servicefor shippers, increased velocity,and possibly decreased trans-portation costs. In addition, additional capacity might be cre-ated by more effectively balancing supply and demand.Increased sharing of information should reduce the coststructure of the customer/shipper as well.

ConclusionsThrough this piece, we have articulated the need and, moreimportantly, the opportunity to develop a software solutiontargeted at giving 3PLs more value in the outsourcingprocess. As a result of experience and research, we believethe following to be true: There is a need in the 3PL arena for better connectivity andcollaboration with customers. In addition, there also is a needto enable better collaboration between supply chain partners. There is a need for a sy

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