Mastering the physical and virtual worlds

By Francis J. Quinn -- Logistics Management, 11/1/2000

The annual Council of Logistics Management (CLM) conference held recently in New Orleans was notable on a number of counts. For one, it marked the first time that the word ".com" appeared in the conference theme (redefininglogistics.com). For another, this year's gathering had a higher percentage of attendees from outside of the United States-18 percent-than any previous annual meeting.

From these two facts we can draw at least one conclusion: The world of the Web has officially come to logistics, and that world is becoming smaller and smaller.

But beyond the obvious, the CLM sessions underscored another dynamic taking place in the marketplace. Namely, the worlds of the physical and the virtual supply chain are coming closer and closer together. The mechanics of moving and storing product have become increasingly dependent upon technology. And that technology, in turn, has become increasingly dependent on the Internet.

The implications of this development for logistics professionals are profound. We have entered a period of unprecedented technological change. And with change comes gain or pain-depending on how you respond. Logistics managers who have spent their careers in the physical world of moving freight must learn how to leverage the Internet's potential if they are to survive professionally. And while tracking freight movements online is an important start, it's just the beginning.

Internet-based logistics and supply chain solutions, in fact, abound today-and will only proliferate in the future. They can reduce the cost and increase the accuracy of such transaction-intensive activities as freight-bill payment and claims processing. Web-based solutions also can help companies balance production and demand more accurately. When these two supply chain components are synchronized, you can more effectively manage the flow of product throughout the pipeline to remove excess inventory and empty miles. In addition, there's great cost-savings potential in the technology known as trading exchanges-those interactive electronic marketplaces that allow you to buy and manage transportation and logistics services online.

Now, no one is suggesting that logistics managers rush out to purchase the latest demand-planning software package or join every e-marketplace. But they do need to be aware of what's available and then aggressively seek out opportunities to leverage the Web in logistics planning and execution where it makes business sense.

A number of Web initiatives have fallen by the wayside because someone overlooked the physical basics of the business-setting up a distribution network, warehousing the product, selecting reliable carriers, packaging the item, and delivering it to the customer. Maybe a lot more of the dot-coms would still be around today had they paid more attention to the physical side.

Yet logistics professionals, for their part, run a similar risk of failure when they ignore the virtual side of the equation. Managing the integration of the virtual and the physical supply chains is no mean feat. But those who can pull it off successfully increase both their own professional worth and the business worth of their company.

Francis J. Quinn is editor of Supply Chain Management Review, published by Cahners Business Information. Visit the magazine's Web site at www.supplychainlink.com.