Lean Logistics Technology Roadmap — Overall Issues from the Logistics TRM

SCM Investment Costs

Costs for new investments in hardware and software technologies are often quite substantial and a business case has to be made to justify these high costs. The decision to proceed or not to proceed with a new investment in SCM technology is based on both expected payback (ROI) and strategic considerations concerning the sustainability or the competitive performance of the firm.

Technology improvements must be closely integrated with business process improvements. Technology is an enabler of improved business processes; it is not an end in itself. The link between the SCM technology and the overall strategic objectives of the company are similarly critically important.

The importance of logistics to the overall bottom line cannot be overstated. The way in which logistics technology and business process improvements dovetails with the overall strategic vision of the organization is equally or more important.

The importance of logistics and SCM needs to be sold within the company's senior executive ranks. Beyond ROI, the visionaries in the company need to be sold on the value of logistics and SCM.

Data Integrity

Data integrity, accuracy and completeness are the cornerstone of lean logistics. A very high volume of data is being managed relevant to supply chain management practices within an organization. Data for the retail sector involves hundreds of thousands of SKUs. The critical data elements that must be captured and monitored have to be identified. Manual hand-offs of data are to be kept to a minimum in order to avoid errors in reporting and re-reporting data. There is a zero tolerance for error, especially in critical fields such as health care and pharmaceuticals.

Given the enormous amount of data that must be captured, manipulated and monitored, exception-based reporting for critical fields may be the best approach. The identification of these critical fields for an exception reporting regime are of critical importance.

Interoperability

Interoperability or seamless communications across a number of disparate systems in real time or near real time is absolutely essential for supply chain management to work both efficiently and effectively. The challenge for many corporations is how to get technology to do this without the need for substantial new capital investments.

Building separate interfaces with each partner and bridging these interfaces seamlessly provides a considerable cost barrier to companies. A need exists for a common language or translation package that will provide the required communication bridges. XML and the Internet may provide this common language.

E-commerce standards both domestically and globally need to be established. In some areas such as pharmaceutical distribution these standards are now evolving (eg., Efficient Consumer Reponse (ECR).

Cross Border Issues

The fallout from September 11, 2001 has resulted in a crisis for Canadian industries in moving goods across the border to the United States. A virtual border crossing is considered to be a desirable solution.

There is a concern that access to the U.S. border is becoming a serious non-tariff trade barrier, especially due to the emergence of the Homeland Security Office and the pending U.S. Container Act.

The U.S. Customs Department implemented new regulations in December 2002 that affect containerized ocean-going cargo bound for U.S. ports of call. The measure is planned to be implemented to all incoming flow to the U.S. territory, including rail, road, air and intermodal transport within the next three years. As a result, shippers, carriers and non-vessel operating common carriers must rapidly adapt to a new business model that favors electronic data transfer, and requires information to be electronically submitted within 4 to 24 hours prior to crossing the border. ¹

Canadian SME that are suppliers of U.S.-based just-in-time and lean manufacturing clients will have to adopt those new technologies in order to maintain their presence in those specific supply chains. Operation Safe Commerce (OSC) and CT-PAT are the first key measures that have been put in place. They aim at enhancing security throughout international and domestic supply chains while facilitating the efficient cross-border movement of legitimate commerce through the United States. ²

OSC identifies specific supply chains along particular trade routes and analyze every aspect of the supply chain, from packaging to delivery, for vulnerabilities. Based on their analysis, the ports will propose plans to improve security throughout the supply chain. Finally, these potential solutions to improve container security will be tested in an operating environment for intermodal as well as all flows that will be directed to the United States.

Canadian SME that will be CT-PAT compliant will have to go through different process. Expected process for the next five years are as follow:

1. CT-PAT Application Process
   1. Conduct self-assessment of company's security according to specified guidelines
   2. Complete supply chain security profile questionnaire
   3. Develop enhanced corporate supply chain security program according to feedback from Customs
   4. Explain to Customs how company will self-monitor security
   5. Communication of security guidelines with supply chain partners
   6. Demonstrate acceptable level of trade compliance
   7. CT-PAT Certified carrier and driver
2. Technology requirements
   1. Electronic manifest 4 hours prior to border crossing
   2. Data accuracy audit
   3. Driver: NEXUS card or biometrics
   4. Container: electronic door seal ³
   5. Truck: CVISN transponder
   6. Traceability and visibility of shipments through the supply chain via RFID

Awareness

Promoting the value of supply chain management to stakeholders both within and outside the corporation is a high priority. Stakeholders include:

• Customers
• Shareholders
• Trading partners
• Suppliers
• Senior executives

Critical Skills Technology Advancement

Supply chain managers and logisticians need the following skills and competencies:

• Strategic Planning
  • Horizontal
  • Organizationally within extended SC
  • Cross-functional
  • Industry-wide forward thinking
• Process transformation
  • Understanding
  • Facilitation
  • Change management
• Leadership
  • Team-based environment
  • Matrix management
  • Interpersonal / people
  • Negotiation
  • Relationship management
• Optimization
• Operational Analysis
• Innovation
• Project management and information technology implementation
• Financial/economic analysis
• Data/knowledge management
  • Technical level
  • Global cross functional view
  • Interoperability
  • Strategic functionality

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¹ United States Department of Transportation Return to text

² Ibid. Return to text

³ Enabling Secure Trade Forum Return to text

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