September 1, 2005, 12:00 AM

Shifting Gears

(Page 2 of 3)

Although all of its seven stores are in Florida, Holiday Diver serves sharply different markets in different parts of the state. Stores in the northern section, between Orlando and the Georgia border, cater to technical scuba diving enthusiasts who explore northern Florida`s freshwater springs and caves with oxygen tanks and wet suits, while stores in Key West and other southern areas cater more to leisurely cruise-ship buyers of apparel and light-weight snorkeling equipment, Whiteman says.

Because Holiday Diver drop-ships from suppliers to its stores, it has limited time to prepare store managers for what will arrive and when, a challenge heightened by the fact suppliers rarely deliver exactly what the retailer ordered. "It`s rare that a shipment is identical to a purchase order," Whiteman says.

The ripple effect

Holiday Diver`s suppliers usually fax pre-shipment invoices to the company`s headquarters in Dania Beach, Fla., then Holiday Diver loads a shipment notice into its networked merchandise management system for the recipient store to view. But there are times when deliveries arrive before a store manager receives and views the shipment notice, and sometimes entire shipments wind up at the wrong store, which could leave heavy scuba- diving equipment taking up space in the wrong location. In one case, a shipment of scuba-diving gear--which can run from $450 to $1,500 per package--arrived at a store expec-ting apparel and snorkeling masks. "It created a rippling problem," because two stores had the wrong merchandise at the beginning of their selling seasons, Whiteman says.

Now, Holiday Diver is training its employees to use the InSight shipment tracking system from Fedex, which the carrier provides at no extra charge over its shipping fees. "InSight will allow store managers to see shipments at least a day before it shows up at a store," Whiteman says, adding that managers will receive automated delivery alerts in e-mail.

Holiday Diver will realize three main benefits, he adds. Stores will be better able to schedule employees to have enough people on hand to receive deliveries, and they`ll have more time to prepare selling floors for incoming merchandise, a crucial step since each store has limited storage space. Perhaps most important, Whiteman says, Holiday Diver will be able to re-route wrong shipments before they arrive at the wrong store.

Through InSight, which is part of Fedex`s Ship Manager service, Fedex makes available through web browser access the status of shipments as they are scanned at multiple shipping points, including international routes, says Jose Li, consultant in retail industry marketing for Fedex. "If a shipment is stuck in Customs, we alert you that there`s a problem there," Li says. In addition to being able to track the time and location status of shipments at multiple points in the delivery process, Holiday Diver will be able to view specific details entered by its suppliers into the InSight system on what they actually shipped, Li adds.

Plugging the drain

Providing shipment status information to internal retail managers is a key benefit offered by transportation management systems, experts say. "Access to shipment information by internal retail departments is where the real value is," Enslow says, noting that a recent Aberdeen study found that to be the top reason companies were upgrading their transportation management systems. "At three out of four companies, when managers have a question about shipment status and cost, they have to pick up the phone and call the transportation department," she says. "That`s a huge drain on productivity, because transportation managers have to be focused on getting enough capacity for shipments and reducing costs."

Hosted applications, she adds, serve this need better than do licensed applications, which weren`t designed to serve as information-sharing hubs universally accessible by merchandise managers, retail buyers, customer service reps and others who need instant information on shipment status.

Even hosted applications, of course, require some integration work. LeanLogistics takes four to 12 weeks to connect with a retailer`s purchase order system as well as with suppliers` and carriers` shipment order systems, depending on the number of companies, Potts says. The integration enables its users to match the details of what`s being shipped to what was requested in purchase orders. Training, however, with many users opting for a self-training software module, generally takes an hour or less, he adds.

As hosted applications become more popular, however, retailers find more suppliers and carriers already integrated into them. "We`re starting to see a lot of overlap of carriers," Potts says. "When we bring in a new shipper, we`re already networked with 30-40% of their carriers."

Other benefits

In addition to retailers not having to build point-to-point connections with suppliers and carriers, hosted applications also offer benefits such as best practices shared among subscribers learning how to better collaborate with suppliers and carriers, Enslow says.

Some companies opt for a hosted system to bide their time before deciding on a licensed system, leaving doubt over the long-term plans some users may have for hosted technology. Indeed, licensed systems from providers like i2 Technologies, Manhattan Associates and Descartes Systems Group Inc. continue to offer some advantages for shippers with special needs, such as the ability to manage zone- skipping, the bulk-shipping of goods to a regional hub to realize the best shipping rates.

But shippers should expect further improvements in technology offerings, as both hosted and licensed vendors fight to keep their share in a market that`s beginning to blur the lines between vendor offerings, Enslow says. I2 and Descartes also offer hosted versions, though these systems tend to be not as easy to connect with multiple carriers and shippers, Enslow says. In addition, Manhattan Associates offers a hosted system it acquired from Logistics.com. "LeanLogistics and others will have to enhance their value propositions and take even better advantage of their networks than they do now," she says.

The purely hosted providers are already on the right track, she says. Nistevo Corp., for instance, has been building expertise in helping to manage shipments across multiple shippers, carriers and retailer destination points, so that trucks can pick up partial loads at each of several suppliers and deliver them to multiple destinations. "That can help carriers keep rates down, with savings usually of 5-15%," Enslow says.

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