Tuesday, July 8, 2008

Creating Secure Global Freight Networks

Ocean Containers

In 1988 Don Schneider, CEO of Schneider National, Inc., the largest U.S. truckload motor carrier, over-ruled the advise of his executive team and decided to invest some $4,000 per truck in an experimental on-board computer system (from Qualcomm) that would allow continuous communication between his over-the-road fleet of trucks and a central computer system. Originally lured by the expectation that better communication would make his company preeminent in customer service, Schneider found that the primary advantage came from lower costs of operations. Two-way communication and global positioning provided better visibility to the fleet and offered the carrier the opportunity to change its dispatch and routing decisions in real time. The carrier could now react in real time to the latest news available about the host of everyday occurrences that can impact both a fleet's delivery progress and its customers' requirements, such as:

  • weather delays
  • shipping dock congestion
  • holdups in paperwork
  • accidents
  • road construction delays
  • changes in shipment routing
This relatively primitive event management system, combining real-time visibility with real-time communication, put managers back in control of the fleet and allowed them to make profit-maximizing adjustments in operations. What had initially looked like a $14 million gamble paid off quickly in millions of ways as countless errors and missed opportunities were avoided.

Today's supply chain managers, operating in complex, multi-modal, multi-country and even hostile environments require a far greater level of control. Many products like flowers, fresh foods and pharmaceutical agents are difficult to handle, require temperature control or other kinds of protection, and are shipped over global networks. Even the simplest consumer goods now cross numerous borders, where they are taxed, transshipped, rebundled and otherwise transfigured. At every point of contact items can be lost, infected or damaged, sometimes maliciously, occasionally catastrophically.

For shippers and receivers the stakes involved in safe and secure transit now rise well beyond the simple calculus of "over, short or damaged". Their governments, stockholders and lawyers now need to know who is responsible when toys become toxic; when food becomes poison; when shipments become weapons. More helpfully, supply chain managers are exploring and beginning to adopt systems and processes that can prevent dangerous or malignant items from infiltrating our stores, restaurants and homes.

Adoption of event and asset management systems and processes are rising to the top of corporate agendas. Using a variety of sensors, communication media and protocols and sophisticated information centers, these systems are designed to provide early warning of unexpected events and bring them under the control of supply chain managers.

One such provider of visibility and control solutions, System Planning Corporation of Arlington, VA, has developed GlobalTrak. Designed to provide real-time information on containers as they move from source to ultimate destination, the highly configurable GlobalTrak package is comprised of various sensors and seals, two-way communication systems, and data management systems that match information about events in transit with the standard shipping documents associated with those events. Users determine what events they need to monitor and how closely they need to be monitored, whatever they may be, such as:
  • Pickup, delivery and delay times
  • Changes in cargo temperature or radiation levels
  • Delivery paths
  • Opening of container doors
The system is then configured to report on progress as it occurs and to provide special reports when the sensors pick up unexpected activity. Because the system can be equipped with satellite, cellular and radio frequency technology, information about events can be captured and acted upon as they occur, no matter where or when.

Because such systems offer a great deal of protection, their use is being promoted and to some extent underwritten by at least one insurance provider, Marsh, which is developing a supply chain risk management practice. Prudent shippers are no longer relying on government rules and inspectors to protect them from hazards associated with international commerce.

For more information visit our Google Group page on Supply Chain Management.

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