iTECH: Boring in on Core Technology

By Andrea Fischer

Editor of Publications, American Trucking Associations’ Information Technology & Logistics Council

This article appears in the June/July issue of iTECH, published in the June 15 print edition of Transport Topics. Click here to subscribe today.

How can trucking and logistics companies — faced with new technology and endless updates to IT systems — avoid wasting money on uncoordinated solutions as they try to keep up with faster, more visible supply chains?

Purveyors of tracking services, routing software, in-cab communications and radio frequency identification systems promise to lower operating costs, speed freight delivery and enhance security. In a world of virtually unlimited possibilities, information technology managers all too often are overwhelmed by one decision: Where to start?

Truckers should be mindful of how they decide what to purchase, said Marc Mitchell, transportation practice director for Enterprise Information Solutions, a company that helps trucking and logistics companies deploy new technology. Mitchell also is on the board of American Trucking Associations’ Information & Technology Council.

“There is far too much technology out there that is being sold because there is doubt or fear on the part of the carrier,” Mitchell said. “They just want to buy this thing, have it run and have it solve whatever problem they’re facing. But the fact is, if it were that easy, everyone would be doing it.”

A piecemeal approach does not help.

“If carriers choose to address each problem they face by spending money on one niche product, they quickly end up with a patchwork of different systems and it becomes hard to maintain the health of the whole operation.”

Instead, Mitchell said, trucking and logistics managers not only should develop a comprehensive technology plan to dictate their buying decisions, but they also should focus on developing a common platform for whatever technology they need.

Even small trucking companies, with their limited resources, can learn from what the chief information officers at industry giants do, Mitchell added.

According to Information Week magazine, flexibility and connectivity are two of the most important factors a chief information officer must pursue. The problem is, “CIOs are being given more strategic roles than ever before, yet they’re simultaneously seeing their budgets cut while expectations remain unrelenting,” reporter Bob Evans wrote in a recent article.

Even as a global recession complicates the situation, “CIOs are being asked to drive business change while, at the same time, many are trying to replace old and inflexible infrastructures with modern and flexible ones.”

Information Week has a feel for our industry, because the weekly publication often includes cargo transporters in its listings of technological innovations. In May, the publication cited two package-and-freight carriers — UPS and FedEx — in a report on IT best practices.

Rob Carter, FedEx’s chief information officer, told the magazine in an interview that even though more than half of FedEx’s business is U.S.-based, “all of our growth is fueled by global trade and the global connectedness that our network provides.”

Carter’s main focus, the magazine reported, is to simplify tech-driven processes across FedEx’s worldwide operations.

As the company grew rapidly abroad through acquisitions and start-up of new units, its underlying IT infrastructure and applications started to became overly complex. In response, the carrier has worked hard to build consistency into its processes, yet maintain location-specific and specialized services.

Information Week singled out FedEx Clearance — a “digital interconnect” technology the carrier developed with customs officials in many different nations to reduce paperwork and expedite international shipments.

Another place where FedEx is standardizing process, the article said, is at the physical hubs where it sorts, scans shipping labels and loads packages into bulk shipments. FedEx opened a hub in Guangzhou in February to serve China’s manufacturing and the rest of the Asia-Pacific region. A hub is under construction in Cologne, Germany, that will serve Europe when it opens next year.

Both are modeled on FedEx’s state-of-the-art facility in Memphis, Tenn., which features belts moving through six-sided tunnels at 400 feet per minute. Labels are scanned, no matter where they’re located on a package.

Paperless invoicing as a core technology earned UPS a spot on Information Week’s list. Just months after its introduction, the system has been accepted in 103 countries and is used by 20,000 customers, the article said. It not only reduces handling errors and the delays that are familiar customs hallmarks, the system also reportedly saves 25 million pieces of paper by eliminating multiple copies of invoices and customs documents that used to travel with each package.

“You can’t do that by building [a system] for the U.S., then getting requirements for Canada and extending the U.S. one to Canada; then getting requirements for Germany . . . .” and so on, UPS CIO Dave Barnes said in the article. “The environment we all compete in doesn’t allow that.”

Another example of consistency is the handheld device that every UPS driver in the world carries. Developed by UPS, beginning in 1991, the Delivery Information Acquisition Device in its latest configuration can be customized for local languages.

But wherever it is operated, the DIAD’s core technology is the same.

Likewise, UPS’s scanning is a common platform, which works the same way in Shanghai, China, as it works in Louisville, Ky.

Mitchell contends that although most carriers don’t need to deploy IT systems that can be used across the globe, paying attention to the strategies of the CIOs who direct such systems yields valuable lessons in simplicity.

“It’s very easy to pick a dozen different technologies for a dozen different niches or small challenges, but the real value of deploying technology is to have it be seamless across the entire operation, not just in one area.”

“Companies need to develop that in-house expertise that combines intimate knowledge of their operations with technical knowledge,” Mitchell continued. “The technologies that we need to deploy in transportation aren’t that complicated, but you need someone that understands both the business of transportation and the world of IT to make the right buying decisions.”