An enterprise customer might sit comfortably in front of a 4PL logistics dashboard that tracks shipments around the world. But typically, much manual labor goes on behind the scenes before a 4PL can give a customer easy insight into the status of material. “If you are IT savvy like UPS, you can send through XML,” Dutta notes. “But if you are a freight forwarder in China, you might be using a Web browser front end and be sending a flat file.”
Integration solutions are still ad hoc and industry specific, according to McKenna, but integration is less a technical issue about the way companies connect with each other than a matter of business process synchronization. “Passing the data is easy. It is the synchronization of the data content, the timing of the data as it relates to what the data means,” McKenna says. And managing such complexity is precisely the 4PL value proposition.
Running the Trains on Time
Lucent Technology, a company that has moved in the last several years toward outsourcing much of its manufacturing, went the 4PL route in an effort to reduce its order cycle time along with the number of warehouses and staging areas. In so doing, Lucent went from in-house management of 1700 3PLs to a mere two 4PLs. (Lucent prefers to call 4PLs LLPs or lead logistics providers.)
A Lucent network switch typically consists of dozens of sub-assemblies, the manufacture of which is contracted out. Ultimately, thousands of parts, often from China and Europe, must be brought to a single location at a specific time and assembled into a finished product.
“We did an introspection of our own core competencies and developed a vision of what we do well and don’t do well,” says Anthony Damelio, director of supply chain logistics at Lucent. With so many high-end network equipment manufacturers redefining their core value as software and services, it’s no surprise that Lucent chose the total logistics outsourcing solution offered by 4PLs. “We use Ryder in North America and UPS Global Logistics in China and EMEA [Europe Middle East and Asia] to leverage their global resources.”
Damelio identified Optum’s TradeStream as best-of-breed logistics software and insisted that its 4PLs deploy it before signing on with them. TradeStream’s suite is used to assign, track, and trace material from a carrier.
“Our LLPs ensure that the carriers have connectivity into their systems. The LLPs have the responsibility to collect that information, by fax, EDI, HTML, and pull that back up and close the order for us. We know from a visibility perspective that the order was tendered and delivered,” says Damelio.
Visibility and the Bottom Line
Visibility across multiple levels of the logistics chain is a key promise 4PLs make to their customers. According to Optum’s Dutta, visibility buys customers time, options, and better fulfillment rates. That translates directly to lower costs, quicker time to market, and more and faster revenues.
Visibility identifies delayed shipments and takes the appropriate corrective action. This can avoid such costly maneuvers as, say, hiring a second carrier to expedite an order or buying a duplicate component at a higher price, only to end up with two identical components arriving at the same time in the same location.