accuracy and reliability of freight forwarders in...

Academic Year 2013-2014

ISSUE IN ENTERPRISE ARCHITECTURE DEVELOPMENT:

ACCURACY AND RELIABILITY OF FREIGHT FORWARDERS IN GOOD

CUSTUMER SERVICE IN TERMS OF PRODUCT DELIVERY

A Research Study

In Partial Fulfillment of the Requirements in the Subject of Software Engineering

(Enterprise Architecture Development) in

Graduate Degree Program of Master of Science in Information Technology

Specializing in Managament Information System

Submitted by:

MARICLAIRE F. SARTE

MSIT – MIS

Submitted to:

Prof. ROSE ESCOBER Professor in Software Engineering

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

GRADUATE SCHOOL

Sta. Mesa, Manila


INTRODUCTION

A freight forwarder is a firm specializing in arranging storage and shipping of

merchandise on behalf of its shippers. It usually provides a full range of services including the

tracking inland transportation, preparation of shipping and export documents, warehousing,

booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and

filing of insurance claims. Freight forwarders usually ship under their own bills of lading or air

waybills (called house bill of lading or house air waybill) and their agents or associates at the

destination (overseas freight forwarders) provide document delivery, deconsolidation, and

freight collection services.

The impact of computers on communication offers both great promise and benefits as

well, most importantly in shipping businesses. In addition to the recent evolution of new forms

of organization, technology is adding another powerful force in the work environment

especially in those organizations which renders huge and complicated business transactions

and operations. Embracing the trends of information technology could be good and most of

the time could be the best value that a company could invest into because it unifies the

business and its strategies with the aim of extracting the full potential value of business

technology solutions attending the current struggles and definitely providing the best service

which the company wants to achieve for the client.

Although there is already existing management system for freight forwarding business

processes, there is still an issue that arose in terms of reliability and accuracy of product

shipment. General facts were stated which tells that one of the reasons why freight

forwarders lose in company‘s revenue and general income is the lost products and delay of its

shipment. Nevertheless, too much expenditure in terms of telecommunication bills has been

listed as the top list factor of company loses and in which the company budget releases its

bunch of money to invest into just to monitor and save the quality service and speed of

product shipment. Almost all of freight forwarding company have the ability of monitoring the

product/good shipment through SMS or text messages, where in, staff of the company would

ask the driver or the liason officer in where currently the shipments is exactly located to. And

so, these workers or employees should reply every other hour. Calls and long conversations

would be done and by that inquiry from the staff in the source/main office, monitoring of


products and goods is also expected to report, just goes the same way if there would be

hassles and sturggles that may come their way. With this process, check-ups and other

monitoring processes are extremely done by the delivery officers/employees.

According to Mohd Hafizzuddin Md Damiri in his article entitled ―Issues and Challenges

of Logistics in Malaysia: A Perspective‖

(http://www.academia.edu/1360843/Issues_and_Challenges_of_Logistics_in_Malaysia

_A_Perspective), Malaysia‘s progress on logistics has failed to keep pace with its growth in

trade. Developing countries in this region are now catching up, so faster progress on logistics

development will be crucial to sustaining Malaysia‘s competitive advantages. High logistics

costs in Malaysia derive from poor transport infrastructure, underdeveloped transport and

logistics services and slow and costly bureaucratic procedures for dealing with both exported

and imported goods. The balance among these three varies among countries in the region

but in each country, a complementary approach to address all of them will be needed to

produce a sustainable improvement in competitiveness.

He also stated that transport of products is often the way that logistics is viewed in

many companies. But there is more. Moves of products should complement the company

strategy. If the emphasis is on cost reduction, lower inventories, customer service or

whatever, then products must move in a way that is consistent with the emphasis. Product

must also flow, not just move. If it does not flow, then there is not a supply pipeline. Instead

there are imbalances in inventories with components and finished goods not being where they

should be. The movement may be extremely broad in geographical scope. Raw materials and

completed units can move between and among all regions of the world. While other

departments in the company may focus on select geographical regions for sourcing,

manufacturing or sales, logistics must deal with all of these. He also said that it is not enough

to move product and materials. We must know where they are. We must know what orders

are coming in and when they must be delivered. Information (timely and accurate) is vital for

sound decision-making. The information must flow between the company and its suppliers,

carriers, forwarders, warehouses and customers. It must also move internally among

purchasing, customer service, logistics, manufacturing, sales, marketing and accounting.

Investment in information technology is not an alternative anymore; it is a requirement for

logistics and company effectiveness. Ability to respond to the dynamics of the global


marketplace must be quick. Raw materials and components must be ordered and arrive

completely, accurately and quickly. Orders must be filled completely, accurately and quickly. It

is no longer months or weeks for lead times. Hours may decided customer service,

competitiveness and value-added. Back orders are not tolerated. If company cannot properly

respond customers will look for those who can. Service is more than having to expedite a

shipment. Service is a factor of competition, customer requirements, the company‘s position

in the industry, the company culture. Logistics is the link among all this. And the more diverse

the geographical scope of vendors, manufacturing, warehouses and customers, the more

critical is time. Distance means time. Time delays are not acceptable now. Movement of

product and movement of information show their impact here. The external issues are

obvious and get the attention, especially if something goes wrong. External issues involve the

carrier who brings material from the vendor to the plant, who moves it from the plant to a

distribution centre or who takes it to the customer. There are mode choices to be dealt with.

External can also involve an outside warehouse. Time is one of the critical issues in logistics.

There are external and internal factors, which must be recognised if time is to be reduced

effectively. Management must understand the process and the co-operation and integration

required. Their customers will not accept excuses, mistakes and failure. Whether you are a

manufacturer, wholesaler, retailer or other form of business, you must have an accurate

picture of your inventory. This picture should be computerised. Inventory represents capital

tied up, capital, which can be used for other purposes. And inventory, along with freight, is

one of those problems areas which can either be a problem or a symptom of a problem. With

the increasing emphasis and interest in supply chain management, continuous replenishment

and just in-time programs, good inventory information is mandatory, not optional, for success

in today‘s markets. Inventory control should be integrated into all company programs,

customer service, sales, manufacturing, purchasing and logistics. Transportation is a basic

element of the logistics process and the supply chain, which runs from vendors through to you

to your customers. It involves the movement of product, service/speed and cots, which are

the key issues of effective logistics. It also impacts with the other two logistics, movement of

information and integration within and among suppliers, customers and carriers.

In Daniel Angus‘ technical report entitled ―Problems in Transport and Logistics‖

(http://itee.uq.edu.au/~uqdangus/Problems%20in%20Transportation%20%20Technical%20R

eport%0(Draft).pdf), states that vehicles are not 100% reliable and therefore there may exist a


probability of a breakdown or accident. This could lead to two possibilities. These includes

another vehicle that must meet this truck en-route to transfer the goods for transport and

delivery in the field. Secondly, the goods inside the broken-down vehicle can be supplied by

the distribution depot and therefore the customers can be served through the distribution

centre via different vehicles.

In a case study entitled ―Distinguished Problems of Logistics‖ authored by Frantisek

Nemec of Silesian University in Opava School of Business Administration in Karviná

Department of Marketing, she pointed out that a transportation strategy, to be effective in

supply chain management, is not playing one carrier off against another. It is not beating

down rates. Rather it is a way to respond to the dynamics of our business, its customers,

suppliers and operation. The strategy, regardless of whether you are involved with domestic

or international, is much more and should recognise: customer requirements, mode selection,

carrier relationships, measuring and flexibility. The supply chain involves continuous and

efficient movement of product from vendor to manufacturer to customer. Therefore the

transportation program must reflect and meet the customers needs. The time and service

aspects of transportation are vital.

Marta Anna Krajewska and Herbert Kopfer porposed an algorithm that would hopefully

resolve issues in transportions of freight forwarding companies. In their research paper

entitled ―Transportation Planning in Freight Forwarding Companies: Tabu Search Algorithm

For the Integrated Operational Transportation Planning Problem‖, they mentioned that no

software for vehicle routing and subcontraction not to mention advanced simultaneous

optimization methods are offered at all. Thus, the complex process of planning in freight

forwarding companies is still done manually (compare Jurczyk, Kopfer and Krajewska

(2006)). Yet, as the logistic market gets more and more competitive, and the common

possibilities to decrease transportation costs are almost utilized, freight forwarders slowly

discover that they cannot work efficiently without structural changes. Amongst others, these

include establishing fully automatic and efficient methods for the entire problem of operational

transportation planning. Thus, algorithms solving this problem are becoming inevitable.

Wholly, this research has helped the researcher to derive a conclusion on how

accuracy and reliability of freight forwarders in cutomer service in terms of product delivery


affects the factors of retaining the client‘s trust and the company‘s integrity. Moreover, the

researcher has come to an idea of proposing a freight forwarding managment system with

tracking inland transportation using GPS locator in which the development of application will

assist the management in coordinating the processes involved in a shipping business. This

study also opened doors to analyze the circulation of shipping freight forwader‘s transactions

and its process in transporting or delivering goods and producsts to the client, and to test the

level of effectiveness and acceptability of the freight forwarding managment system with

tracking inland transportation using GPS locator to provide the freight forwarders a possible

suggestion of a better way of doing their business in terms of product and goods delivery.


RELATED STUDIES

As the researcher had known one of the issues in enterprise specifically in area of

logistics which tackles accuracy and reliability of freight forwarders in terms of good customer

service in product delivery, different studies and literature were collected to support this issue.

Book: Logistics (2002)

Author: David J. Bloomberg, Stephen Lemay, Joe B. Hanna

Transportation plays a key role in economic success by allowing for the safe and

efficient distribution of goods and services throughout the supply chain. The United States

has over 4 million miles of roads, enough to circle the globe over 157 times. The U.S. rail

structure includes enough track to travel around the world nearly seven times. U.S. pipelines

could circle the globe over fifty five times! In terms of economic impact, transportation

accounts for over 10 percent of the U.S. gross domestic product (GDP). The transportation

system employs almost 10 million people in the United States, over 7 percent of the entire

civilian workforce!

Transportation links the various intergrated logistics activities. Without transportation,

the integrated logistics system breaks down. Some view transportation as the glue that holds

the entire system together. Without the transportation links, raw materials cannot flow into the

warehouses and plants, nor can the finished product flow out of the plant to field warehouses

and finally to the customer.

Transportation does more than just link the other integrated logistics activities. An

effective transportation system forms the backbone of a sound economy. Transportation has

played a key role in the development of every industrialized nation. Transportation also

provides some nations with comparative and absolute trading advantages. Without an

effective transportation system, domestic and international economic growth would be

impossible.

Because control of transportation affects so many people and so many industries, the

public, in the form of the government, has a vested interest in it. The implication is that the

public must be protected from those who would exploit them through unwarranted control of


transportation. Every military startegist, terrorist, and revolutionary knows that to control an

area, one must control transportation and communication.

A service response logistics (SRL) activity refers to choosing the distribution channel to

deliver service to the customer. Key contructs associated with service delivery include

inconvenience, flexibility, personable interaction, and reliability. Banks have developed ATMs,

electronic banking, and even home or computer banking. Some grocery stores now take

phone orders and deliver groceries to the customer‘s home. This exciting for those people

who have limited mobility and are mostly homebound. Caterpillar Tractor has developed a

remote diagnostic service delivery for its customer. Caterpillar equipment is built with sensors

that Caterpillar can access via computer linkups to monitor the performance of equipment. In

this way, potential problems can be identified even before the operator recognizes them. This

ervice delivery avoids costly equipment breakdowns. In a sense, it resembles preventive

medical care.

SRL has three primary activities: managing waiting time, managing service capacity,

and providing service delivery. Managing waiting time refers to methods used to reduce the

time the customers must wait to consume the service. This s the equivalent to reducing the

order cycle time in the flow of goods. Service capacity is defined as the managing,

scheduling, and staffing of people and services so that the service response logistics network

can meet customer demands. This is like managing inventory in goods-producing firms.

Service delivery is the ability to manage distribution channels to ensure the timely delivery of

services to the customers.

The management of the SRL activity is a service firm‘s ability to minimie the time a

customer must wait before the service is consumed or rendered. Reducing waiting time

enhances customer satisfaction: in fact, waiting time has a disproportionate impact on

satisfaction levels. Recognize, however, that the capacity management and service delivery

can greatly affect waiting time.Today people feel pressed for time and may become agitated

when delayed beyond their expected waiting time. Service firms realize that long waits can

lead to customer dissatisfaction and leave a negative impression about service quality. Each

service provider should develop a strategy to manage waiting time. Quality programs can

reduce waiting periods. Many firms have automated call answering and routing systems that

allow to reach the correct person the first time without being transferred. A service may

streamline producedures. For example, hspitals now allow self-administration of pain-killers,

which means the patient need not wait for a nurse or a doctor. A fourth strategy is improving


communication and information flows to and from the customer. For example, hotels have

developed reporting systems for early checkout in the hotel room and account review through

the hotel television system. Companies adopting the SRL concept must realize that these

functions must be managed just like integrated logistics.in good logistics, the activities focus

on the movement of physical products. In SRL, activities focus on delivering not only physical

products but also associated services and benefits.On one hand, logistics activities revolve

around planning the movement of physically moving goods. On the other hand, the SRL

activities primarily deal with the movement of information, collection and storage of data, and

communication with the parties involved.

Book: Best Practices Series: Making Supply Chain Management Work (Design,

Implementation, Partnerships, Technology, and Profits) 2002

Author: Dale Young, et. Al

Editor: James B. Ayer

Under the chapter 14 of this book entitled ―Strategic Implications of Electronic

Linkages‖, the authors stated that much has been written in the past decade regarding the

competitive uses of information technology (IT) in industry. Organizations are encouraged to

move into the supply chai, the system of interdependdent activities used to produce a product

or service, and to establish direct, electronic links with their suppliers and customers. Recent

applications of IT, such as Web-based commerce, have targeted customers and distribution

channels. These electronic links, or interorganizational systems (IOS), are a powerful

competitive weapon for facilitating cost leadership and differentiating products and services.

A mature technology such as Electronic Data Interchange (EDI) allows users to

examine the strategic relationships that develop over time between firms that share data

electronically. EDI is a critical technology for establishing direct, electronic links between

trading partners. Much of the past EDI research has described EDI technology and the

activities necessary to implement EDI successfully. The strategic implications of EDI have not

been studies as closely as its tactical concerns. This article addresses the need for

understanding of the competitive effects of electronic linkages by examining the strategic

issues associated with EDI usage. Users need to understand the strategic implications of


electronic linkages between firms as the amount of business-to-business commerce across

the Web grows monthly.

It is often easy to overlook important strategic issues when a technology such as EDI

becomes widely accepted as a way of doing business. Questions such as ―Who benefits from

these electronic linkages?‖ and ―What are the concerns of firms that are forced to use a

technology?‖ should be explored. Unfortunately, the focus of many practitioners and

researchers is solely in identifying and realizing the immediate benefits of EDI. EDI enables

the direct, computer-to-computer exchange of standard paperwork, such as orders and

invoices, between participating firms. EDI usage affects much more than the way of handling

businesses between two firms. Multiple constituencies are involved in EDI activity, including:

the hub or EDI adopting firm, the trading partners (customers and suppliers) of the hub firm,

and the third party firms that provide support services to EDI trading partners. Organizations

occasionally adopt technologies like EDI simply to keep up with the strategic IS investments

of other firms in the same industry. EDI becomes a necessary way of doing business rather

than competitive tool. Firms that make IS investments in response to pressure from

customers or initiatives of competitors may gain strategic advantage over competitors that

neglect to develop similar systems. However, the IS investment was a reactive move and not

a carefully designed component of an IS strategic plan.

The strategic issues surrounding EDI implementation seem to be much more difficult to

manage than the technical issues. Technologies such as the ANSI standards and

communications software are maturing. But business issues (e.g. relations with trading

partners) are evolving and affect organizations other than the firms that are exchanging

documents directly. The author‘s research into competitive IS applications and EDI

implementation points to three key strategic EDI issues such as business relationships

between trading partners, balance of power between buyers and sellers, and impacts of EDI

adoption on third parties.

Transportation firms are affected by EDI efforts in a significantly different manner.

Retailers are advancing the concept of ―Quick Response‖ or ―Efficient Consumer Response‖

to provide just-in-time inventory to the store floor. Trucking firms have installed expensive Iss,

such as satellite links in each truck, to improve the tracking of shipments while in transit. An


electronic link between trading partners therefore can affect the supply chain component that

provides the physical link between those firms. A second way transportation firms are affected

is when Quick Response retailers place small orders each day instead of larger orders

monthly. Large orders can be delivered to the retailer‘s distribution centers by trucking firms

specializing in large containers. Next day carriers such as UPS and Federal Express often

deliver the small orders. Here a change in order size, as a result of a just-in-time program and

electronic order exchange, leads to change in both lot size and freight carrier.

Relationships among trading partners are affected by the decision to exchange data

electronically. These relationships are experiencing substantial change due to forces both

external (e.g. customer demand for higher levels of service) and internal (e.g. hub firm

actions) to EDI-using industries.

Article: Principles of Logistics Management: A Functional Analysis of Physical

Distribution Systems (1966)

Author: James A. Constantim

General Merchandise: Storage and Warehousing

The number and location of warehouses depends upon the ―time utility‖ required by

customers, that is, the number of days they are willing to wait to receive their orders. In turn,

the tolerable waiting time and the number of warehouses determine the cost of the system.

Also, users to be made of the warehouse and the scope and nature of the market influence

costs.The objectives discussed by Professor Jones are: to provide good service to customers,

to reduce the costs of transportation, and to maintain an investment in inventory sufficient to

keep the right amount of stock on hand.

A large group began to view the transport system as a part of an overall system and

adopted the marketing concept of service to the customer. Now, with well-developed water,

air, motor, and rail transport systems, express and forwarder companies, the question of a

cost/time relationship arises. With the transport rates and speed of delivery tied together in


most instances, the shipper has several choices: high speed and rates, use air-transport, low

speed and rates, use water, rail and motor fall in between, and warehousing may link them

all. Thus, the cost/time utility concept comes into play.

Decisions concerning warehousing have several dimensions: where to locate

geographically and the number of locations to choose; where to locate within a city; and

whether to use public warehouses or private. Decisions concerning locations within the city or

area may be made using the same techniques discussed in his book. The reasons

concerning the importance of storage and warehousing are inherent in the nature of both

production and consumption. Storage and warehousing are used as an agent to regulate the

flow of goods when required by natural and economic enviraonmental conditions including the

climate, the economics of production, and the requirements of timely service at low cost, -- or,

the creation of cost/time utility.

Article: Outlook Point of View: Freight Forwarding and Logistics: What the High

Performers Know?

Date: January 2013, No. 1

Author: Rob Knigge

Source: www.accenture.com

Freight forwarding and contract logistics continues to be a growth industry. Though

such growth is expected to slow somewhat (from a high of 3 percent over the past five years

to about 1.5 percent in the near term), that rate will still likely outpace that of global GDP—a

good situation to be in, considering current economic circumstances. Even so, freight and

logistics companies will need to deal with numerous issues in the years ahead. For example,

as trade routes become more competitive and as freight rates fall, the industry‘s traditional

bargaining power with its shippers—volume—will be challenged. One important strategy to

counter this challenge is to use balance sheet strength to acquire niche players in important

trade routes and geographies, especially in emerging markets.

http://www.accenture.com/


Another key to growth and profitability will be the ability to analyze customers‘ needs

and then respond quickly with differentiated and advanced logistics solutions. That will require

better IT tools to improve internal process efficiency and to generate analyses that result in

deeper understanding of customers‘ industries and business processes. According to recent

Accenture High Performance Business research, which analyzed corporate performance in

the freight forwarding and contract logistics industry from 2008 to 2011, high performers owe

their success to a combination of factors: dominance over profitable trade lanes; strategic

growth in key emerging markets; and business models supported by operational excellence

and designed to develop expertise in customers‘ industries while empowering those

customers with greater information and better service at the same time.

(Industry background) As customers enter new markets, especially in emerging

economies, they are demanding much more than traditional transportation and warehousing

services from their freight forwarding and contract logistics providers. The ability to offer new,

value- added services such as warranty processing, returns management and light

manufacturing is now a differentiator, as is providing services such as customs and

insurance brokerage, and trade and transportation management. In other words, the ability to

become a ―one-stop-shop provider‖ is emerging as a way to achieve differentiation and

capitalize on cross-segment opportunities.

However, companies in the industry face multiple risks, particularly in light of continued

global economic instability. Rising oil prices are a persistent threat. Industrial production

slowed during 2011. Economic challenges in the European Union, political instability and

unrest across multiple areas of the globe, and a series of natural disasters have highlighted

the often fragile nature of the freight forwarding and logistics business and the industry‘s

customer environment.

According to their research, the following represent some of the most serious risks:

• Flat growth for forwarders. After heavy losses in 2009, the sector recovered

moderately in 2010. The past year has been a difficult one, with profit growth being limited to

volume growth, and with yields unlikely to improve as freight rates remain under severe

pressure.


• Pessimism about growth opportunities in air freight. In the Asia-Pacific region in

particular, the air freight business has suffered more than container shipping recently.

• Ongoing overcapacity in ocean freight. Shipping rates for all routes continue to

decline.

• Risk of cheap capacity. Counter-cyclical businesses such as freight forwarding

or contract logistics, with relatively flexible business models, are better able to keep margins

stable in the downturn—but they risk sitting on cheap capacity in an upturn.

On the positive side, demand is rising for advanced logistics capabilities and industry-

focused solutions, especially in emerging markets. The increasing number of assembly plants

in these markets—including Turkey, Mexico and Thailand—has positively affected the

dynamics of the logistics industry. Companies are also responding to market and economic

pressure by restructuring their logistics organizations—consolidating service providers and

functions, sharing logistics facilities and centralizing management.

Industry imperatives: What the high performers know against this background,

according to Accenture‘s exclusive analysis of recent industry performance, high-performance

businesses in freight forwarding and logistics have maintained industry-leading operating

profit margins and above-average capital efficiency ratios—a result, we believe, of their

tightly controlled operating expenses and strong working capital management. In contrast to

most of the companies in the industry, whose top-line growth suffered significantly in the

global downturn, the high performers managed a compound annual growth rate of 13.4

percent over the past three years. They also returned a total of 7.5 percent to shareholders

over five years—in contrast to negative returns for the rest of the industry peer group studied.

Using the structure of the three building blocks of high performance, as defined by the

Accenture High Performance Business research program, the following are some of the

important lessons about high performance from which all players in the freight forwarding and

contract logistics industry can benefit.

1. Market focus and position. Due to a mixture of organic growth and strategic

acquisitions, high performers not only have a strong presence in emerging markets

such as Brazil, Russia, India, China and Mexico, they also exert control over the most

profitable trade lanes: Europe to Asia, for example, or North America to both South


America and Asia. Moreover, by leveraging dominant positions in domestic freight

(both air and road), they have managed to maintain volume growth without

compromising their revenues.

2. Distinctive capabilities. According to our analysis and scorecard of industry players,

three business capabilities stand out in particular.

• Flexible business model. The high performers know that time to market is critical

in their industry—and they have the flexibility to respond with speed and agility to their

customers‘ need for convenience. High performers have established new ocean freight links

to growth geographies such as Africa. And they have opened multiple new service links that

span the global trade routes over which they dominate.

• Deep expertise in key customer industries. Industry knowledge is growing in

importance as customers extend their supply chains in response to globalization. High

performers have been leaders in developing extensive expertise in the industries they serve,

going well beyond traditional transportation and warehousing solutions. Increasingly, logistics

companies are strengthening their ability to collaborate and are better aligning themselves

with customers‘ operations, processes, industry know-how and technology. • Using IT to

maintain 360-degree control. The high performers have moved well beyond using IT merely

as an enabler of internal process management. Instead, they leverage their proprietary

customer- facing technologies to empower their customers, offering them end-to-end visibility

across the entire supply chain. Important to ongoing success will be the ability to develop

more ―intelligent‖ services, more dynamic planning and increased alignment with customers‘

operations and processes.

Supply chain visibility remains a top operational priority for large customers.

Customers generally struggle to achieve a unified picture of their supply chains because of

the legacy information systems designed to operate within a single company, not across a

network of companies. Thus, the ability to share real-time information with key customers,

suppliers and partners has become critical in the freight forwarding industry.


3. Performance anatomy With freight forwarding and contract logistics, performance

anatomy relates not only to overall operational excellence but also to such procurement

practices as the purchase of transportation capacity and the innovative use of shared

services. Because of their relentless focus on productivity improvement, the high performers

are masters of operational excellence, achieving significantly higher gross profit conversion.

These companies place much greater emphasis on process automation and on finding the

right balance between volume commitments and spot buying—a strategy that enables them

to achieve competitive rates in the most important trade lanes. And they have been

enthusiastic adopters of shared services, not just for internal processes but also to improve

customer services and supply chain management. Conclusion A controlling presence in key

growth markets and the flexibility to respond swiftly and innovatively to customers‘ evolving

needs distinguish the high performers in freight forwarding and contract logistics. In the future,

deep expertise in customers‘ industries and in the discipline of cost control will be more

critical than ever.

High performers will differentiate themselves further by offering supply chain

management as a shared service to customers. To drive the continuous innovation of

customer-facing applications, industry leaders will leverage IT-driven process management

collaboratively with those customers.

Article: Switch Point in Logistics: Specialization and Value Added Services

Author: Roland Berger, University of St. Gallen

Tasks will increasingly be integrated and performed by large businesses offering

complete solutions. Increasingly complex supply chains and intense product specialization in

shipper industries will call for increasingly specialized logistics service providers such as

value added services where in industry knowledge and industry-specific logistics solutions

have already become a key requirement to gain customers in specialized industries such as

pharmaceuticals, aviation, consumer goods. Specialization and division of tasks between

business will intensify -complexity of supply chains will require logistics service providers with

specialized knowledge. Shippers have an incentive to chose several logistics service


providers for their supply chains, both for reasons of contingency/security and to ensure that

the supply chain is not dependent on one single provider. Trend contradicts last decade's

integration of contract logistics with other logistics segments, particular freight forwarding has

been integrated with contract logistics.

In addition to this, the author gives insight about Globalization vs. Regionalization –

Factors for potential regionalization. This consists of :

1. Cost efficiency such as rise of energy prices or it increases benefits of

geographically short material flows, and rising wages in emerging countries

(reduces benefits of remote production)

2. Environment

a. ecological awareness (Local products preferred by customers)

b. governmental regulations (increased governmental regulations or

involvement in businesses enforces).

c. local unavailability of resources such as materials, skilled labor, water and

energy

He also cited different supply chain requirements such as just-in-time delivery or the

flexibility and fast response times required, fast innovation cycles (short and quick, SC

required and low inventories require, and roll-out of new production techniques more difficult

in decentralized production). Freight forwarding companies should re-think purchasing

strategies of transport capacities like developing different models of purchasing and delivering

shipments using sophisticated capacity of steering mechanisms.

Article: You’re in Charge: Selecting and Managing Freight Forwarders

Author: Mark Parker

Date: August 2013

Source:

At risk of compliance failures in their physical supply chains, many U.S. exporters and

importers complain about their inability to manage freight forwarders and customs brokers


effectively. But they have more ability— and responsibility— than they think. Regulatory

changes have made accurately recording and maintaining trade-related data a compliance

requirement. While data input has been more or less automated, thereby minimizing

paperwork and easing access to information, this ―upgrade‖ also brings a higher visibility of

errors to the regulators, increased fees and penalties, and a heavier responsibility load for the

trade community. Compliance problems arise from a lack of awareness and insufficient

training on requirements.

In the current economy, in which many companies are struggling to grasp regulations

and keep up with requirements, there is a tendency to place the onus on freight forwarders,

making them responsible for classification, reporting, accuracy, and recordkeeping. This is not

a recommended approach, especially for U.S.-based businesses.

Forwarders rely on information provided by the exporter. Though they have written

authorization to represent a business, forwarders typically expect the exporter to provide

accurate information. Furthermore, regulators will hold the exporter responsible, not the

forwarder, if the information is incorrect. A forwarder‘s primary role is to arrange and manage

the transportation of goods; they should not be expected to serve as a company‘s compliance

personnel.

CHOOSING A FREIGHT FORWARDER

You must first choose a freight forwarder before you can manage one. Even in this

economy, do not let cheap rates and low logistics costs wrongly influence that choice. The old

adage rings true: you get what you pay for. Selecting the best forwarder for your business is

critical to smooth supply chain operations.

At the beginning of the freight forwarder selection process, it is wise to create a

requirements list. The freight forwarder must have knowledge of and experience in your

product, desired shipment method, and destination country. The freight forwarder‘s staff must

be trained in U.S. Department of State and Department of Commerce (including Census

Bureau) documentation, recordkeeping, reporting, and licensing requirements.

The freight forwarder must also demonstrate willingness and the capability to communicate

regular status updates and problems, and maintain records on export transactions, including

the depletion of licenses in order to provide comparative internal audits.

Other important requirements are Customs-Trade Partnership Against Terrorism (C-

TPAT) certification, authorization to file electronic export information and shipper export


declaration (SED) and submit the shipper‘s reports via the U.S. Automated Export System

(AES) for filing SEDs electronically, and full internal quality controls. Depending on the

business requirements, companies should keep their forwarder relationships to a manageable

number. In general, you should choose no more than two or three freight forwarders, as

managing multiple forwarders requires more manpower and can ultimately create more

problems than it solves.

Put in place a power of attorney (POA) with each authorized forwarder, clearly defining

its role and responsibilities in your supply chain. And while there are certainly times when a

company must grant limited authority to other agents, this should be a rare exception— never

the rule.

Your evaluation process should also include meeting with each potential forwarder‘s

operational staff so you can gauge their capabilities. Don‘t let the forwarder‘s account

representative keep you from interfacing with operational staff during the evaluation process.

A MISSION TO MANAGE

After you have selected a forwarder, your challenge and responsibility becomes

managing the service effectively. The following forwarder management activities are all critical

to maintaining best-practice standards. Give them high priority.

Establish and maintain clear communication guidelines. Creating and maintaining

an open dialog with your freight forwarder is vital. You should discuss and document needs

and expectations up front. Provide detailed documentation to support any potential staff

turnover that may occur. Hold regular conference calls or face-to-face meetings to discuss

problems and identify solutions that will improve compliance and shorten timelines. Keep

metrics of your shipping activity to monitor progress and problems— both yours and the

forwarder‘s.

It is essential to have a reporting structure for any potential non-compliance issues or

government inquiries relative to the transaction. This may seem like a lot of work, but your

compliance department will function more smoothly, and you will have better control of your

shipping activity.

Be sure the communication process includes prior notification of shipments.For

exports, use a Shipper‘s Letter of Instruction or its equivalent to ensure that shipment details


are communicated clearly and accurately. Many mistakes occur because a forwarder has

insufficient or inaccurate shipment information.

In addition to the required logistic information, such as weights and dimensions, export-

related documents should include compliance information such as Classification, License

Authorization, and AES Internal Transaction Number. For imports, require that forwarders

notify you of all incoming shipments. This allows time for verifying shipment details, such as

consignee and correct harmonized tariff schedule classification, and ensuring supporting

documents are provided.

Get a complete copy of the transaction. A common complaint from exporters and

importers is that they are unable to get a copy of their shipping records. Establishing

communication guidelines makes this much easier. A checklist of required documents will

help ensure that the entire transaction has been received. Giving a copy of the checklist to the

forwarder can help limit the number of requests.

Audit documents after receiving them. The audit doesn‘t have to be complete, but

your compliance department should establish a threshold to maintain a good compliance

rating. In general, you should conduct a weekly audit for a smaller threshold and a quarterly

audit for a larger threshold. If you find errors, you can correct them as soon as possible to

limit potential penalties and fines. As you find and correct errors, research each occurrence

so that the problem is solved for future shipments.

Maintain strict controls on AES filings. To avoid mistakes, it‘s best for the exporter

to directly file AES. Mistakes are less likely to occur when you have more control over your

shipment documentation; you‘ll also spend less time managing your forwarder.

If you opt to have the forwarder file AES, put strict controls in place. Your best defense is to

outline clear Service Level Agreements. If possible, get a copy of the transaction before it is

submitted. Changes to the AES record will result in a compliance alert message to the filer,

meaning your shipment violates export reporting requirements. If a filer consistently receives

compliance alerts, the business practices that led to them must be identified and corrected.

The filer will otherwise be subject to delays, fines, and/or penalties.


Know your responsibility in the transaction. Too often, companies are identified as

exporter of record without their knowledge. Regardless of terms of sale, under the various

U.S. export regulations, all parties remain liable for compliance.

It is essential to know your responsibility and participation in the transaction. Just because the

export is Ex-Works, do not assume that you are not the U.S. Principal Party in Interest

(USPPI) or the exporter of record. Often, if the goods are leaving your dock, you are involved

with the AES record. Under the Foreign Trade Statistics Regulations, the USPPI or its agent

is responsible for ensuring the AES records are properly filed. The U.S. Bureau of the Census

identifies what information the USPPI and forwarder must provide.

The USPPI is responsible for coordinating with the forwarder and ensuring that all

records are filed and all information is accurate. Exceptions are ―routed transactions,‖ where

the forwarder acts on behalf of a party other than the USPPI. In these cases, the U.S. Bureau

of the Census has defined which party is responsible for certain information.

Make compliance your business. You know your transactions better than anyone. A

freight forwarder will never be able to effectively run your compliance program, and you

cannot outsource liability. The onus is always on the exporter and importer. When a

government agency comes knocking, very little blame for violations can be laid on the

forwarder.

The more control you give up, the more likely you are to increase regulatory

noncompliance risk. With the exception of AES, companies should control their own

jurisdiction determinations, classifications (both Schedule B and HTS), license determination,

license authorization, and screening.

Qualify your own transactions. Don‘t let forwarders qualify your transactions for

preferential trade agreements. Often, improperly trained shipping personnel are responsible

for filling out the certificates of origin. Only the trained personnel in your company‘s

compliance department should perform the cumbersome, detailed qualification process.

Limit POAs, written authorization, or signed authorization granted to agents.The

more POAs and authorizations you give forwarders, the harder they are to manage. Many


companies— both importers and exporters— aren‘t even sure how many authorizations they

have granted, and therefore are unable to manage their forwarders.

Importers who have granted POAs to several customs brokers discover that shipments clear

Customs without their knowledge; the freight just arrives. No import documentation is

provided, making it nearly impossible to audit the transaction. Are qualified experts performing

the classification? Do you audit for accuracy? Are you overpaying duty or, worse,

underpaying? Do you have all the documents required for a complete transaction file?

These are just a few common problems experienced when you lose visibility into your supply

chain and control over your brokers. Limiting authorizations limits errors— and, just as

important, your workload.

Keep talking. It‘s important to keep your forwarder aware of new regulation

enforcement and new technology development. When an open dialog is maintained, you can

more readily share, plan, and act upon information. A proactive approach will limit your

errors— which will limit the time you spend correcting them and reduce the likelihood of

penalties and fines.

THE COMPLIANCE DRIVER’S SEAT

None of this is to say that forwarders are free from liability; just the opposite is true. In

August 2009, after a five-year government investigation, a global freight forwarder reached a

$9-million settlement agreement with the U.S. Bureau of Industry and Security (BIS) and U.S.

Department of Treasury‘s Office of Foreign Assets Control in a case involving hundreds of

shipments to Iran, Sudan, and Syria, and a failure to adhere to government recordkeeping

requirements.

BIS has published a helpful guideline on the forwarder‘s responsibility within any given

transaction. Forwarders are still subject to criminal prosecution and penalties for violations of

U.S. trade regulations, such as Export Administration Regulations and International Traffic in

Arms Regulations. And, they are still responsible for knowing their customer and being aware

of red flags that may appear in a transaction.

But ultimately, the importer or exporter is responsible. It‘s much harder to avoid an

accident if you are a passenger instead of the driver. To effectively manage your freight

forwarders and brokers, be the driver in your compliance department. Be an active participant

in your account. Know the regulatory requirements. When you take control, the ever-changing


and evolving compliance world— including freight forwarders— becomes much more

manageable.

Article: Issues and Challenges of Logistics in Malaysia: A Perspective

Date: August 2013

Source:

http://www.academia.edu/1360843/Issues_and_Challenges_of_Logistics_in_Malaysia_A_

Perspective

According to Mohd Hafizzuddin Md Damiri in his article entitled ―Issues and Challenges

of Logistics in Malaysia: A Perspective‖, Malaysia‘s progress on logistics has failed to keep

pace with its growth in trade. Developing countries in this region are now catching up, so

faster progress on logistics development will be crucial to sustaining Malaysia‘s competitive

advantages. High logistics costs in Malaysia derive from poor transport infrastructure,

underdeveloped transport and logistics services and slow and costly bureaucratic procedures

for dealing with both exported and imported goods. The balance among these three varies

among countries in the region but in each country, a complementary approach to address all

of them will be needed to produce a sustainable improvement in competitiveness.

He also stated that transport of products is often the way that logistics is viewed in

many companies. But there is more. Moves of products should complement the company

strategy. If the emphasis is on cost reduction, lower inventories, customer service or

whatever, then products must move in a way that is consistent with the emphasis. Product

must also flow, not just move. If it does not flow, then there is not a supply pipeline. Instead

there are imbalances in inventories with components and finished goods not being where they

should be. The movement may be extremely broad in geographical scope. Raw materials and

completed units can move between and among all regions of the world. While other

departments in the company may focus on select geographical regions for sourcing,

manufacturing or sales, logistics must deal with all of these. He also said that it is not enough

to move product and materials. We must know where they are. We must know what orders

are coming in and when they must be delivered. Information (timely and accurate) is vital for

sound decision-making. The information must flow between the company and its suppliers,


carriers, forwarders, warehouses and customers. It must also move internally among

purchasing, customer service, logistics, manufacturing, sales, marketing and accounting.

Investment in information technology is not an alternative anymore; it is a requirement for

logistics and company effectiveness. Ability to respond to the dynamics of the global

marketplace must be quick. Raw materials and components must be ordered and arrive

completely, accurately and quickly. Orders must be filled completely, accurately and quickly. It

is no longer months or weeks for lead times. Hours may decided customer service,

competitiveness and value-added. Back orders are not tolerated. If company cannot properly

respond customers will look for those who can. Service is more than having to expedite a

shipment. Service is a factor of competition, customer requirements, the company‘s position

in the industry, the company culture. Logistics is the link among all this. And the more diverse

the geographical scope of vendors, manufacturing, warehouses and customers, the more

critical is time. Distance means time. Time delays are not acceptable now. Movement of

product and movement of information show their impact here. The external issues are

obvious and get the attention, especially if something goes wrong. External issues involve the

carrier who brings material from the vendor to the plant, who moves it from the plant to a

distribution centre or who takes it to the customer. There are mode choices to be dealt with.

External can also involve an outside warehouse. Time is one of the critical issues in logistics.

There are external and internal factors, which must be recognised if time is to be reduced

effectively. Management must understand the process and the co-operation and integration

required. Their customers will not accept excuses, mistakes and failure. Whether you are a

manufacturer, wholesaler, retailer or other form of business, you must have an accurate

picture of your inventory. This picture should be computerised. Inventory represents capital

tied up, capital, which can be used for other purposes. And inventory, along with freight, is

one of those problems areas which can either be a problem or a symptom of a problem. With

the increasing emphasis and interest in supply chain management, continuous replenishment

and just in-time programs, good inventory information is mandatory, not optional, for success

in today‘s markets. Inventory control should be integrated into all company programs,

customer service, sales, manufacturing, purchasing and logistics. Transportation is a basic

element of the logistics process and the supply chain, which runs from vendors through to you

to your customers. It involves the movement of product, service/speed and cots, which are

the key issues of effective logistics. It also impacts with the other two logistics, movement of

information and integration within and among suppliers, customers and carriers.


Article: Problems in Transport and Logistics

Author: Daniel Angus

Source: http://itee.uq.edu.au/~uqdangus/

Problems%20in%20Transportation%20%20Technical%20Report%0(Draft).pdf

Date: August 2013

In Daniel Angus‘ technical report entitled ―Problems in Transport and Logistics‖, states

that vehicles are not 100% reliable and therefore there may exist a probability of a

breakdown or accident. This could lead to two possibilities. These includes another vehicle

that must meet this truck en-route to transfer the goods for transport and delivery in the field.

Secondly, the goods inside the broken-down vehicle can be supplied by the distribution depot

and therefore the customers can be served through the distribution centre via different

vehicles.

Transportation Problems can be thought of as either dynamic or static, but not both.

The difference between a dynamic and a static problem is discussed quite well in [2]. The key

feature of a dynamic problem is that it has limited access to information about the problem. In

the case of the Vehicle Routing Problem it may know some customer demands a-priori and

be able to plan a route based on this information, however at run time more information will

become available changing the problem domain.

The distinction has to be made that simply changing customer demands during runtime

does not imply a dynamic environment unless these demands are kept hidden from the

algorithm until runtime. This is discussed further in the relevant subsection - Dynamic

Transportation Problems, and unless specified any other description hereon refers to a static

instance of the problem.

Cost in most problems is the direct monetary cost of a product or service. Some

examples of costs in transportation include:


• Lease, taxation or tolling of infrastructure including roads, train tracks, shipping

channels, canals, aeroplane corridors, bridges, etc. these costs occur in transit on the edges

(arcs) of a transport network.

• Transfer costs associated with the transfer of goods, usually from one mode of

transport to another, or from transit to storage, ship truck, train, plane, warehouse, etc. These

costs occur at the nodes (vertices, cities) of the transport network.

• Storage of goods, often a suitable carrier is not available to transport goods therefore

a holding fee or warehouse rental cost may be incurred while the goods are awaiting transfer.

This cost will be incurred at a node of the transport network.

• Damage to goods, if goods are soiled or damaged during transportation, insurance or

replacement costs may be incurred by the carrier.

• Lease of vehicles and fixed and variable running costs associated with vehicles.

Length is most commonly used to describe a geographical distance; this must not be

confused with cost, as cost may often not be directly related to length.

Time constraints in transportation are as follows:

• Goods are often perishable, therefore these goods must be delivered to their

destination in less than or equal to the amount of time allocated.

• Some edges have time dependent traffic conditions, meaning it may be quicker to

transport at a particular time in the day/week/year.

It is often not a simple edge time that will be factored into a quality measurement of a

transportation system, rather the door-to-door time. For the case of air transport the longest

edge in the total journey may be short, but forwarding the goods to their final destination may

involve holding time and more transportation adding considerably to the total time.

Case Study: Distinguished Problems of Logistics

Author: Frantisek Nemec (Silesian University)


In a case study entitled ―Distinguished Problems of Logistics‖ authored by Frantisek

Nemec of Silesian University in Opava School of Business Administration in Karviná

Department of Marketing, she pointed out that a transportation strategy, to be effective in

supply chain management, is not playing one carrier off against another. It is not beating

down rates. Rather it is a way to respond to the dynamics of our business, its customers,

suppliers and operation. The strategy, regardless of whether you are involved with domestic

or international, is much more and should recognise: customer requirements, mode selection,

carrier relationships, measuring and flexibility. The supply chain involves continuous and

efficient movement of product from vendor to manufacturer to customer. Therefore the

transportation program must reflect and meet the customers needs. The time and service

aspects of transportation are vital.

Research Paper: Transportation Planning in Freight Forwarding Companies:

Tabu Search Algorithm for the Integrated Operational Transportation Planning

Problem

Researchers: Marta Anna Krajewska and Herbert Kopfer

Marta Anna Krajewska and Herbert Kopfer porposed an algorithm that would hopefully

resolve issues in transportions of freight forwarding companies. In their research paper

entitled ―Transportation Planning in Freight Forwarding Companies: Tabu Search Algorithm

For the Integrated Operational Transportation Planning Problem‖, they mentioned that no

software for vehicle routing and subcontraction not to mention advanced simultaneous

optimization methods are offered at all. Thus, the complex process of planning in freight

forwarding companies is still done manually (compare Jurczyk, Kopfer and Krajewska

(2006)). Yet, as the logistic market gets more and more competitive, and the common

possibilities to decrease transportation costs are almost utilized, freight forwarders slowly

discover that they cannot work efficiently without structural changes. Amongst others, these

include establishing fully automatic and efficient methods for the entire problem of operational

transportation planning. Thus, algorithms solving this problem are becoming inevitable.


Essay: Issues in Enterprise Architecture (Logistics)

Source: (http://www.agiledata.org/essays/enterpriseArchitecture.html#sthash.a4yzLS3B.dpuf)

Date : August 2013

Making the enterprise architecture attractive to customers must be considered. Agile

enterprise architects realize that they need to make their work, including their services,

attractive to their customers (developers and business stakeholders). If your customers

perceive that you have value to add, that your enterprise architecture efforts will aid them in

their jobs, then they are much more likely to work with you. If, on the other hand, they think

that you‘re wasting their time they won‘t work with you. They‘ll find ways to avoid you, to

cancel or postpone meetings with you, to find ways around you.

Essay: Freight Forwarding: Managing Risk (Department for Business,

Innovation & Skills)

Source: https://www.gov.uk/freight-forwarding-managing-risk (August 2013)

Overview of freight forwarders’ responsibilities

Freight forwarders provide transport solutions to businesses wishing to send packages,

crates and containers from one country to another. Forwarders act on behalf of importers and

exporters to get their client‘s goods to their destination on time and in good condition. This

means booking cargo with shipping lines, airlines, rail or road carriers. Some freight

forwarders have their own road transport and may actually carry the goods themselves. A

forwarder‘s other responsibilities include preparing and checking bills of carriage, arranging

insurance, ensuring the lowest possible customs charges are levied and - where necessary -

arranging storage.

Trading conditions and limiting liability for freight forwarders


All businesses are subject to a wide range of statutory regulations - such as

employment law, health and safety, public liability and accounting standards. There are also

legal issues which specifically affect freight forwarders and their customers. The role of the

freight forwarder is to make arrangements which enable goods to travel from seller to buyer.

This often involves a journey of several thousand miles, using more than one mode of

transport. There must have been a sale - and contract - agreed between a seller and buyer

for the supply of goods before a freight forwarder is needed. Many of the elements of this

contract impact directly on the nature and detail of the contract eventually agreed between the

forwarder and their client - which could be the seller or buyer of the goods.

Trading conditions

To ensure the client and the forwarder fully understand - and agree upon - their

responsibilities in the transportation process, the client must be made aware of the

forwarder‘s trading conditions. This needs to be done before details of the contract are agreed

- ideally at the quotation stage. Trading conditions establish the circumstances under which

any service is provided and usually include limiting the forwarder‘s liability in the event of a

claim against them. Failure to do this could leave the forwarder with unlimited liability - which

could prove very costly.

Trading conditions also:

ensure the client knows their goods are not automatically insured

provide safeguards to help ensure the forwarder is paid once the job is done

protect the forwarder if the client fails to fully disclose the contents of a

consignment, eg hazardous material or goods of an exceptionally high value

Despite being able to limit liability, the freight forwarder still has some level of

responsibility for loss and damage to goods.

Conventions

All transport is subject to national and international laws, and each mode has its own

legal regulations that limit the liability of the carrier. These conventions play a similar role to

trading conditions.


Many shipments are notified via inventory booking references so these are also worth

confirming with Port loaders.

The importance of insurance for freight forwarders

When a freight forwarder is entrusted with someone else‘s goods, they become legally

responsible for taking all the necessary steps to protect and preserve that consignment. This

means the forwarder is liable to the owner for any subsequent damage or loss.

However, the forwarder is legally entitled to limit the amount they are liable for,

provided that these trading conditions have been agreed in advance.

Where goods are lost or damaged, it is possible that someone - during the

transportation - has been negligent. If there has been negligence, there is likely to be a

demand for compensation. The damage or loss might not have been the fault of the

forwarder, but if it was caused by someone the forwarder is responsible for - such as a

subcontractor - they will be liable as if it were.

Forwarding is not just about handling cargo - much of it is about using and providing

information. For example, forwarders should know:

when a certain ship is due to leave

a country‘s import regulations

the current rate of duty for a particular product

If forwarders get this information wrong, and a client relying on its accuracy suffers a

loss, the forwarder could be liable. However, they can use their trading conditions to limit the

amount of compensation they will be liable for in the event of such mistakes.

To protect themselves against risks, forwarders can take out insurance to help cover

any compensation they may become liable for.

Types of insurance for freight forwarders

Liability and marine insurance are the two important types of cover for freight

forwarders to consider. Forwarders must have public liability insurance - like any other


business - and employer‘s liability insurance, if they have staff. It‘s also advisable to insure

any premises owned, along with their contents.

Liability insurance

All freight forwarders should have liability insurance cover. This offers protection from

the types of compensation claims outlined further down in this guide.

Policies are available from a wide range of brokers, although a specialist insurance

broker with experience of the relevant insurance policies is advisable for freight forwarders.

Liability insurance does not insure the goods themselves - this is usually the responsibility of

the buyer or seller.

Marine insurance

This covers the loss or damage of goods being transported internationally. Marine

insurance policies also cover air, road and rail transport.

Because freight forwarders and carriers are entitled to limit their liability, owners of

goods who don‘t insure them during international transport will only be entitled to a fraction of

the goods‘ real value. Many freight forwarders carry their own marine insurance policies so

that when requested by their customer they can provide it as an added value service.

International trade finance

Freight forwarders play a crucial role in making sure the seller receives payment from

the buyer.

For example, if the terms of payment are cash on delivery, it could be the forwarder‘s

responsibility to ensure that this money is collected when the goods are delivered. In other

cases, the forwarder can help payment by ensuring the correct documents are in the right

place at the right time.

Sellers can often be trading with buyers thousands of miles away who are unknown in

terms of financial stability. Because of this, international financial institutions have developed


specialist procedures that allowB exporters to do business safely - knowing they will be paid

on time and in full.

Forwarders must understand these processes so that their provision of well ordered

and accurate documents promote smooth, swift and secure transport of the goods, and

ensure that payment is unhindered.

Managing the risks of freight forwarding

Freight forwarders have within their care - or control - goods and documents owned by

third parties that often represent large sums of money. This means good risk management is

the key to running a successful forwarding business.

Freight forwarders can limit their liability and cover some of the risks with insurance

policies. However, it can be easy to invalidate the benefits of limited liability through

carelessness or ignorance. Also, some risks are uninsurable - such as losses caused by

terrorism.

Risks can never be eliminated completely, but with good practices and training, they

can be minimised to acceptable levels. This reduces the likelihood of unwanted claims that

could severely reduce profits.

It is important that forwarders bring their trading conditions to the attention of the

customer before the contract is concluded. Failure to do so could prejudice insurance cover

and invalidate the protections of limited liability.

Other areas of the business where a forwarder needs to establish clear procedures -

which are understood by any staff involved - include:

getting written instructions from customers

controls over the issue and release of documents

managing subcontractors - ideally involving written contracts

handling dangerous goods - for more information, see the guide on freight

forwarding - moving goods

cargo security

insurance claims


Case Study: Car 54, Where Are You?

By Merrill Douglas

Source: www.inboundlogistics.com/CaseStudies

Topic: A web-based railcar monitoring service helps American Gypsum keep freight on track.

For years, railroads have been tracking rail cars and using that data to keep shippers

informed about their freight. Some shippers visit individual railroad web sites to track the

progress of their cars. Others use services that collect raw data from the railroads and

transmit it to a computer in the shipper's office, where software turns the data into reports. Still

others use a service to format the data for them and pass those reports along, or alert them if

a shipment gets into trouble.

American Gypsum, a major producer of gypsum wallboard, used to rely on the third

option. But it wasn't working.

"We used a third-party service to track our shipments and give us advice," says Wayne

Johnson, director of logistics at American Gypsum, a division of Eagle Materials in Dallas.

"But that service kept us informed manually, using spreadsheets, phone calls, and a few e-

mails."

Most communication took place by phone. Once a month, the service faxed Johnson a

spreadsheet with information on car movements. "The spreadsheet wasn't useful, and wasn't

up to date," he says. "Nor did we have the staff to control it."

MAKING TRACKS TO THE WEB

About 18 months ago, American Gypsum switched to a web-based service provided by

Railcar Management Inc. (RMI), Atlanta. The company's rail coordinator now receives daily e-

mail reports on its rail cars.

American Gypsum operates four wallboard plants—two in New Mexico, one in

Colorado, and one in Oklahoma. It uses trucks to haul gypsum into these plants and move

finished product to big box stores such as Home Depot and Lowe's, but it uses rail to ship

wallboard to large lumber yards and distributors throughout the United States. The company

also uses rail to ship scrap paper to a company-owned paper mill in Lawton, Okla.


Rail accounts for between 30 and 32 percent of American Gypsum's $100- million

annual transportation budget. The company owns 255 railcars and also uses cars that belong

to the Burlington Northern Santa Fe and Union Pacific railroads.

"We ship between 7,000 and 7,500 rail cars a year," Johnson says. The company also

owns a shortline railroad, the Hollis & Eastern (H&E) in Duke, Okla.

When officials at American Gypsum started looking for a new way to monitor their rail

cars, they considered two other systems besides RMI's ShipperConnect Freight Management

Services (FMS). One big factor in RMI's favor was that the H&E was already using some of

RMI's rail solutions.

"We looked at other systems, but jumped on the advantages we could get by using

RMI for both the plants and the railroad," Johnson says.

PROACTIVE REPORTING

RMI has been providing software applications and business services to regional and

shortline railroads in North America since 1979. In the late 1990s, RMI started using the data

it collected from those customers to create its Freight Management Services for shippers.

"We collect car location messages throughout the day from the railroads as rail cars

travel throughout North America," says Paul Pascutti, RMI's vice president of marketing. "We

then provide proactive reporting to identify potential exceptions, such as cars that are

delayed, out of route, or behind schedule."

Many location messages come from radio frequency identification (RFID) tags affixed

to rail cars. RFID readers installed along the rail lines capture a unique identification number

from each car as it passes, and transmit that data to the railroad's transportation management

system.

Data entered by railroad employees or provided by shippers—for example, when a

shipper notifies the railroad that it has a loaded car ready for pickup—also generates car

location messages.

Once a shipper authorizes its railroads to release proprietary information about its

freight, RMI starts collecting that data and using it to spot possible problems.

"We can track where a car is right now, as well as provide historical information on transit

times and potential areas where there might be delays," Pascutti says. "The shipper can

address those issues with the railroad, perhaps to improve overall cycle time."


To identify problems, RMI's system compares current car location data with historical

data that shows how long it usually takes to travel between a given origin and destination.

"Once a car starts falling behind, we provide that on our reports," Pascutti says. "We have

ETA (estimated time of arrival) reports that show if a car is on, behind, or even ahead of

schedule."

Shippers receive their reports via e-mail, some first thing in the morning, others several

times a day. Rather than showing the status of every car, reports focus on exceptions, such

as cars that are behind schedule and those that are being pulled off the line for repairs.

Customers can ask for specialized reports—one that focuses only on empty cars headed

toward plants for loading, for example, or one that shows only the activity related to a specific

plant. Users also can log on to the web site at any time to make ad hoc queries.

For American Gypsum, RMI intercedes with the railroads when problems occur. "We

authorize RMI to be our contact with the railroads," Johnson says. "When a car is delayed for

more than 24 hours, RMI can call the railroad and ask what's going on. If a car gets derailed,

RMI gets it back on the rail, or contacts us so we can file a claim."

Along with tracking railcars, ShipperConnect allows a shipper to automatically create

an electronic bill of lading (BOL) for each car prepared for pickup, transmitting that document

to the railroad in standard EDI format.

TWO WEEKS TO GO

RMI charges a monthly fee for ShipperConnect FMS based on transaction volume.

Once a shipper contracts for the service, it takes about two weeks to get up and running.

During that time, the shipper provides letters authorizing RMI to collect its car location data,

and RMI works with the railroads to set up the necessary connections.

The shipper also provides RMI with ID numbers for the cars in its private fleet, so RMI can

build a "fleet master," Pascutti says. In addition, the shipper gives RMI information on any

special fleet groupings—such as sub-fleets dedicated to specific plants—and lets RMI know if

it uses railroad-owned cars at certain origins and destinations.

AUTOMATED BOLS

American Gypsum is currently working with RMI to automate its BOLs even further.

When the project is complete, American Gypsum's order entry system will feed data about


customer orders to ShipperConnect. FMS will use that information to create BOLs for the

railroads, telling them what products American Gypsum is loading on the rail cars.

"Once an order has been entered into our internal system, our goal is to have that information

fed through RMI without ever manually entering it again," Johnson says. "When the shipment

date arrives, and the order is completed, loaded, and ready to go, it will automatically be

'billed' to the railroad."

ShipperConnect helps American Gypsum provide better customer service. "With better

information on rail cars, we can proactively contact our customers to let them know when a

shipment will be delivered, or if it will be delayed," Johnson says.

Besides advising customers about problems, American Gypsum can take corrective

action. "We supply trucks if a shipment will be delayed too long," he notes.

"Before using the RMI system, we reacted to information instead of proactively acting

on it," Johnson says. "Customers were calling and asking about their shipments. Now we tell

them ahead of time if a shipment is delayed."

AT THE CARRIERS' MERCY

Although the service also helps American Gypsum use its rail cars more efficiently, the

company is mostly at the mercy of its carriers on that score.

"With proactive monitoring, we can move the delayed cars a little faster," Johnson

says. "But speeding railroad transit time is almost impossible."

In the back office, though, the system has improved the productivity of the employee who

monitors rail freight. "He used to spend most of the day monitoring freight," Johnson says.

"Now it takes up only a little of his time."

Article: DHL Simplifies International Transportation

By Connie Gentry

Source: www.inboundlogistics.com

Topic: DHL Connect Automates the Processes Required to Transport and Track Global

Shipments.

http://www.inboundlogistics.com/


The dynamics of transcontinental shipping fluctuate hourly with changing cultural and

political winds. Even when using proven carriers such as Airborne, DHL, Federal Express,

RPS, and UPS, businesses can lose control of their packages when they hand them over for

shipment.

To try and remove some of the mystique and mayhem associated with transportation to

and from foreign countries, DHL Worldwide Express, Redwood City, Calif., has launched DHL

Connect, a new software application. DHL Connect places DHL's knowledge of international

air express delivery inside any PC. International distribution becomes a user-friendly,

chartered course, rather than a black hole of uncertainty.

"Shipping internationally depends upon discrete processes, such as establishing airbill

identification numbers, checking addresses to confirm deliverability, and tracking the

shipment," explains Alan Boehme, director of business planning at DHL Worldwide Express.

"We've leveraged the power of the Internet so anyone can connect directly into our system

and conduct business on an international scale. Even if transport buyers don't have Internet

access, they can link into the shipping resources of DHL Connect through our VPN (Virtual

Private Network)."

Researching and maintaining the comprehensive information necessary to understand

the intricacies of import and export licenses, the specific paperwork required by different

governments, or projected delivery schedules between countries is an expertise unto itself.

For instance, shipments with "commercial value" are classified as dutiable, subjecting them to

import taxation, vs. routine business correspondence that does not incur additional paperwork

or cost.

The DHL Connect service, available on CD-ROM or via download from the DHL web

site (http://www.dhl-usa.com), automates the processes required to prepare shipment

documentation, track the shipment, notify the recipient that it is enroute, and maintain reports.

The software, provided free of charge to any DHL customer regardless of the number or

frequency of international shipments, houses a comprehensive list of commodity

classifications (for example, dutiable vs. non-dutiable) and can integrate with personal

information management (PIM) systems such as MS Outlook, Symantec ACT, and Lotus

Organizer. Users of DHL Connect during its recent pre-production beta release say it is

convenient and easy to use.

International Data Corporation (IDC), Framingham, Mass., is a leading provider of

information technology data and analysis with more than 300 research consultants operating

http://www.dhl-usa.com/


in more than 40 countries, including seven U.S. locations. With 10 to 60 international express

shipments leaving its headquarters daily, IDC utilized several expedited delivery carriers,

including DHL, Federal Express, and UPS. One of its preferred systems was DHL's EasyShip

on-line tracking mechanism, so the DHL Connect software provided a logical extension.

"The tracking capabilities of DHL Connect are valuable for our time-sensitive packages that

need to be monitored as they pass from hand to hand," explains Sydney Balise, manager of

office services for IDC. "Even with excellent customer service and communications, phone

calls to stay abreast of shipments invariably routed through voice mails, which meant waiting

for a reply call. Instant tracking access at the desktops of our key people is convenient and

efficient."

The system has gained acceptance immediately. Balise describes it as the "unanimous

machine of choice" because it is easy and fast. She estimates that a single three-to-five

minute session brings the user up to speed with DHL Connect.

"People don't have to take time to run from the fourth floor to the mailroom. In two or three

keystrokes they can print a shipping airbill at the local laser printer, insert it in a plastic pouch

and it's ready to go," says Balise. "We're throwing away the airbills; within six months no one

will manually write the information."

Another proponent of the timesaving convenience was searching for a file maker or

software to accommodate airbill layouts when DHL launched its beta test.

"I spend one to one-and-a-half minutes per package, compared with a minimum of five

minutes to manually complete an airbill - 10 minutes if I wrote it so it could be read," says Ian

Macadam, program assistant special executive programs at the MIT Sloan School of

Management, Cambridge, Mass.

Sending 10 to 30 packages daily to students, partner universities, and corporations in

obscure locations around the world, Macadam frequently had to track down packages that

never made it to the intended destination. "One of the biggest advantages with this software is

that it can correct problems before the package ships," reports Macadam. "If the address is

incorrect or nondeliverable, the software can alert you or edit the information so that the

package doesn't get left sitting in Customs or delivered to the wrong address."

The innovative hybrid architecture marries a Windows type application to the open

Internet, allowing DHL to broadcast updates and regulatory changes as they occur to every

PC using the software. Boehme predicts the next step, which he proclaims is merely a "step,

not a futuristic leap," will be updating shipments in progress.


"The key to DHL Connect is this ability to allow the user's systems to communicate with

our systems in real time," says Kathleen Schumacher, vice president of logistics, DHL

Worldwide Express. "With the trend to replace warehouses and inventories with direct

distribution to the end user, senders must track their shipments. Logistics is information;

therefore improving the communication of information by definition will improve logistics."

In terms of international commerce, the software levels the playing field so any person

can initiate and monitor shipments from their desktop - whether they're sitting in the CEO's

chair of a Fortune 500 company or in a home office.

By leveraging the power of the Internet, DHL Connect lets companies of all sizes conduct

business on an international scale.

Case Study: The Right Route with the Right Rate (Issued January 2001)

By Heather Ignall

Source: www.supplylinks.com or www.atomic29.com

Topic: Can a dot.com company take complexity and cost out of supply chain management?

As we head into the new year, companies now have time to reflect on mistakes they

may have made when delivering goods during the holiday season. Did your goods get there

on time? Did you pay the best rate? Did you choose the best carrier?

If not, a new supply chain management company that offers route optimization and

landed cost calculation could position you solidly for the year. SupplyLinks, South San

Francisco, Calif., is an Internet-based B2B global supply chain network that links users to

multiple transportation modes and service providers through a single platform.

Founded in June 2000, SupplyLinks was formed through a partnership between G-Log

(Global Logistics Technologies) and New Meadows Venture Partners, with a goal to enable

manufacturers, retailers, and distributors to manage and bring innovation to their supply chain

processes. New Meadows provides capital and G-Log provides the technology capabilities

through its Global Command and Control Center.

The company is headed by CEO David Beatson, formerly chairman, president and

CEO of Circle International and Emery Worldwide. Beatson was approached to head several

http://www.supplylinks.com/

http://www.atomic29.com/


dot.coms this past year, but chose SupplyLinks because it has "a compelling business model

and is a good fit with my background and experience," he says.

"Our vision and strategy are simple," says Beatson. "We want to take the complexity

and costs out of implementing an integrated supply chain management solution. We link all

components of the supply chain, enabling our customers to transform the way they manage

their businesses globally."

SupplyLinks streamlines the use of a supply chain management system, helping

companies automate and simplify the processes of buying, transporting, and managing goods

worldwide through a global network of service providers. Manufacturers, retailers, and

distributors can manage their supply chain processes by optimizing transportation routing,

fulfillment, and landed cost of finished goods.

As an ASP (application service provider), SupplyLinks gives companies access to

multiple transportation modes with established carrier and forwarder tariffs.

"If customers want to know landed costs prior to making a procurement decision, we provide

the ability to calculate landed cost. This includes product cost, duty fee, excise tax, and

transportation cost, under the optimal solution," Beatson says.

After companies compare two different vendors with the total landed cost calculated,

on the execution side SupplyLinks provides a network of service providers—LTL and

truckload carriers, air and ocean forwarders, and parcel carriers—with links to these

providers, according to Beatson.

"Once a company selects the right mode of transportation, we provide the ability to

click and ship on our web site. This is done in a completely seamless environment," Beatson

says. "We also provide complete track and trace capabilities and in-transit visibility. If

something goes wrong in the process, we are able to contact the carrier to determine

alternate routings that could still meet the needs of the customer."

IT AND SERVICE PROVIDING

"SupplyLinks is an IT company and a service provider, not strictly a software provider.

We enable customers to make the right routing and mode selections, implement those

decisions, and follow that freight through to delivery," Beatson says. "For small to mid-sized

customers, we also negotiate rates with service providers. We aggregate space, and provide

customers with a discounted rate that they may not have gotten otherwise."


The logistics dot.com playing field is jammed with e-commerce companies, many of

which are exchanges or auctions. That's not the SupplyLinks model.

"We try to find the optimal mode, not take a nickel off the rate per pound on a given

shipment," Beatson says.

SupplyLinks sells a bundled service of IT solutions on an ASP basis to small to mid-

sized companies. The company also targets B2B exchanges that bring buyers and sellers

together, becoming the logistics solution that a lot of these exchanges don't address.

"We also deal with large shippers who use us as an ASP to provide transportation

optimization, landed cost optimization, and in-transit visibility," Beatson says. "We use

carriers' established tariffs because these carriers have already negotiated the rates. They

use our solution on an ASP basis, and we download the carriers' proprietary rates, rather than

using our aggregated rates."

THE REACTOR

One SupplyLinks customer is ATOMIC29, Los Altos, Calif. Founded in March 2000,

ATOMIC29 provides printed circuitry manufacturers with commercial, technical and human

capital.

"We work with our partner manufacturers and look into what makes their business

more profitable," says Jeremy Louwerse, ATOMIC29's vice president of e-business. "That's

where SupplyLinks and logistics come into play. Logistics is an important element of the

printed circuit manufacturing industry's business model that hasn't been focused on much in

the past few years."

ATOMIC29's e-business application allows manufacturers to become e-business

enabled, providing end users with online quoting, ordering, and technical services.

SupplyLinks gives ATOMIC29 the ability to help clients manage the transportation planning

and delivery of their products throughout the world.

"We are always on the lookout for tools to help our partners operate a more efficient

and profitable business," says ATOMIC29 CEO Frank Lonergan. "Manufacturers of printed

circuitry are under increased pressure to provide more visibility into the supply chain and

deliver product with just-in-time precision."

SupplyLinks gives ATOMIC29 a seamless solution that allows the company to provide

its partner manufacturers with the logistics solution they can access through ATOMIC29's

web interface called the REACTOR, Louwerse says.


The ATOMIC29 REACTOR is a browser-based application that provides printed

circuitry manufacturers with complete e-business functionality. The application can be

seamlessly integrated into a manufacturer's existing online presence, or function as a stand-

alone resource.

"When partner manufacturers need to manage the logistics piece, they enter into the

SupplyLinks solution via our REACTOR," says Lonergan.

This allows them to optimize a logistics solution, or get a landed cost optimization at the time

of quote, so ATOMIC29 partners can provide their customers with a more realistic quote,

taking in all aspects of the transaction.

"Prior to this, partner manufacturers had to guess what the actual landed costs would

be, and they weren't able to weigh different options," Lonergan says. "Once the deal is done,

the SupplyLinks solution gives them a click-and-ship solution. We can turn over the whole

logistics process to SupplyLinks."

ATOMIC29 has been working with SupplyLinks for the past six months.

"We chose SupplyLinks because of its people. They seemed to best meet our goals

economically, and are well versed in logistics. We didn't want to find an IT provider that knew

the printed circuit board industry. We wanted to find the best IT provider in the logistics

industry," says Lonergan.

Mick Fountain, divisional chief executive for Exel's global freight management and

technology group, a $2.6-billion company that specializes in supply chain services, uses

SupplyLinks for a different purpose than ATOMIC29.

"SupplyLinks is a sales channel for Exel," Fountain says. "Exel has a link on the

SupplyLinks web page. When customers choose their transportation mode, they can access

our services right there. The relationship could, however, end up becoming more in depth

than this because there are various other e-commerce ventures that Exel may want to get

involved with that link in with what SupplyLinks and David Beatson do."

Fountain's division has a similar relationship with another IT provider, but not to the

scale and potential of the relationship with SupplyLinks, he says.

"There are numerous exchanges and markets on the e-commerce scene, but at some

stage they will need to be profitable. Who survives will be determined by the value proposition

presented, its compelling nature, and ultimately, the execution. I think SupplyLinks can

succeed," Fountain says.


OTHER BENEFITS

SupplyLinks is used on an ASP basis, so companies don't have to license the

software. They get a pay-as-you-go solution.

"It's a completely internationally focused solution, aimed at the needs of the transport

buyer more than the carrier. We're building this model to support consignees and empower

them to have complete visibility into freight that is moving inbound to them," Beatson says.

ATOMIC29 has not been with SupplyLinks long enough to determine how much money it has

saved, but that isn't the company's focus.

"It comes down to efficiencies," says Lonergan. "If we can use logistics to more

efficiently manage transactions to the manufacturers' advantage, that can add to the bottom

line for the finished product. Optimizing this process brings a lot of benefits."

Another part of the SupplyLinks solution includes not only price, but also carrier quality

rating. The company provides users with the optimal mode solution, and options on each of

those modes. In addition, users get access to both the price and quality ranking that has been

established for that particular transportation partner, according to Beatson.

SupplyLinks is having discussions with several companies that could be announced as

customers in the future. Beatson says the company is also planning to partner with

companies in the ITL (international trade logistics) space as part of the solution it offers.

"What it comes down to is that the SupplyLinks solution is bulletproof," says ATOMIC29's

Louwerse. "Technology can be either too robust or too simple; sometimes it doesn't get to the

heart of the matter. But SupplyLinks does."

ANALYSIS

Freight forwarding companies have a great contribution in their clients‘ successful

production and distribution. Freight forwarder is defined as a firm specializing in arranging

storage and shipping of merchandise on behalf of its shippers. It usually provides a full range

of services including the tracking inland transportation, preparation of shipping and export

documents, warehousing, booking cargo space, negotiating freight charges, freight

consolidation, cargo insurance, and filing of insurance claims. Shipper‘s agent consolidate


trailer on flatcar movements. Typically they arrange for transportation only, charging a fee for

their services. The primary advantages of using an agent include cost savings, consolidation,

and faster transit time.

Transportation is the vital link in the integrated logistics process. Just-in-time delivery is

the ability of a carrier to meet shipper‘s demanding requirements for short, well-defined transit

times. This definition demands that carriers become more ―customer service oriented‖. That is

They must provide customized delivery services to fit their customer‘s production

requirements. These customized service could include the following:

1. establishing ―milk runs‖ whereby specific routes and times are scheduled for

customers;

2. scheduling trips to meet customer‘s ―delivery window‖, which could be hourly or

daily and may require more less-than-load shipments

3. providing ―dedicated equipment‖ to certain customers (this refers to the carrier

having equipment available twenty-four hours a day just for that customer);

4. using drop-and-switch techniques for trailers;

5. building terminals close to customer‘s plant facilities;

6. buying ―specialized equipment‖ that assists in fast loading and unloading so that

customer‘s delivery needs can be met;

7. developing transportation informations systems that can constantly monitor the

shipment, while also feeding information on demand to both the carrier and the

shipper. This system should include document control, computer-assisted-auditing,

computer-generated reports, computer- assisted shipping and routing systems, and

electronic transmission of data;

8. innovative pricing of services and contracts.

As mentioned by David J. Bloomberj in their published book entitled Logistics, the

customized services dictate the carriers and customers work as partners, not adversaries.

They must be prepared to share the benefits of just-in-time (JIT) and jointly solve its

problems like the transportation and delivery stuggles. Not all modes of transportation can

readily implement JIT delivery. Finally, if a manufacturing firm adopts the total JIT concept

(delivery, purchasing, and manufacturing), everyone in the channel of distribution for that

product must be a JIT participant. In Bloomberj‘s case study about A.J. Stevens Incoporated

(CASE 7.1 pp. 115-116), A.J. Stevens Inc. Has operated in the United States and Canada for


fifty years. The firm‘s primary business was marketing and selling fast-moving consumer

products and pharmaceuticals, but upper management saw additional opportunities in third-

party logistics. In 1998, the firm‘s two sales divisions each operated its own integrated

logistics team, and Stevens also ran a fleet of twenty-five vehicles. Management saw an

increasing demand for integrated logistics services. Many of its customers had inefficient and

costly integrated logistics operations and were looking for ways to reduce costs and improve

service. Several customers lacked experience in operating large-scale warehousing and

distribution functions. In early 1998, Stevens established a new integrated logistics division to

design integrated logistics systems for other firms. Management decided to treat the new

division as a profit center.

In 1998, Leewick Ltd., a multinational food and household products company,

contacted with Stevens for logistics services. Six months later, another multinational

pharmaceutical and nutirional manufacturer, NutriCare Ltd. entered into a similar contract with

Stevens.

According to the agreements, logistics assets and personnel could be transferred to

Stevens when they took over the operations. A few warehousing employees from both

multinational firms joined Stevens, but most continued to work for their respective companies.

To ensure a smooth transportaion to third-party operations, transportaion teams from Leewick

and Nutricare were managed and supervised independently according to their old practices.

Stevens had four fleets: A, B, C, and D. Fleet A took care of the fast-moving consumer

products and bulk delivery. Fleet A served supermarkets and small stores, selling household

and food products. Fleet B delivered pharmaceuticals to doctors and hospitals. Fleet C was

the Leewick delivery tea, serving customers similar to the customers of Fleet A. Fleet D was

the nutricare delivery team, serving dispensary stores, hospitals, and supermarkets. After

almost twelve months of operations, Steven‘s clients are satisfied with the logistics services,

but profits are lowere than expected. The final account for 1999 shows that the overall profit

of the integrated logistics division was well below budget. The shortfall was attributed to

losses incurred by the transportation department. The general manager of the division has

asked the transportation manager to take immediate action to improve efficiency of the

transportation department and to achieve cost savings.

The analysis for this cause implies that there could be determinants of such increase in

the transportation department. This could be the terms of communiation and monitoring

process such as inquiry through calls or SMS text message. The other could be the


uncontrollable use of gasoline which may be caused lost in direction, frequent stop over, and

unexpected troubles in travel. The other factor in increase of company expenses is the

complaints and demands of the clients due to poor client-service provider communication. In

which clients could mistrust and doubt the carrier‘s integrity.

Due to the high cost of freight transportation (in terms of air transpo), most of

customers of freight forwarding companies chose to travel their goods and products through

inland means of transportation such as trucks, elf, and cars. Air transportation costs more

than motor transportation, which costs more than rail, which more than water, which costs

more than pipeline. Taking transportation costs alone into consideration, costs relate directly

to speed – the higher the cost, the higher the terminal-terminal speed. However, to consider

only terminal-to-terminal costs is to err. Goods do not move from terminal to terminal. They

move from origin to destination, which often means additional costs. In integrated logistics,

time is measured in how quickly the goods move, not how quickly the vehicle moves. A train

may go ninety mile an hour over good track with no grade crossings, but if goods spend a

week in the rail yard waiting for final delivery, it does not matter. Pricing based on costs takes

into account the total cost of the service, which includes both time and money. Safety

concerns in modal selection range from protecting the general public from explosions to

protecting carrier employees as they load and unload goods. Some goods might economically

move in bulk, but safety concerns require that they be packaged – some chemicals in drums,

rather than as liquid bulk goods, for example. Such issues will affect mode choice. Clearly,

packaging interacts with safety concerns, which in turn affect modal choice. In fact, other

logistics issues tie back to safety and to modal choice.

Moreover, carriers that consistently deliver goods on time add more value than those

that do not. They are worth more. The importance of reliable delivery and pick up rises as

firms move toward just-in-time (JIT), quick response. The concept of just-in-time fails without

reliable carriage , regardless of the mode. The higher the reliability requirements, the more

likely goods will move by faster modes and faster carriers; this could result to accurate and

fast generation of report about monitoring of the client‘s goods/products. Transportation

managers must measure customer service, as surely as the system must deliver service. This

demands a process to monitor and improve those services. First, the manager must identify

the primary transportation customers. A transportation manager at a large retailer might

define the retail outlets as customers. A third-party might define customers as those who ship

freight through them. A good long-term relationship requires continuous improvement of


services and of the quality associated with providing those services. The quality is measured

by customer standards. Key issues include terms of sale, credit arrangements, transit time

reliability or consistency, door-to-door transit time, loss and damage percentages, and

handling of lost or damaged shipments. And product tracking should allow the shipper to

follow a shipment through the transporation system.

CONCLUSION

Reliability and accuracy of transporting goods/product is one of the issues faced by by

freight forwarding companies in the Philippines. The researcher therefore conclude that there

is a need of improving the freight forwarding management system that would deal with

accurate and timely monitoring of products/goods condition and its current location; to meet

the solutions of these companies for good customer service. Primarily, an integration of the

management system using information technology will be a great help to meet this demand.

By this, there will be high level of trust from clients which may be resulting to a proportionally

outcome towards company‘s performance and integrity. The study also showed that there

were several methods and analysis done by past researches to improve the business process

of logistics not only in the whole wide world most importantly in the Philippine region. In

further studies, the were one hundred fifty two (152) registered freight forwader companies in

the Philippines according to PHILIPPINE SHIPPERS' BUREAU Registration and

Accreditation Division List of Companies with Domestic Freight Forwarder Accreditation as of

31 December 2012. Many issues in logistics have been discussed in the cited articles and

books presented in which different problems occuring in this business in terms of high

expenditure for transportation and reliability and accuracy of delivery of goods specifically in

freight forwarding companies have been tackled. Since there are competitive registered

freight forwarder companies in the Philippines, the study thereof implies that there is a need

for an integrated freight management system with the tracking system using GPS locator for

in-time monitoring the current location and condition of the delivery goods.Developing

transportation information systems is one of the customization service that must be available

to an effective and efficient logistics services. This should constantly monitor the shipment,


while also feeding information on demand to both the carrier and the shipper. This system

should include document control, computer-assisted-auditing, computer-generated reports,

computer- assisted shipping and routing systems, and electronic transmission of data.

A further study should be intended to assess and evaluate the benefits of having a

development to the freight forwarding management system in this business organization. This

should seek to find solutions on:

1. What is the current management system used in the company?

2. How can the company improve their management system in terms of accuracy and speed?

3. How can the company disperse and produce information about the current location and

conditions of goods and products to be delivered towards the client and the management

itself?

4. How could the administrative officers/workers be able to manage to provide document

delivery, deconsolidation, and freight collection services, and real-time information to track

and analyze the transport and delivery time and current situations of goods and product, and

to prepare shipping and export documents?

RECOMMENDATION

Generally, the researcher would recommend an integration of the freight forwarding

management system with tracking inland transportation using GPS locator. This includes the

ability to enable freight forwarders to have higher administrative control in transport and

delivery time of products and goods to the client. At the same time, this could enable them to

monitor storage and shipping of merchandise on behalf of its shippers, to track inland

transportation timely, and to urgently notify the client about the status and delivery conditions

of products. This integrated system could provide live messaging and instant report about the

condition, location and other relevant inquiries not only of the staff from the main office but

most importantly of the clients.


With this comes an idea of conceptualizing a framework which consists of three

phases. The first phase or the ―input‖ is the collection of management information, process

flow, delivery of goods and products information and freight forwarder management needs,

interviews, and other data gathering techniques. The second phase or the ―process‖ will be

the assessment, analysis and design of the requirements and process flow of the system.

This will include the development of the freight forwarding management system with tracking

inland transportation using GPS locator. The final phase or the ―output‖ is the actual out,

evaluation and implementation of the system.

Conceptual Framework Using IPO Model

The researcher thereof belive that the freight forwarding companies will be benefitted

from the proposed solutions. The organizations will have the opportunity to extend its market

and could have an efficient and effective way of transacting business to and communicating

with customers who are not personally attending the request for the business processes and

transanctions that evolves within this. Information is being stored and recorded properly and

the delivery and transport report and monitoring of goods and products is timely and accurate.

Forecasted transport solutions could also be used to anticipate goods demand and counter

shortages in supply. They could be aware of an accurate forecasting method about the

supply. With the benefits to the staff and employees of freight forwarding companies, they

could produce effective and efficient reports needed just on time. They could prepare shipping

and export documents, could urgently book cargo space, could monitor cargo insurance and

Interviews Data Gathering Needs of Analysis Survey

Analysis, Design & Assessment of Requirements for the Freight Forwarder Management System Conduct Survey about the Effectiveness of the Proposed System Analyze Survey

Survey Evaluated Prepare Recommendations and System Proposal Implement FFMS With Tracking Inland Transportation Using GPS Locator Maintain the system

INPUT PROCESS OUTPUT


the shipment itself and needed file insurance claims accurately. And of course, improvement

to their performance at work would be seen because of the timely feedback and response to

the bosses ‗ and clients‘ inquiries about the shipment and product transport.

DEFINITION OF TERMS

Bill of Lading (sometimes abbreviated as B/L or BOL) - is a key document used in the

transport of goods. It is a document generated by a shipper, detailing

a shipment of merchandise, giving title to the goods, and requiring the carrier to release the

merchandise to a named party at the destination.

Electronic Document Interchange (EDI) - is a document standard which when implemented

acts as common interface between two or more computer applications in terms of

understanding the document transmitted.

Freight forwarder, forwarder, or forwarding agent - is a person or company that organizes

shipments for individuals or corporations to get goods from the manufacturer or producer to a

market, customer or final point of distribution.

Global Positioning System (GPS) - is a space-based satellite navigation system that

provides location and time information in all weather conditions, anywhere on or near the

Earth where there is an unobstructed line of sight to four or more GPS satellites. The system

provides critical capabilities to military, civil and commercial users around the world.

Logistics - is the management of the flow of resources between the point of origin and the

point of consumption in order to meet some requirements, for example, of customers or

corporations. The resources managed in logistics can include physical items, such as food,

materials, equipment, liquids, and staff, as well as abstract items, such as time, information,

particles, and energy.

accuracy and reliability of freight forwarders in...

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