There's software to focus on every part of the logistics management process. The trick is to make sure it's all synced up.

In the past, key parts of the logistics process have been managed using a hodgepodge of techniques, from paper forms to custom-designed spreadsheets to enterprise-class applications. But now, software can automate just about every component of the sequence, including order entry and processing, requisitioning and procurement, strategic sourcing, warehouse management and partner relationship management.

Consider cross-docking, the practice of coordinating supplier shipments so they can be mixed, matched and immediately shipped out again without requiring goods to be warehoused. It's theoretically possible to do this without software managing such complex handoffs, but few chief logistics officers would want to attempt such a feat without systems to support their efforts.

However, this proliferation of applications has for many companies created a mishmash of software that keeps logistics managers from getting the timely information they need. According to AMR Research Inc., the average U.S. manufacturer and retailer has 12 order management systems. That means many companies have substantial holes in their ability to get their supply chain logistics in order. Because many companies' ERP systems never really dealt with the myriad of logistics implementation issues like shipping optimization and transportation purchasing, there's currently a wave of upgrades and consolidation taking place that's similar to the series of integration steps many businesses went through with their earlier ERP efforts.

Yet even when such software is consolidated, lack of external integration is a problem. "You can put in a beautiful system that provides you with real-time information," says Menlo's Feitzinger, whose company controls about $7 billion in annual freight purchases. "But if your transportation carriers can't give you reliable information, then you have a great system—but you don't have great information."

Ask Your IT Staff: How many systems do we have that touch logistics, and what are the major stumbling blocks to integrating information from them?

Ask Your CFO: How much are we spending on services such as shipping, and how timely is the information we receive about what we're spending?

Ask Your Chief Logistics Officer: What tools do you think you'll require to get the information you need for better logistics?

This article was originally published on 02-14-2003
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