Enabling Pervasive Supply Chain Collaboration: Lessons from International Logistics and Freight

As President of his company, Freightek, he designed and built a system to facilitate and automate the movement of critical data through the freight supply chain. Now he is planning to extend freight information systems in ways that will make collaboration between far-flung supply chain partners commonplace. Imagine this: Comprehensive data integration and rich collaboration between any businesses, of any size, anywhere.

This article will address ways to implement automated supply chain data systems; it details the elements of a successful collaborative enterprise, and it presents a vision of dynamic and collaborative supply chains.

At Issue: What's slower than a slow boat from China? The paperwork for the shipment. The complexity of the shipment's physical path from point-to-point is nothing compared to its information path which is often twisted, inefficient and counterproductive.

Believe it or not, despite major improvements in shipper, importer, freight agent and regulatory agency data systems, shipments can still spend days or weeks in port waiting for their documentation to catch up with them. The problem is that the level of collaboration needed to meet the stringent information requirements of international freight and logistics management has not been universally adopted. It hasn't been accessible to third-world manufacturers, to the smaller shippers or to the wide variety of people and organizations that might need it. Until now.

It's important to understand the complexity of freight and logistical information management. The most direct route from point A to point B may be a straight line, but ask any importer or customs broker and you'll soon see that the physical path-and the information path-between the two points is more often a twisted quagmire involving carriers, agents, regulatory agencies and specialized service providers. The spatial, cultural, technological and motivational distinctions between the two points only exacerbate the challenges.

With the traditional approach, every new party adds cost and delays the process. Every question or unanticipated requirement has the potential to derail the process. In today's time-critical climate, when even minor delays can spell the difference between a market success and utter failure, the inability to share reliable logistical and freight management information represents a serious impediment to supply chain effectiveness.

Freightek's e-portal: powered by Bluestone Total-e-Server.

Freightek was formed to provide a B2B information technology portal for international logistics. Their portal-enabled through Bluestone Software's Total-e-Server™, the application server at the heart of the Total-e-Business platform-provides fully integrated product shipment, fulfillment and delivery tracking and compliance servicesFrom the start, the Freightek process was conceived to support all aspects of the supply chain, providing integrated one-stop tracking of the physical product and meeting the demanding documentation compliance requirements of shipping regulators. Freightek's e-Focus portal sets new standards for the movement of cargo and information, and for merchandise management by following the shipments from the time they leave the shipping dock to their arrival at their ultimate destinations and providing electronic access to shipping manifests and other document information along the way.

The Internet-based logistics IT portal offers a suite of services that small or large companies-be they importers, freight intermediaries or related service providers-can use to facilitate and track the compliant and expeditious movement of data across the supply chain. Rather than incurring large, up-front outsourcing costs, Freightek's customers pay as they go on a per-transaction basis. These services can be seamlessly integrated into existing supply-chain management systems on an "a la carte" basis.

For Freightek, these technological innovations represent more than a good idea; they represent a creative and successful business model. The entire organization is focused on universal collaboration among any freight and logistics management stakeholders.

Before committing to a specific direction for Freightek, Larry Antonucci collected insights from companies with firsthand experience with international shipping, logistics and import/export documentation. Without exception, these companies have seen the demands of international traders escalate dramatically, particularly since the adoption of the Customs Modernization Act .

The Freightek e-Focus portal represents their unprecedented understanding of the freight and logistical aspects of supply chain management, but it also demonstrates some really creative entrepreneurial thinking-thinking that stems from a clear recognition that knowledge collaboration is central to frictionless supply chain collaboration. Even their per-transaction revenue model is innovative and reflects an understanding of the need to connect collaborators throughout the world including companies that have yet to make significant investments in internal IT capabilities.

Collaboration Example: Advanced Notice Speeds Handling, Automates Management

Electronic Advance Shipping Notices (ASNs) are just one area of focus for Freightek's system. Using a PDA and Freightek's 'scan pack' capability, UPC codes can be scanned while the shipping container is being packed. This approach includes a real-time audit procedure and assures total accuracy at the shipping point. The shipper can even use recipient-specific rules to reconcile and evaluate the shipment while each shipment or order is being fulfilled.

This detailed, UPC-level information forms the basis for shipment clearance that can now be tentatively granted even before the freight arrives in port. The same shipment data is also sent to the ultimate recipient so they can automatically populate their Warehouse Management System (WMS) based on the anticipated receipt of incoming materials. Upon receipt, or at any time in the process, discrepancies and issues of noncompliance-now very unlikely-can automatically generate e-mail alerts and prompt corrective intervention.

Even without special barcode-equipped handheld devices, authorized stakeholders can log in to the system (using an Web browser) to add, review, analyze and exchange freight and logistical information. For automated information exchange, the system also lets collaborators exchange batches of information using HTML, XML, EDI, FTP and virtually any message format, including standard (SMTP) e-mail messages. This means that the advantages of this portal are available to anyone with Internet access.

Another advantage is for those companies doing EDI. This is a way for them to 'net enable' their EDI and do it quickly and with more partners than they may have originally planned.

For once, the information chain isn't the bottleneck that determines the speed of the physical transportation chain. Rather than serving as a gateway that permits the continued progress of the freight, the information can actually lead the process, pulling the necessary participants into the process at the correct time, and giving them what they need to expedite delivery. Yes, hard as it is to believe, the impediments have been removed so the information can move faster than an ocean-going freighter! And equally important, all stakeholders can be granted appropriate access to the necessary information, anywhere and any time. (Security features provide limited access based upon predetermined access authorization and user recognition/registration.)

A Vision of Collaborative Commerce

Larry Antonucci's vision is to make this and similar collaborative opportunities available to companies of any size, anywhere in the world, regardless of their present ability to invest in leading-edge technology. Freightek's Web services and collaborative commerce framework can be used as a unifying IT backbone to enhance competitiveness and value across the entire supply chain. It demonstrates that there are innovative, but practical ways to deal with the growing amount of technological diversity as long as certain fundamental guidelines are followed:

• Rely on standard Internet technologies for data access and sharing
• Seek interoperability of loosely coupled applications
• Look for more than transactional exchange; target collaboration
• Pursue industry redefinition to achieve sustainable competitive advantage

Standard Internet technology and connectivity: The first prerequisite for effective collaboration is standardized connectivity; it's clear you can't share information with people who can't come to the same table. But connectivity brings more than the ability to trade messages-that's possible using fax technology-it also implies the ability to exchange information in real time, without technology differences and without losing the ability to reuse the information. The only way to achieve this is through the use of standards for presentation, logic, exchange and security.

The use of standard Internet technology is the only way to achieve this connectivity. Bear in mind that Web standards have grown to include presentation formats (HTML, etc.), logic/processing languages (JavaScript, EJB, etc.), messaging protocols (SMTP, FTP, etc.), and security approaches (HTTPS, SSL, etc.). Without the adoption of such standards--in fact, without standards covering every one of these issues-collaboration would not be possible.

Application Interoperability: Second, early approaches to collaboration were based on assumptions of a homogenous application environment. (If you want to work with us, you'll have to use this software; you'll have to run it on this specific platform, and you'll have to use it following our proscribed processes.) Is it any wonder why adoption was less than swift?

Freightek understands that the integration and interoperability of loosely coupled applications will be key to both attracting users to their portal, but also to achieving and maintaining best-of-breed functionality in all aspects of their business. The advantages of interoperability extend beyond the Freightek portal into the customer enterprise. What good does it do to receive an electronic advance shipping notice if you can't use it to automatically populate your warehouse management or inventory systems? In other words, true collaboration is best achieved when information is exchanged in ways that preserve the portable reuse of that information.

Targeting Collaborative Interaction: Once customers, partners, agents and employees have access to the information resources they need, it isn't enough to merely execute simple transactions. It's equally important that all of the stakeholders have the ability to work with the information in ways that are unique to their needs and interests.

What exactly does this mean? If the various applications have an ability to interoperate, isn't that enough? No, for true collaboration, you want to permit and promote a deeper understanding of and greater utility for the information.

Consider how a retailer might influence the packaging of products prior to shipment from the overseas manufacturer. The current approach has the importer taking delivery of the imported goods after they clear customs. The importer breaks the shipments down and repackages them for shipment to their customer a retailer. Rather than shipping them to a single location, however, the importer uses store allocation information and ships different products and different quantities of each product to warehouses in different parts of the country. In turn, the warehouses handle deliveries to the local outlets based on order quantities and sales volume.

A richly collaborative business web would permit store sales data to flow straight through the retailer's organization, to the importer and on to the manufacturer or manufacturers. Rather than packing products in containers based strictly on cube utilization, the manufacturer's shipping department uses the retailer's information to kit the products in such a way that shipments don't need to be completely broken down and repacked before delivery to the retailer's warehouses or local stores. In exchange for its service, the manufacturer gets a premium price, the importer saves time and labor and the retailer takes receipt of the merchandise much more quickly. Rich collaboration is a win/win/win proposition.

More than merely the presence and usage of compatible data formats, this type of collaboration requires the development of visionary business processes that are based on mutual trust but also protect each partner's unique interests, system security, open stakeholder communication and a willingness to step back and consider new ways of doing business.

Redefining an Industry: The last requirement for truly collaborative commerce is the willingness and ability to reinvent the processes that have for so long defined our various enterprises and industries.

Just as visionary individuals sometimes have trouble convincing others in their own companies about the value of making a change, changes involving multiple trading partners can also be difficult. The size of the challenge increases proportionately with the cost and complexity of making such a change. Those who see the value of with such a reinvention would argue that it isn't the size of the obstacle that matters, but size of the opportunity.

And, it's much easier and more rewarding to pursue reinvention when you can rely on the technology, knowing its going to work 100% of the time and that will be flexible enough to respond to a changing world.

Overcoming Obstacles to Collaboration

Freightek is a business whose very livelihood depends upon the adoption of technology-enabled collaborative practices in an industry that has heretofore seen very little need for working together. What have been the principals that guided their business model and what else can we learn from their success?

While few of us may be in a position to create new business ventures based on collaborative commerce, Freightek's success has been enabled through a specific set of technologies and system attributes delivered by their Bluestone application environment and business solutions:

Standards reduce risk: Freightek built their system around XML and J2EE. The use of established standards for data and development is fundamental when planning your business infrastructure.

Data standards will protect your ability to exchange and meaningfully reuse information with your trading partners. XML is the foundation upon which all emerging standards are based. Web technologies are compatible with XML.

If you think it's important to protect your systems ability to run on any Java-compatible machine, regardless of hardware or operating system, be sure to look for 100% Java. Java was designed for portability and hardware/OS independence.

Development standards will improve application portability and help to assure that developers will be available who understand your code. J2EE is the de facto standard for 100% Java enterprise applications. It also includes features that assure reliability, security and developer productivity.

Database and application connectivity is essential. Achieving interoperability between loosely coupled applications can be achieved with Java and XML.

The system in use by Freightek uses a Universal Listener Framework that separates business logic and messaging formats. This means that trading partners can access and work with shipping and logistics information using whatever means they prefer. Whatever method they choose, they will be granted comparable access, comparable flexibility and comparable service. And when new messaging formats are introduced, it will be easy for Freightek to add the ability to listen to, understand and respond using those formats.

The internal data format of Freightek's system is based on XML. XML is the lingua franca of e-business. In this case, it serves both as an internal data format and the format Freightek's developers use as they configure various aspects of their system. But equally important, it's also the basis upon which other industry-specific standards are being created. Freightek's system permits any of these standards to be used-and understood-by the applications connected to Freightek's server, including standards that are still evolving.

Reducing deployment costs and the cost of ownership: The strict adherence to standards should not increase the cost of your infrastructure. Compared to less flexible, proprietary or pre-built solutions, standards-based systems will be easier to integrate and customize. You've got to be able to leverage your own legacy systems and business practices, but also those of collaboration partners you have yet to meet.

Freightek's system included pre-built connectors for all kinds of business applications, databases, messaging systems and best-of-breed Web commerce support applications. It included simulators for testing wireless device compatibility and trail maps that made it easy for them to create new functionality. Capabilities similar to these can free you to create low-cost solutions that extend the usefulness of your system into new areas.

Non-stop, mission-critical performance: Along the same lines, you don't want to be faced with hard limits on the number of trading partners with whom you can collaborate. In most cases, these are practical, based on degraded system performance that comes from heavy traffic and demand. Systems that allow unlimited scalability, a high degree of fault tolerance and rapid, programmatic disaster recovery are best.

Pay as You Go: Freightek's success was based in part on a model that allowed their customers to use and pay for just the capability they need, yet remain secure in the knowledge that when and if they needed more capability, they could buy it. It's unlikely that you'll be able to develop your enterprise infrastructure using this approach, but the lesson is still valid: Protect your options, but build what you need, when you need it. Too many companies start with a vision that requires an audacious scope, then become overwhelmed as anticipated implementation costs mount.

You can do a lot with some very simple steps, and you can take those steps without closing the door on the grand design if you stick to standards, use open systems and take things a step at a time. In Freightek's case, they also protected their future flexibility with Bluestone's Universal Listener Framework, something that makes the addition of new trading partners a relatively trivial endeavor.

A system that prevents you from partnering with an EDI based vendor, or one with virtually no internal infrastructure at all, will not achieve the collaboration flexibility you desire. There are a lot of potential collaborators out there who have relatively little technical sophistication.

Unleash Collaboration

The example sited in this article focuses on freight and logistics management, but the lessons are universal to businesses everywhere. Collaboration is all about expanding your focus beyond the four walls. It's about engaging in productive relationships with external customers and suppliers, and the customer's customers and suppliers. It's about using the Internet to create business webs where synchronized and automated supply chain information to accelerate business processes.

Key to the process is the ability to leverage, consolidate, understand, and work with content from different systems. The result is single-point access to both enterprise and supply chain information so your decisions can be based on a complete view of the value chain, a view that reveals opportunities associated with every stakeholder from the designer to the manufacturer to the consumer. A system that provides deep visibility and real-time interaction seamlessly across the value chain.

Supply chain collaboration can enable frictionless commerce and light-speed response to opportunities. For businesses that are prepared to step into this realm, the rewards are many, ranging from employee productivity to customer loyalty and market share. Fortunately, the risks and challenges are fewer day by day.