Transportation Messaging

If I am the logistics manager responsible for keeping a production line running, my stocking and replenishment strategy will be heavily influenced by the dependability, timeliness, and quality of the information I receive from my suppliers. If I am the buyer for a retail operation responsible for keeping the right product on the store shelves, I will react the same way. Inventory accumulates as a protection mechanism when information is bad.

Analyzing and optimizing the supply chain requires a comprehensive database of supply chain information. A corporation must accumulate order and shipment data from its external vendors, carriers, third parties, and customers. This can represent thousands of messages in varying formats and sent via different media. True trading partner integration along the supply chain has proved to be a tricky task, and today there is no information focal point anywhere in the supply chain.

Supply chain managers require the capability to develop a plan and monitor the actual status, measuring the performance-to-plan and highlighting exceptions. This requires collecting pipeline information from all trading partners and computer systems, evaluating each new transaction and determining key business events, and getting the information about those key business events to the right person in time for decision-making.

When critical customer and product information is available when needed, businesses can not only increase profits and partnering potential, but they can reduce operating costs, inventories, and order/ship cycle times. When management has the right information, it can analyze each link in the supply chain and change any logistics process that limits customer satisfaction and profits.

In order to manage global businesses as efficiently as possible, a key focus must be on the importance of information. When the highest level of data is accessible, companies can eliminate unnecessary operational processes and inventory, expedite operations, and anticipate and eliminate problems before they impact service. Information technology has the potential to have the greatest impact on shortening the global supply chain.

Business Information Processes
A key component of supply chain information is the data provided by carriers about the state of the shipment process. There are three core transactional¹ business processes where shipment-related messages are exchanged on every shipment between the shipper and the carrier. These are Booking, Shipment Status, and Freight Billing. Of these, Booking provides significant supply chain information because during this process the cross reference between the orders being shipped and the shipment (or shipment documentation) is established. Shipment Status is the carrier's method for reporting progress of the shipment and any anomalies that occur in transit. Freight Billing occurs once the shipment is complete (normally) -- the carrier invoices for his transportation services. Freight Billing does not provide any information that is significant to the monitoring of the progress of the order/shipment cycle.

Within the various modes of transportation, ocean, motor, rail, and air, the same business process may be conducted in completely different ways. Agents and industry practices have added sub-modes with unique operational business practices². There can also be substantial differences between domestic and international business practices. Once the shipper has completed his shipment planning decisions, he must contract with the carrier to transport the load. Depending on the mode of transport, the shipper will either perform a Booking or a Carrier Notification process.

Booking is the carrier's order process and is performed primarily when exclusive use of the conveyance is required, or where a space reservation on a specific vessel or voyage is required. Once the load has been offered to a carrier, he is expected to either accept or reject the load and terms, which completes the agreement. With Air Cargo, Ocean, Truckload, and TOFC or COFC booked through an agent, the shipper sends the carrier a booking request (EDI, FAX, or phone call) and the carrier responds with an acceptance or rejection. With Ocean, the carrier can also send back a counter-proposal (e.g., an alternate vessel/ voyage or routing).

Rail procedures are slightly different -- the shipper sends the rail carrier a waybill and the carrier comes into the shippers yard or siding to pull the cars; there is no formal acceptance procedure. The same is true with TOFC/COFC booked directly with the railroad. The shipper tenders his trailers or containers at the origin ramp and by the specified cutoff time (latest time of arrival to be loaded in time for the next train's departure). He provides the rail carrier with a waybill and the rail carrier puts them on the next train. Capacity is usually not an issue because cars can almost always be added to trains.

Multi-modal booking is the most complex because each of the legs of the voyage must be booked individually (assuming the shipper is booking the service himself and is not contracting with a forwarder or carrier for door-to-door service). The legs are booked in priority sequence -- the most difficult to book, or most time critical first. If any of the legs cannot be booked, it may cause the shipper to re-route or reschedule the shipment.

Most of the time, booking is not done by Parcel or LTL carriers. Unless the shipment volume is unusually large, the shipper assumes that the carrier has infinite capacity and automatically accepts all shipments tendered to him.

Shipment Status
The objective of a shipment service is on-time performance. Operational continuity is insured by maintaining schedules on each shipment and then monitoring progress. Shipment Status evaluation is the process of employing carrier-provided messages about the shipment (pick-ups, ETAs, and deliveries) to monitor the actual shipment's progress and to make performance-to-plan comparisons -- comparing the carrier's status to the plan.

Each mode of transportation has a different method for providing status. Generally, status is provided in three ways -- the carrier provides a report of where the conveyance was last seen (called a spotting message), an action that occurred to the conveyance (picked up or delivered), or an estimated time of arrival (computed from the dispatch system or other mechanism)³.

Air cargo uses the IATA CargoImp standard for international inter-line traffic. Status codes report actions that occurred and changes in state or location, including when the consignment is received from a shipper or another airline, is booked, manifested, prepared for loading, departed, or arrived on a specific flight, is to be or is actually transferred to another airline, that the consignee has been notified of its arrival, cleared by Customs, delivered, or has a discrepancy.

With motor transport, the status provisioning procedures for both LTL and Truckload are similar. Both use the ANSI Set 214 utilizing the Status Code to describe the event that has occurred -- primarily to confirm pick-up and delivery, and to report estimated time of arrival. The status is based on driver call-ins while in transit (two to three times a day), except for those carriers with in-cab satellite communications systems. Status information is fed into the carrier's dispatch system and is extracted several times per day and transmitted to each individual customer.

Two different messages are used to convey Ocean status -- the Ocean Status Details (ANSI Set 315), and the Arrival Notice (ANSI Set 312). Normally, ocean status messages report estimated and actual arrival and departure from ports of loading and discharge. It is based on vessel radio calls, which occur approximately every three hours. The arrival notice is a separate message because it is also used for customs notification and clearing. Most carriers deliver status in a batch, as with motor.

Railroads use the Car Location Message to indicate status (both car and container/trailer). This is a proprietary standard unique to North American railroads. A car location message is generated every time an "event" occurs, so the timing is not regular. The most commonly used event codes are: pull - the car pulled from the customer's siding; junction delivery and received - delivery from one railroad to another railroad; arrival at an in-transit rail location⁴; constructive placement - car/container/trailer is available for placement or highway departure; actual placement - car/container/trailer has been placed on the customer's siding; and bad orders - car/container/trailer has been reported or received defective at location shown and shopped for repair.

Issues
In typical companies, thousands of voice, mail, FAX, and electronic documents/messages on material and product status are sent and received among supply chain partners on a daily basis. Besides the mixed media in communication, documents and messages arrive in varying data and format standards, from different networks, and to different internal company locations. Each mode of goods transportation has a different method for providing status. International situations exacerbate the problem because of culture, language, and process differences.

Problems occur because status updates do not occur in a timely fashion. Systems often do not monitor movement through the pipeline and concurrent data compliance. When status updates do not occur at all, the operational manager cannot distinguish a supply chain problem from simply missing data.

Shipment status is meaningless by itself, for the most part (with the exception of those messages that report a specific problem). It is data that is out-of-context -- it indicates the state of the transit process, but must be compared to the schedule for the shipment to have meaning. The shipper must save his planned schedule for each shipment and evaluate the carrier's status reports against that plan. Many manufacturing and distribution software systems have the capability to create a plan for inventory requirements and shipping schedules, but lack the capability to monitor the successful execution of that plan.

Further, shipment status reports both the routine and the exceptions together. Statistically, better than 99% of all shipment status tells the shipper that the shipment is on schedule. If the shipper ships several hundred shipments per day and the carrier reports status multiple times per day, the shipper may be receiving thousands of status messages each day telling him everything is OK. What he wants to see is the one or two messages that indicate there might be a problem.

Often, status does not get to all of the information customers that need supply chain information. Shipment status is sent to the entity that contracts with the carrier -- the shipper. The entity that needs the status most -- the buyer or receiver -- is frequently not involved in the shipment transaction. More and more often, customers are demanding shipment status from their vendors. When the vendor and the customer belong to different corporations and do not share a computer system, this implies that the vendor must receive the shipment status from the carrier, must determine which customer or customers it applies to, and must transmit it to those customers in the appropriate manner.

In the past, two initiatives have been tried and failed: proprietary carrier systems and single media systems for all business.

• Many carriers developed proprietary systems that allowed a shipper to access the carrier's computer system and transact business (usually from a desktop PC). These systems failed because they could only access the individual carrier's system. They made the assumption that the shipper only did business with a single carrier. Shippers resisted the use of these systems because they were different for every carrier and were, therefore, an exception to their routine.
• Single media systems (such as EDI only for all forms of transactions) have been equally unsuccessful. A single media system does not account for different ways of working and differences in technical sophistication between trading partners. EDI has always been an exclusionary technology, available to only the larger, more technically sophisticated trading partners. When technically complex implementations are further complicated by an individual's unique requirements, progress is slowed. Also, EDI is basically a batch communication mechanism -- it was designed to replace the mail, not the telephone. Status information is perishable; it is useful if a problem is detected soon enough to take corrective action.

Often, physical receiving is scheduled at the last minute and the receiving information is not posted until after the goods are received. Also, if orders are either late or incomplete, the anomaly is only detected after the goods have been received and put away. This is because the information about the status of an order accompanies the goods.

This causes problems for the buyers and inventory managers because, if they are not going to get what they ordered, they do not know it until it is too late to take corrective action. Advance notice of an exception would give the managers time to react -- to place an emergency order, to transfer stock, or to allocate stock.

When a status report is out-of-tolerance with the plan (and according to the shipper's established rules), it should cause an alarm to be sent to interested users -- particularly those responsible for the order/shipment cycle and customer service. This gives the user time to evaluate the situation and take corrective action, if necessary. If a shipment in jeopardy of missing its committed delivery can be discovered early enough, corrective actions can be taken that minimize operational interruption and maximize the potential to meet the committed service level.

All of these factors contribute to make information difficult to collect and disseminate to supply chain managers in a timely fashion to insure effective operations management.

The supply chain information issues we have highlighted are:

• Getting consistent information -
  problems result from the variety of media, formats, and contents from different trading partners and modes
• Getting timely information -
  information accompanies the shipment or is transmitted periodically; this results in supply chain managers not getting enough notice to take corrective action
• Status messages are out of context -
  the status must be compared to a plan to determine anomalies
• Filtering data -
  separating the wheat from the chaff; supply chain managers receive too many routine and meaningless messages
• Acting on the absence of data -
  discovering when a missing status message indicates a shipment problem, rather than a data problem
• Distributing information -
  getting the information to the right people at the right time to make decisions

Trends and Impacts
During the past several years, supply chain management practices, industry initiatives, and technological advances have combined to begin to provide solutions for the supply chain manager. There are trends in supply chain management practices, each with an implication on supply chain information:

• Integrated Services -
  Increased emphasis on service causes companies to look to service providers to deliver integrated services with the primary objective being service commitment (as shippers reduce shipment size, increase shipment frequency, and demand higher velocity through the pipeline).
• Agents, such as TOFC/COFC and Air Cargo agents, or third-party logistics companies take the responsibility for integrating the disparate modes, schedules, and business methods and provide integrated door-to-door transportation and information services. They act as both a shipper and a carrier -
  they are the carrier of record for their shipper customer and the shipper of record for the ultimate carrier. These agents must perform both shipper and carrier functions in many application segments, such as routing and scheduling, shipment documentation, booking, tracking and tracing, and freight billing⁵.
• Core Carrier Programs -
  Many shippers have adopted a "core carrier" (or service provider) concept. Under this concept, the shipper uses fewer carriers that each receive a larger portion of that shipper's business. The shipper works closely with a few carriers to develop individual arrangements (contracts) tailored to his specific needs in contrast to buying standard services from many carriers at the lowest rates.
• Third Party Logistics -
  There are many more opportunities for third parties to provide services by performing the role of the integrator. This role is being assumed by the carriers and by agents who form service alliances with sub-contractors. (Note: this is particularly true of international services, where there are many more individual component services that must be performed to complete a shipment.)
• Specialized Services -
  Many supply chain services are specialized; they are directed toward specific commodity groups, modes, geographies, or service levels. The agent or carrier can then construct a service network of dedicated or predominant sub-contractors in specific segments. This makes guaranteed service provisioning and the integration of business systems more feasible and economically viable.
• Electronic Commerce -
  The ability to conduct business transactions electronically and then to provide timely, accurate information about the state of the process has become a cost of doing business for service providers. Third parties assume the responsibility for managing the transactional business processes and integrating the status reports from all of their sub-contractors. What was once a competitive advantage for a service provider has become a competitive necessity.

These programs imply that the supply chain manager is dealing with fewer trading partners who assume a greater responsibility for providing accurate and timely information. Often, the service provider is responsible for integrating and homogenizing information from multiple sub-contractors.

Industry Initiatives
After the turn of the century, many of the initiatives that have begun in the nineties will have matured and become effective. They include:

• Data standardization -
  Alliances have been formed in both the US rail industry⁶ and the international ocean carriers communities to attempt to standardize the ways of transacting business to schedule, book, and track and trace freight within a given mode of transportation. Further, they define specific usage guidelines for individual messages to eliminate the variance in semantics that can occur from one service provider to the next. These alliances exist in addition to the specific industry's standards-usage committees (that are an adjunct to the EDI standards-making process for both the ANSI and EDIFACT communities). The advantage that these industry alliances have over third-party service networks is that this process is driven by the service providers themselves. This commitment from the service providers increases the potential for success.
• Conveyance tracking technology developments -
  Carrier industry groups have been experimenting with several alternative technologies to improve the data quality and timeliness of their shipment tracking data. Numerous US motor carriers have installed satellite tracking systems capable of providing near real time truck tracking⁷ and messaging between dispatch and the driver at the same time. This obviates the need for driver call-ins to collect status and provides accurate location data to the dispatch system. (Note: this technology impacts the quality of the data received by the shipper, but the status message still comes through the carrier's dispatch system -- it may not impact the timeliness if the carrier does not change the frequency of status message transmissions.)
• As of 1995, all North American rail cars in interline service carry automatic equipment identification (AEI) tags.
  This system allows a rail car to identify itself to readers that are strategically placed throughout the rail network for location reporting. Although the data is collected much less frequently, and only at fixed locations, it is an economically viable solution to tracking the entire North American rail car fleet. The same technology is also being adopted by many of the ocean, TOFC, and motor carriers with trailers and containers in intermodal service.
• Data filtering (key events and exceptions) -
  Another development that will impact the way in which business is conducted is changes to the dialogue between shippers and carriers. Currently, too much meaningless data is transmitted, particularly concerning shipment status. Because of the way in which status provisioning systems evolved, status is sent multiple times daily on every shipment regardless of its state or condition. The shipper really wants to know if there are any problems that need to be addressed. In the future, carriers will offer the option of sending only necessary information - exceptions and key events (such as proof of delivery). This will eliminate the requirement for the supply chain manager to sift through mountains of useless data to find the useful information.

Technological Advances
Three technological advances have also contributed to the ability to manage the supply chain with information. They are:

Better tracking and tracing software to manage the muddle of supply chain information
Complete supply chain visibility requires a central database of pipeline information, beginning with the original purchase order. Then this database is updated with events against the PO: inventory shipments and receipts, and scheduled and actual pipeline movements. A monitor must process all enterprise data and messages from trading partners, identifying the exceptions. Checking shipment status information against the PO can determine which shipments may jeopardize inventory availability. Then the proper individuals must be notified if action is required to insure inventory availability -- in enough time to respond to the situation.

Certain sophisticated companies have built such systems for themselves and commercial software products are emerging in the market. These systems are generally rules-driven (so the user can define which key events he wants to highlight) and include alarm services⁸ that will alert all interested parties when the key event occurs. In the future, a single desktop PC (or workstation) with the capability to receive and integrate information from multiple media sources will solve this problem. This will also increase information availability through low cost, wide-band data communications.

When this is accomplished, companies can shorten their order/shipment cycle times and increase lead time dependability, which results in reduced inventory and out-of-stocks. They can also increase control of their inbound freight and increase their reaction time to incomplete or late shipments. Safety factor reduction, and the associated cost reduction, is a function of how soon a buyer is alerted to a variance and the options for remedy or damage control.

Employing a Web browser as a single desktop interface to multiple media supply chain information sources
The development that has the most potential for impact on the way in which business is conducted in logistics is the single desktop interface to multiple media information sources provided by the World-wide Web. Certain of the software monitors being developed have both web-based inquiry capabilities (so that customers and staff with customer responsibility can inquire for status) and the ability to hot-link to carrier web sites to obtain the most current status (recognizing the constraint of periodic batch file transmissions).

In this environment, the user can make more extensive use of intelligent agents to make many decisions in his stead. Employing agents similar to those that are currently available to monitor stock market prices and trends, the logistics manager might employ intelligent agents to monitor the progress of just-in-time or promotional materials. These agents can be programmed with tolerances and alert the subscriber to out-of-tolerance conditions. Another agent might subscribe to the alarms generated by the monitoring agent and, using history of similar occurrences and rules, recommend a course of action to resolve the anomaly. Yet another agent might be used for supply chain synchronization -- evaluating the impact of the first event on the balance of the supply chain. For example, when a shipment is reported delayed and is expected to be late, the agent might evaluate the impact on the manufacturing schedule or on deliveries to stores. A combination of agents that detect events, evaluate their impact, and recommend resolutions give the supply chain manager the best possible information to make timely decisions.

The intelligent agents might come from numerous sources
Service providers or the user himself can be integrated into a completely automated workflow to perform certain logistics processes. Available web-based technology and the accessible and relatively low-cost communications band width provided by the web make these type of tracking technologies feasible and approachable.

Refining information exchange (various forms of electronic commerce)
Earlier allusions to difficulties with implementing EDI universally were not meant to imply that EDI is to be replaced as a delivery media; quite the contrary. With industry initiatives driving the adoption of standards and more capable technologies available to all participants, EDI is expected to become ubiquitous for those transactions where it is best employed -- business documents. Two factors above all else have slowed adoption of EDI for transportation -- the need for technical sophistication to implement successfully and non-standard implementations required to interface with multiple trading partners. Two developments will influence this:

• The new generation of EDI translators are true semantic mappers that do not require the rigid structural conformity of their predecessors. They are capable of including trading partner-specific requirements without having to develop unique and time-consuming implementations for each. Further, these have been abstracted to create rapid- implementation workstations for specific industry alliances (e.g., for communications with the Ocean carriers) or industry- specific hub-and-spoke type networks (most commonly employed in the automotive industry).
• Microsoft's Commerce Interchange Pipe is an easy-to-use alternative electronic commerce package with a built-in semantic translator (based on XML), trading partner management system, and communications system that uses the Web as a communications transport mechanism. This recent development promises to extend the reach of electronic commerce to smaller, less sophisticated trading partners who are equipped with nothing more than a PC running Windows NT.

CONCLUSION
In the year 2000, the average shipper will have easier access to logistics services facilitated by improved technology. The shipper's most difficult decision will be selecting the service providers he wants to use for specific sets of conditions.

Once that decision is made, his computer workstation will automatically develop his daily shipment plan by asking intelligent agents to route and schedule all shipments (based on parameters such as achieving the lowest costs while maintaining the required service levels). The shipper can then review and approve the shipment plan and that approval will cause another series of intelligent agents to automatically book the shipments with the carrier and forward the necessary documentation to appropriate trading partners.

While the shipment is in progress, direct computer-to-computer communication will track the shipment at the appropriate levels and intelligent agents will monitor its progress against its schedule and service commitments. If any exception occurs in this process, an intelligent agent will locate the individual(s) responsible for making a decision and inform him immediately of the exception and recommend alternative courses of corrective action.

Once the carrier or agent confirms the delivery of the shipment (electronically), another intelligent agent will compute the amount to be paid to that service provider from their contract and issue an electronic funds transfer request for payment (eliminating the need for the freight billing process, and its associated costs and delays).

About the Author
Peter M. Stiles

Peter Stiles is the President and Co-Founder of Symbius Corporation. He has over 29 years of experience in logistics and supply chain management and is a recognized national expert in e-commerce logistics solutions. Pete has provided strategic, design and marketing consulting services to some of America's largest corporations, including Union Carbide, IBM, Conrail, Sears, Scott Paper, Union Pacific, Safeway and Revco. He was the founder and president of Operations Technologies and co-founder of Rand-McNally-TDM. Pete is the architect of the first commercial pro-active cargo booking, tracking and tracing system. He also developed the concept of Intelligent Messaging and Dialogues (event-driven electronic commerce). In 1992, he co-founded Operations Technologies and served as its President. Operations Technologies developed the first object-oriented Intelligent Messaging system. Several companies adopted this system to provide glass pipeline information visibility across the supply chain. Pete is a frequent speaker at both domestic and international industry seminars, a guest lecturer at the Kellogg School Transportation Center and an advisor to Calloway Business School at Wake Forest University.

Footnotes

1. These are in contrast to periodic processes, where information is not related to an individual shipment and where information is exchanged periodically. These include various types of data provisioning: carriers providing shippers with schedules, rate quotes, and equipment availability, etc. These processes are not delineated in this document.
2. For example, when the TOFC/COFC service (Trailer on Flatcar/Container on Flatcar) was conceived, the railroads did not want to deal directly with the retail customers, so they created a network of independent agents to act as an intermediary. These agents realized their competition was truck transportation and aligned their transactional business practices with truck rather than rail.
3. Note that the carrier collects the status of the progress of the conveyance -- truck, train, vessel, or flight. This is cross-referenced to the shipper's documentation, established either during the booking process, or from the shipment documentation (Bill of Lading, etc.).
4. Since most rail status is dependent on passing a fixed location, rather than being based on driver or vessel calls to dispatch, the lack of a status message can indicate that the car has been placed on a siding and is not moving.
5. Agents must associate and cross-reference the contracts with their shipper and their carrier. If they are a TOFC agent, for example, they must track the trailers tendered to them by the shipper and cross-reference them to which rail cars they are riding on. The railroad will bill and report status by rail car, the agent must explode the status back to the individual containers and owners.
6. The industry has also been impacted by the consolidation that has occurred in the past decade -- from seven class one railroads to four (the Burlington-Northern & Santa Fe Merger, the acquisition of the Southern Pacific by the Union Pacific, and the acquisition of Conrail by Norfolk Southern and CSX).
7. Loran or GPS-based location reporting transmitted periodically through a communications satellite.
8. Alarm services "push" information to the user, rather than wait for him to inquire. Most allow the user to define the message media (pager, Email, FAX), format, and content. Some also allow the user to dictate specific conditions that must occur before the message is sent -- geographic, product, or time considerations.