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Web-based transportation logistics is driving the cost out of products
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Web-based logistics systems first appeared about four years ago, but were used mostly during the first two of those years in test cases by early adopters. Now they’re becoming more widely accepted, Minahan says. “You’ll see more and more of them, absolutely,” he says.
As in other emerging technology markets, web-based logistics systems got an early push from a new crop of small, agile technology vendors, including such companies as Arzoon, CarrierPoint, Cleartrack, Clicklogistics Information Network, GT Nexus, Logistics.com and Nistevo. But now more established players among the supply chain and transportation management technology markets are also developing web-based logistics, serving to confirm that the market is here to stay, Minahan says. He cites web-based logistics development from established supply chain vendors i2 Technologies Inc. and Manugistics Group Inc., and from major ERP vendors such as Oracle Corp. and SAP AG.
Aberdeen projects that money spent by all industries on web-based logistics resource management systems will grow steadily over the next several years, climbing from $5.6 billion last year to $9.6 billion in 2005. Aberdeen includes in its definition of logistics resource management several supply chain areas, including event management, contracts negotiation, transportation management and inventory management.
Small fry first
At Family Dollar, the G-Log GC3 system is being deployed in the first quarter, during which two G-Log staffers will be on-site to train the retailer’s personnel in how to use the system, including how to set parameters for optimal freight movements. Burns says he expects a smooth transition. “Nothing good is easy, but the implementation and training for this is much easier than anything else I’ve seen,” he says.
By the time GC3 is completely deployed in April, it will have a large number of vendors participating, Burns says. The retailer will first consolidate the high number of truckloads that arrive from smaller retailers, for which Family Dollar arranges and pays for shipment transportation. Then it will begin consolidating shipments from larger vendors, such as Procter & Gamble, which arrange and pay for their own shipment transportation. These larger vendors then tack their freight costs onto the price of the goods.
With his new visibility into P&G’s freight movements, Burns will be able to reallocate some of its truckloads when P&G’s carriers call him to schedule deliveries to Family Dollar distribution centers. “We’ll remove some of the transportation cost from the cost of goods,” he says.