In today’s competitive global marketplace, companies are under constant pressure to improve the way they do business. To succeed, Global 2000 organizations must minimize costs, serve customers effectively, and build sustainable strategic advantage. For worldwide enterprises competing in the new, increasingly electronic world of commerce, realizing these goals requires flexibility and innovation.

Corporate managers must look past legacy practices and technologies and see their businesses with new eyes. To succeed, managers must ensure that their companies effectively manage five key disciplines: procurement, manufacturing, logistics, customer relationship management, and regulatory compliance.

These functions, once discrete processes handled by separate silos within the company, are now increasingly interdependent. Supply chains are more complicated than ever, with many businesses outsourcing key functions, relying on a larger number of suppliers, and doing business with partners globally.

As the patterns of worldwide commerce become ever more complex, logistics is emerging as perhaps the most critical discipline for large organizations. A superior logistics solution influences an organization’s success in procuring raw materials and components, guarantees an uninterrupted supply of components to manufacturing, ensures timely delivery of products to end customers and partners, and ensures regulatory compliance with international and domestic trade laws.

Needed: A New Kind of Logistics

Logistics, essentially everything a company does to manage the delivery of its shipments in and out, is vital to a company’s success. In fact, transportation accounts for more than 10% of US GDP. Depending on the industry, the average Global 2000 company today spends from 5% to 15% of revenues on logistics-related charges. Yet most of these organizations are making do with old-line logistics systems that fulfill only their most basic requirements, are not linked into any of their other key trade processes, and rely on outdated and inflexible client/server technology. As a result, they stand to lose not only time and money but also market share to smaller, nimbler competitors.

Today, complex supply chains are a fact of life for most large companies. To manage their supply chains and improve their ability to compete, they need a new kind of logistics capability appropriate to the requirements and accelerated pace of 21st century trade. They need a comprehensive program that will enable them to reduce costs, improve customer service, and build real competitive advantage.

Reducing Costs

By ensuring that inbound and outbound shipments are made with preferred carriers, companies can significantly reduce costs. By streamlining costly and inaccurate manual procedures of completing a bill of lading or ensuring a shipment’s compliance with cross-border trade rules and regulations, for example, companies eliminate transaction-based tasks and give logistics professionals time for more value-added activities. Time-consuming, expensive transportation service RFPs are another source of expense and delay. Such RFPs burn time and money and often fail to identify the best providers, leading to further costs down the road.

Improving Customer Service

Improving visibility and control over shipments is needed by most Global 2000 companies. From a customer-service standpoint, knowing where goods are in the supply chain is critical. Inbound shipment delays could shut down manufacturing lines; outbound delays could affect trading partners. Fragmented and inefficient freight-payment methods between shippers and carriers can lead to delays and extra costs for the final customer, affecting customer satisfaction.

Building Sustainable Competitive Advantage

Most logistics systems fulfill only an organization’s tactical requirements for shipping. They do not provide the company with any long-term strategic competitive advantage, either by speeding up its processes and cycle times or allowing it to preserve capital that it could then reinvest in value-added functions. In fact, organizations with severely limited logistics systems find themselves held back from strategic moves, such as expanding into overseas markets or taking on several better suppliers to replace one large, less-efficient provider.

The Answer: Logistics Resource Management

How can companies develop logistics capabilities that will help them save money, focus on the customer, and establish strategic advantage over the competition? The answer lies in a powerful new class of applications known as logistics resource management programs.

Developed using open internet technologies, these applications give global trading organizations a single point of visibility and control over all logistics processes.

Because logistics affects the entire business, these systems help large enterprises quickly improve their supply chains and processes from procurement to manufacturing to customer relationship management. They touch every part of the supply chain from the factory floor all the way to the customer.

Designed for fast deployment and minimum use of IT resources, LRM applications deliver quick results and a fast return on investment. Built entirely on web-native technology, not on an outdated client/server model, they allow all trading partners to obtain information from a standard web browser. And, since the applications are available in hosted versions, companies are freed from the burden of creating a server infrastructure and maintaining a data center.

Automating Processes

By automating many steps in the shipping process, LRM applications reduce cycle times and free logistics professionals for other, value-added tasks. They offer built-in, customized RFP tools to help companies find the best carriers quickly and inexpensively. And by cutting down on inconsistencies in the freight-payment processes, LRM applications reduce the need for costly manual reconciliation of invoices between shippers and carriers.

Sourcing and Procurement

With an effective LRM application, companies can incorporate total landed cost (TLC) calculations into the sourcing process, helping them save money and make better decisions. Companies can also compare shipment and transport charges by mode to determine the service that best suits business needs.

Deploying Best Practices

Every company struggles to encourage logistics best practices, both in its internal organization as well as in its trading partners. By controlling all logistics functions, LRM applications help install these practices. And because true LRM applications are web native, they also can be used by trading partners, which in turn instills these methods throughout an entire supply chain.

Ensuring Transportation Compliance

In today’s world of increasing reliance on cross-border trade, companies’ supply chains stretch around the globe. This demands compliance with complex regulatory, tariff, and customs rules and regulations. By correctly classifying inbound and outbound shipments, LRM applications help organizations ensure that raw materials, components, or finished goods move smoothly through customs, avoiding costly fines and delays.

Tracking Shipments

Shipment tracking is critical to ensuring smooth supply chain operation. Because LRM applications are based on open, standard internet technologies, they allow trading partners to exchange information easily across multiple enterprises and systems. If a problem arises with a shipment, an LRM solution can alert all parties involved in time for them to take effective action. This helps companies avoid stock-outs and line-down situations and cut inventory costs. By giving their customers access to one source of information on shipments, regardless of carrier or shipment mode, companies can greatly reduce their customer-service costs.

LRM: Transforming Logistics Today

With logistics resource management applications, Global 2000 companies gain a low-risk, fast time-to-benefit, high-ROI means of transforming their business. They can step up the performance of the supply chain and increase the pace, accuracy, and efficiency of the logistics processes. Companies using LRM applications can reduce logistics costs by and average of 5% to 15%, increase customer satisfaction by ensuring that shipments arrive on time, and build a supply chain that delivers a sustainable strategic advantage over the competition. wt