Collaborative Logistics

by Deepak Sharma on Monday, January 07, 2008

In this post I want to write about Collaborative Logistics. I had proposed a Mashup idea on this topic for which I submitted to Microsoft-BT Mashup competition early last year and I got 1st prize for the same. To borrow the definition of Collaborative Logistics from this article, Collaborative Logistics is achieved when two or more companies form partnerships, or work with existing supply chain partners (customers, suppliers and carriers) to optimize transportation operations by sharing truck capacity to cut the high costs of less-than-truckload shipments and empty back hauls. In my mashup idea, we are talking of SMB's who want to lower the operation costs. The Mashup I have proposed takes into consideration these SMB's need of lowering costs and optimizing inventory. The idea is to share unused capacity in Trucks. Trucks which are not full can communicate the available space to the Mashup Service which will then broadcast the same to Mashup service subscribers using SMS service. Similarly a Truck Owner can broadcast his unused space to subscribers through the Mashup service. The uniqueness of the idea was it targeting the Long Tail of SMB’s.

There is an excellent white paper on Collaborative Logistics by Kevin Lynch who was the CEO of Nistevo which was later acquired by Sterling Commerce. The article while introducing Collaborative Logistics explains how Shippers and Carriers benefit from the collaborative arrangement:

The key to understanding Collaborative Logistics lies in recognizing how costs are distributed in a logistics network. Both shippers and carriers focus a lot of attention on controlling costs to improve profitability. Following a traditional approach, each organization has the ability to increase the efficiencies and reduce the "individual costs" of only those business processes that the organization independently controls. However, they have no visibility over "hidden costs."

Here’s the big question: How is it possible to reduce costs that are hidden? And, here’s the sole answer: Collaborative Logistics. This new business process makes hidden costs visible, so companies can work together to reduce them.

An example of a hidden cost that all members of a logistics transaction pay, but none individually control, is asset repositioning.
• Shipper A requires goods be delivered at a certain place and time.
• Shipper B requires goods be picked up at a certain place and time.
• The carrier must decide how to optimally apply their asset to this situation.
• Shipper A and Shipper B do not understand how their interaction affects asset repositioning costs.
In other words, no single player controls asset repositioning costs. They are a hidden cost paid by all. By maintaining an isolated approach, members of a logistics transaction are limited in their ability to reduce overall costs.

In my mashup which used Web services from Microsoft (MapPoint, Virtual Earth) and BT (Web21C SDK), I have considered two scenarios, Subscriber mode and Publisher mode. So let's take an example of Subscriber mode:

- Contoso Hardware Shop is based in Washington, DC, USA. It needs to send a shipment of heavy duty Spanners to it’s customer in Philadelphia, PA.
- Contoso logs on to Collaborative Logistics Mashup Website using BT Web21C Authentication Service.
- Contoso provides start and end locations of it’s shipment. The start location is filled automatically based on Contoso’s past usage of the service.
- The Collaborative Logistics Mashup service provides a list of truck’s on a Map (using Microsoft MapPoint API or Virtual Earth SDK) which are in the vicinity (near Washington, DC) with their unused capacity. To provide the location of trucks on Map, it uses BT Web21C Location Service.
- Upon selecting a truck on the Map, an SMS (Using Web21C SMS Service) is sent to the Truck with Contoso’s Contact details for them to collaborate and take the process forward.

Reverse is also possible.

- Litware Truckers, Inc is a Transportation company based out of Philadelphia. It has a fleet of 17 trucks.
-Litware operates its trucks in the north eastern USA. Many times Litware’s trucks travel with unused capacity. These can be used by small businesses which needs to ship small packages and can’t afford full trucks.
-Litware has registered with Collaborative Logistics Mashup website. Truck Drivers can send SMS to Collaborative Logistics Mashup service which is received using Inbound SMS service. The SMS will contain the unused capacity in the truck.
-The Collaborative Logistics Mashup then sends an SMS (using SmsMessage Service) containing Litware truck details including Truck Location (using BT Web21C Location Service) to all registered subscribers. Subscribers have the capability to set their Presence (using BT Web21C Presence service) status to “No SMS” if they don’t wish to get SMS from Mashup service.
-Depending on the location and needs of subscribers, they can contact (call or chat) the Litware Truck for using unused capacity.


Recommended Reading:

Collaborative Logistics: Increasing Supply Chain Management Efficiency

Collaborative Logistics: Why collaborate?

7 immutable laws of collaborative logistics

One comment

Finding your blog was a breath of fresh air. Your collaborative logistics approach could absolutely be scaled and become a massive efficiency booster across multiple sectors.

I've been working on something similar (from the business perspective not the technology) for a few years now. My plans have been centered around a very key vertical here in the Midwest, USA and that's biofuel transportation (raw materials, produced goods, and post-production by products.

I'd like to get to know you somehow and see where this goes. I'm findable on linked in as well.

Doug Mitchell
The Mitchell Group, LLC

by Doug on 10:30 AM. #