Though fuel costs climb and heightened security creates delays at seaports, airports, and international borders, customers still expect top delivery service. And they still want quality products at the best price.

Profit Squeeze
In the face of this profit squeeze, you might look to your logistics operation for ways to gain strategic advantage. Should you restructure distribution networks? Do you need to strengthen collaboration with supply chain partners? Or is the answer to upgrade technological infrastructure? You may decide to try them all. The ingredient common to all three approaches is the improved flow of information — or in the term favored by transportation experts, visibility.

Data flow is so important to logistics that, in a sense, information can substitute for inventory, according to a recent report from the Logistics Institute at Georgia Institute of Technology in Atlanta, which cited five benefits of better data sharing:

• Better forecasts eliminate safety stock.
  
• Sharing forecasts allows suppliers to reduce inventory.
  
• Improving order accuracy reduces mistakes in shipment.
  
• Sharing data with vendors and shippers trims backup inventory and lowers the number of customer inquiries.
  
• Getting customer orders earlier permits companies to build products to meet demand.
  

To bring materials into the plant and move products to customers in an orderly way that supports profits, you need to know where the goods are at each point and know when action is required to get them to the next stage. That means that information must flow readily both inside and outside the company, keeping all key players up to the minute with real-time data. Internally, the critical links in the data network are between the purchasing, production, sales, marketing, accounting, and customer service departments.

Externally, the manufacturer needs an effective means to share real-time information with suppliers, carriers, forwarders, warehouses, and customers.

High-Speed Exchange
In this high-speed information exchange, phone calls, e-mail, and faxes don’t cut it. To stay in the logistics game, even small and midsize manufacturers need to make major and ongoing investments in technology. In addition to the help promised by constantly improving transportation management systems software and other computer programs, logistics professionals are turning to Web-based solutions and wireless tracking technology such as smart tags. (See "Tagging Along for Improved Supply Chain Visibility," page 2.)

Web-based solutions offered by logistics providers appeal to manufacturers that move small shipments over long distances. Buyers and sellers click their way to inventory updates on password-protected dedicated Web sites, getting details on shipment locations, invoices, bills of lading, and even exact pickup and delivery times.

As your transportation visibility improves, you may be able to report the success logged by a quarter of the 189 manufacturers participating in the recent IndustryWeek 2002 Value-Chain Survey of logistics. These respondents reported that despite all the challenges of recent years, they have actually reduced their transportation costs. Overwhelmingly, survey participants give credit for success either to information-based collaboration with customers and suppliers, named by 91 percent, or to the availability of real-time information, cited by 88 percent.