It seems no matter where you turn, there's no end to articles, conferences, and products devoted to managing the supply chain and improving logistics strategies in the world of international trade. And with good reason, the savings in time and money coupled with improved efficiency and productivity make supply chain management (SCM) not only a good investment, but downright critical for survival in today's global marketplace.

The advent of the internet has tremendously enhanced the tools and resources available for SCM, notably the software, by bringing visibility to all the participants along the supply chain and giving them real time information and data exchange capabilities. While there is not yet a product available that can truly master the entire supply chain end-to-end, a few leading companies are coming pretty close. The complexities of today's supply chains and the number of participants involved have been real challenges to developing the software. Nonetheless, the leading products are not only impressive, they're likely to become the model for future SCM and logistics software products. This article focuses on the effort to develop an end-to-end solution; in our May issue, World Trade will focus on the more specialized supply chain management and logistics software in our "Annual List of SCM & Logistics Software Providers."

Sizing up SCM Software

A comprehensive industry report entitled "e-Global Logistics: The Engine Powering Globalization," prepared by Stephens, Inc., an investment bank in Little Rock, Arkansas, identifies three sectors of international logistics for which internet technology demand will be the greatest: (1) global trade compliance and landed cost; (2) global transportation management; and (3) global trade settlement. In short, for the first sector, trade compliance means adhering to the trade rules and customs regulations of various countries, while landed cost means the total cost of the product from purchase to delivery, including duties and taxes. For the second sector, transportation management covers such things as the procurement of transportation services and management of carrier contracts. Finally, global trade settlement involves payment from the buyer to the seller.

While these three sectors are major components of the supply chain, no one has yet to devise a single, self-contained product that can manage the supply chain from beginning to end. "We don't foresee that happening within the next five years," notes Robin Roberts, an analyst with Stephens, Inc. and author of the report. "There are products for supply chain planning, and there are others for supply chain execution (order management; warehousing; transportation management; trade compliance; international settlement), but there isn't a single product for managing the entire supply chain," she adds. Furthermore, most products are not capable of handling global reverse logistics and duty minimization, or using preferential trade pacts such as Nafta to reduce duty. Ultimately, Roberts contends that an end-to-end SCM portal will emerge that will link consortia along the supply chain. It will be composed of a purchasing and distribution consortium; a multi-modal transportation consortium; a trade compliance solution consortium; a customs clearing consortium; and a trade settlement consortium.

Evaluating the various products on the market can be challenging. According to Roberts, "If the business process isn't fully understood in the first place, it cannot be translated into effective software." This first step of the evaluation process should be followed by an assessment of the company's domain expertise. "Domain expertise means the management team has people with experience in international trade and software development," says Roberts. Among the other evaluation steps, Roberts advises taking a good look at who's using the software and being wary of press releases touting new customer additions. Find out, for instance, how many transactions the average customer processes through the system each month, and how many of the customers have purchased additional modules or expanded to a bigger user base. Finally, Roberts stresses the importance of integration. Integration is significant because the customer may already have "legacy" systems, secondly, integration is the prerequisite for maintaining and updating the huge amount of trade content data.

Comparing prices is another consideration. The Stephens e-Global Logistics report describes four basic pricing models: up front license fees; transaction fees, either as a flat fee per transaction or as a percent of transaction value; subscription fees; and freight and insurance markups. An out-of-box software license is an example of an up front license fee. A portal that processes purchase orders is an example of a transaction fee as percent of transaction value. Subscription fees can apply to a portal that provides tracking and tracing information, for example, while freight and insurance markups are associated with portals that book these items for the customer.

Taking a Look at the Players

Here's a look at seven of the top players from the trade compliance and landed cost sector who are coming close to providing a self-contained end-to-end solution. Clearly there are more companies offering excellent products in this and the other sectors, some of which we will review in our May issue.

Capstan Systems Capstan has become one of the top companies in their use of the internet for global supply chain execution. Their single, web-native global network provides visibility along the entire supply chain, linking carriers, logistics service providers, suppliers, buyers, customs brokers, financial services, and news and information. The suite of application services has four modules: Global Import Management, Global Logistics Management, Global Export Management, and Global Landed Cost. In addition to Capstan's network application services, the company offers community and content services. Capstan's content team provides worldwide aggregation and editing for information collected and packaged by Capstan, drawn from third party content providers, and generated directly by participants in the networked community. Lastly, Capstan's TradeMap business services include training and support infrastructure for all Capstan network participants. The company's customers include Esprit, Celestica, Aspect, and Bechtel.

ClearCross Last November, ClearCross announced that it had reached a merger agreement with Atrion International. Once the merger is completed, ClearCross will offer products for a wide range of regulatory needs for businesses in the chemical, high-tech, automotive, and consumer packaged industries. The ClearCross network features landed cost, document production, export compliance, track and trace, and import and export functions. It uses XML-based messages to link businesses with ClearCross trade engines, which provide immediate answers to the regulatory, financial, and logistics questions that pertain to international trade, and essential services such as customs agencies, freight forwarders, carriers, banks, and insurance companies. Pillsbury, Coca-Cola, Cisco Systems, Motorola, GTE, and Warner Lambert are among the company's customers.

Express Action Similar to most logistics software companies, San Bruno, California-based Express Action is a relatively new company. Express Action uses an outsourced international trade program, which offers customers trade compliance, landed cost, and trade settlement. The company differs from its competitors in that it doesn't collect and maintain trade data in-house. Instead, Express Action licenses trade content from other providers. The company is concentrating on cross border internet commerce between the US and Latin American countries.

From2 Global Solutions The company's core product is the Global Delivered Cost Calculator, a powerful tool that instantly calculates in advance the all inclusive delivered cost of goods directly on the vendor's web site, including freight, insurance, duties, taxes, VAT, customs clearance fees, and other import charges. From2 handles trade compliance and customs clearance from its Washington, D.C. office to ensure legal and expeditious international deliveries. The company also offers other logistics services such as warehousing, fulfillment, international door-to-door delivery, and online tracking. Late last year, Ryder System announced that they had entered into a strategic alliance enabling them to use From2's products to deliver specific international trade services over the internet to its customers. From2 also has a strategic partnership with the Americas Information Gateway System (AMIGAS), an e-commerce service designed by the Florida Trade Data Center to facilitate international trade in the Americas.

myCustoms The centerpiece of myCustoms is FACTS - the Fully Automated Customs Transaction System that includes landed cost; compliance checks (specific country regulations, procedures, tariffs, laws, and administrative rulings); document processing; collection and payment to customs departments; integration (myCustoms' back end service is fully integrated into the customer's e-commerce site, making the import/export process transparent to international customers); carrier neutrality; reporting (final reports detail all import and export transactions); and record keeping (myCustoms is a repository of trade data for customs auditing purposes). Last October, myCustoms announced they had partnered with Bibit and Uniscape in a move designed to solve global billing, customs, and multilingual content barriers facing e-commerce companies. Pricing is based on transaction fee as a percent of shipment value.

NextLinx NextLinx' product suite allows customers to: screen orders and customers against the latest list of denied parties from the appropriate government; determine if a license is required prior to shipping; produce documents and distribute them electronically; calculate the landed cost; assign classification codes for almost any country in the world; rate and book shipments on an integrated carrier; and manage data to facilitate repeat shipments. NextLinx Global Knowledge provides customers with a comprehensive, up to date database of trade regulations. The company partnered with nPassage, an internet based tracking, tracing, and management software and services company in November. NextLinx' customers include UPS, Boeing, and Rockwell.

Vastera Headquartered in Dulles, Virginia, Vastera's web based products lets customers calculate landed cost, screen for restricted parties, generate shipment documentation, track and trace, source, and manage duty. It's also one of the few logistics software companies whose product can handle repairs and returns. In addition, Vastera has an online library of country specific trade regulations. Founded in 1992, it's one of the "oldest" companies in the industry. Vastera has formed strategic alliances with Oracle, SAP, JD Edwards, IBM, Microsoft, PeopleSoft, Sun, Dell, Hewlett-Packard, KPMG, and Andersen Consulting, among others. The company's 200+ customers include Ford, Gateway, Motorola, and Nortel. Pricing is based on subscription/transaction fees, consulting service fees, managed service fees, and software license fees.

Although there are many compelling reasons for companies to increasingly use the internet to manage their supply chains, such as the powerful software currently on the market, not everyone is jumping on board. Recent industry surveys reveal that many are still concerned about issues like security, costs, integration, and the quality of the software products. But, SCM and logistics software is relatively new, and given more time and customer input, the products that will be introduced over the next few years may very well attract even the most skeptical companies.