Technology Holds Key To
Transportation Industry

December 8, 2006
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GRAND RAPIDS – Fluctuating fuel prices and a dearth of good drivers are issues faced by every company in the warehouse and distribution sector, said Dick Wickard, president of Columbian Logistics Network.

Wickard said he's convinced that what sets a winning firm apart from the pack is technology.

"I don't see fuel cost as an issue," Wickard said. "I don't care if I'm company A, B or C, I've got to handle it. I think the bigger challenge is staying ahead of technology to service customers with their logistics needs."

To that end, Wickard said he makes sure he hires experts and frequently sends staff members to national conferences and asks them to report what they've learned to those who stayed home.

"First of all, you have the right people on board, and I mean not only IT people, but people who are pretty well experienced and versed in their specific field, whether it be transportation, warehousing or logistics," he said. "Number two, we're not ashamed to participate in many national conferences. Part of our core values with our directors and officers of the company is we have an obligation to attend (a certain number of) conferences and come back and report to the group.

"We interview the customer quite often and find out what their needs are, and if they're changing, we've got to change with them."

Radio frequency applications, online visibility and electronic data interchange are all important to different sets of customers, said Wickard, whose company hosts 225 trailers, 100 tractors and about 1 million square feet of warehouse space.

For example, according to CLN Director of Marketing and Sales Donna Randall, radio frequency identification (RFID) "will trace a pallet from the time it's manufactured until it reaches the final consumer. It will have a little tag that follows that pallet through the whole system. It's going to tell you where that product is in the supply chain. It's going to know where anything is all the time, any time."

That's just one piece of a growing armament of technology in the warehousing, transportation and logistics field, according to the Supply Chain Manufacturing & Logistics Web site (www.scs-mag.com).

"When I got into this business years ago, people would make something, warehouse it, and as the customer ordered, would ship it to them," Wickard said. "Now it's made yesterday, the customer wants it tomorrow, and it comes through here today."

Bob Koerner, president and CEO of Total Logistic Control in Zeeland, part of Supervalu of Minneapolis, said adding technology can be a matter of finding a better solution — but increasingly for third-party logistics, technology is not an option but a requirement to compete.

For example, Koerner said, in TLC's transportation section, "the technology that we have installed and are working with is a fuel optimizer, which basically has live information of the cheapest fuel prices in a given area, so when we dispatch a truck the optimizer says 'OK, you're going to go from here to here, here's the cheapest place you should buy fuel.'And it keeps track of it by truck, so it may say buy 100 gallons here and then you go down the road, and buy 400 gallons, so fill it up when you go down the road. Fuel being what it is, that's a big deal."

Koerner said his company is about to launch a product, based on Oracle software, that will allow customers to use TLC's computer resources to manage their own systems. TLC hosts 600 trucks and 35 warehouse facilities across the nation, Koerner said.

"We now are offering to our customers something we've branded as TM1; that stands for Transportation Management 1. If you're a shipper and you know that you need a system to manage your freight but you don't have one or don't want to spend all the dollars to buy the latest technology, you can tap into our system and manage all of your freight on our system. Never before could you manage your freight on a system like this and then have a full suite of services."

Classic Transportation Services recently has seen its biggest-ever investment in technology "as a ratio to our income," President and CEO Larry Benton said. "We've spent a lot of money on technology in the last two years, but we are finding we are doing a lot more with less people," although company growth continues to demand more employees.

"Warehousing is the lion's share of where more technology has gone."

Using technology to improve communication, whether that's between the customer and the warehouse or giving cell phones to drivers, is key to Classic's future, said Benton, whose company runs about 49 transportation units and holds 275,000 square feet of warehouse space.

"Communications, for us, is the biggest thing we can continue to improve on" because it affects every facet of his business, Benton added.

Koerner said customers' expectations for technology solutions in the industry are higher than ever. "I'd say five years ago, many of the customers had their own technology, and clearly technology was a differentiator between companies, but not to the extent it is today.

"In the old days, somebody had price, somebody had quality, and somebody had service. And today, if you don't have all three, you can't show up," Koerner said.

"It's the same kind of thing with technology in our business today. It is just an expected thing you have. If you play in this business at a fairly large level, technology is just an enabler. You have to have it."

Still, bread and butter issues such as fickle fuel prices and the impact of the quality of drivers on insurance rates are important to the bottom line, Benton said.

"Our customers are pretty sensitive to fuel surcharges," Benton said. "I think it's going to be a challenge for fleets going forward to maintain a competitive cost for our customers and also being able to make a profit."    

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