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On-line access to distribution systems can help address shrinking product lifecycles, ease the growing squeeze on margins, improve collaboration with supply partners, the management of supply-chains and enhance customer service.
However the inability of many organisations to transfer information in a standardised format between their own internal systems is still keeping them at arms length from supply chain partners and inhibiting the use of on-line logistics and distribution.
While most enterprise resource planning (ERP) providers offer a distribution module few major customers are able to link to more than a handful of partners. Transport and freight companies like TranzRail and Mainfreight have their own systems but there's some distance to go for widespread linking with clients.
TranzRail general manager of IT Gary Collings, says clients can track containers or waybill numbers from the company's web interface which has an electronic data interchange (EDI) interface back to the main host. He doesn't believe there's strong demand yet for a direct interface to ERP systems but is looking at developing a more comprehensive customer portal. Because of the many types of systems TranzRail would need to deal with, it hasn't deployed its own ERP system but is currently developing a customised system as part of a its business aligned rail technology (Bart).
Mainfreight has a freight tracking facility on its website for Mainfreight, Chem Couriers and Daily Freight which connects to its host system and pulls in real time information. "We're working on how to link with customers through EDI all the time. We don't have a standard interface but will customise to each requirement," says IT support team manager Paul Derbyshire.
"We're working on an XML interface with one customer but have to be fairly flexible. Our web tracking facility can be placed on the intranet and as long as people can get external access they can look at this," says Mr Derbyshire.
He says there are an increasing number of requests for a direct interface but it's still relatively low and is making a client-server application product called Freman32 which can be installed on a clients PC allowing them to upload consignment information and return status information. "We're prepared to interact with anyone providing it can be proven beneficial to both parties."
Distribution Technology Maturing
Many companies are starting to gear up for the time when their partners can seamlessly hook into their systems to generate the right forms and responses for real time information sharing and order tracking to streamline distribution.
 According to Nigel Birtwell (pictured), New Zealand general manager of Geac Enterprise Solutions, this is the year organisations will start to invest in distribution systems and within two years the market will have matured
"The pace is picking up and technologies are more readily available and proven. There's been enough research and study done on the benefits but most organisations are still working through the business case before getting stuck in," he says.
Currently he says there's more dialogue between the biggest logistics organisations and the biggest suppliers. "They're only just coming to a position where their systems can interface to many of our clients. Quite a few of our clients have talked to a
number of these suppliers and found they are not ready."
He says a tightly run ship with accurate up to date information passing between key people is a pre-requisite for running any ERP solution or integrating with supply chain partners. "You need a clear collaborative approach to understand where the benefits for all organisations are to be gained.
The manufacturing and distribution software developer finds having a web-based help desk to support resellers, distributors channel and clients makes life a lot simpler. Clients can log their support calls or questions and get a response directly from the product center where development takes place. "You've got to have an infrastructure like that to add value to the core resources - it helps get the maximum results from people in your team. Resellers, distributors and clients can access our on-line library of patches, updates, fixes and new releases," he says.
Standard Formats Essential
Customers who've purchased Geac's Flexicom product for example can achieve similar results when setting up on-line distribution systems. Flexicom, which hooks into Geac's manufacturing and distribution product StreamLine and i2, also works as an add-on to Mfg.pro, BPCS and other similar products which need web-based sales order fulfilment and order tracking. It uses EDI, XML and other standard formats for document exchange.
As long as the host ERP and supply chain solution is capable of tracking inventory at different stages in the production and distribution cycle Flexicom can quickly work out how many units of any commodity item are in stock and where the last order is.
Flexicom has been around for a year and several sites in Australia along with electrical component supplier HPM on Auckland North Shore are making good use of it. HPM has a Flexicom interface into i2.
Nick Moor operations manager for HPM says its early days but HPM is future-proofing. "It can take one to two years to get a reasonable set of customers up and running on an EDI system. If you're ready today you're probably ahead of the bunch. We have a handful of customers but most of our customers are not ready - when they are, we'll be ready. They still need to output their files in the correct format, for a lot of systems that's still quite challenging"
Flexicom has e-commerce capabilities for on-line ordering via the internet and there's a highly secure EDI component which is business to business. "While most businesses start off with the internet e-commerce component we've done it the other way around because of the needs of two of our customers." On the distribution side, that means EDI handles purchase orders coming into the business and an invoice going back to the customer with additional email confirmations included. The customer can also go on and look at their accounts.
"The systems don't interface with the freight companies yet but in the future they certainly could and that would be of great benefit," says Mr Moor.
Consignment and Confirmation a Key
Carl Mitchell Turner chief executive of e-marketplace provider SupplyNet says e-logistics needs to butt seamlessly into e-commerce systems. Buyers need to source and push through purchase orders and receive back advance shipping notices and notification of when the goods arrive.
"We allow the advanced shipping notice to happen through our systems but we don't generate it, neither do we have anything to do with the shipping of goods. We do have some functions for non-electronically enabled supply tools to create this information but that's only to ensure the purchasing and procurement process has all the information needed."
Mr Mitchell-Turner says such solutions are few and far between in New Zealand but are emerging in other parts of the world. For example Hong Kong-based ECL Logistics provides a web system for those wanting to sell product lines into greater China.
"They offer a full contract warehousing system with an internet interface to manage inventory and sell-side e-commerce tools to market products. They give you a web log on, ask you how many products you are trying to sell, the inventory levels you plan to maintain and allocate space in a warehouse so you can ship your good to them."
One company in the early stages of developing such a system locally is Norcross Printing, which is spinning off a separate warehousing and logistics company, Request. The company uses SiteWorks from e://volution along with specialized software from Prism and an ERP to manage inventory in three West Auckland warehouses.
Warehouse Automation Extended
Request specialises in storing, distributing and tracking marketing and branding merchandise from umbrellas, posters, banners and other brand support material critical to the sales of process, as well as printing and supplying order books and forms.
Request Integrated Logistics is a one-stop solution for companies wanting to print, store and manage the storage and distribution of marketing and promotional material from multiple suppliers. Both Norcross print and e://volution will use the system to assist their clients by providing an integrated distribution system.
According to e://volution chief executive Henry Norcross many companies are backing off on-line buying strategies and placing renewed emphasis on getting their internal and on-line sales systems right. One of the missing pieces e://volution is linking with distribution systems.
Our ultimate model is to talk to the customer, understand who they're distributing to and the logistics needed and design and build an on-line presence based around their product.
"Everything is becoming quite vertical. People need to be selling on-line first before collective buying. There are still logistics, payment and supply chain issues. The gap between EDI and integrated marketplaces is huge," says Mr Norcross.
People typically want to look in one place for information. Raw materials to final product or inward goods to dispatch is usually monitored through an internal ERP system. The web is deployed outside the ERP for buying and selling product allowing the customer to check invoices on-line, processing receipts and where the goods are going.
Baby Steps to Track and Trace
Conduit marketing manager Justine Pellett says the main focus for many companies has been on getting internal systems in order rather than concentrating on external communications such as tracking product through the distribution chain.
 "Internal processes are much easier to control. You can make smaller customers do things a certain way but if you have 2000 customers you don't have that control so the system has to be a lot more flexible and integrated. You have to offer multiple ways for them to do things. That's an area that's been missed in previous development and where ERP systems stop," says Ms Pellett, (pictured right.)
It's at the fringe of the company that Conduit picks up its EDI, ERP systems and Web tools business. "We are supply chain specialists assisting supply chain collaboration. It's not just how you get a raw material and turn it into finished goods. Where we add the value where you cross the line with a supplier, customer or a trading partner."
Conduit has linked several clients with their transport company to allow track and trace so a customer can look at their order using the purchase and delivery information as part of a 360 degree solution.
However rather than trying to tackle large all encompassing e-commerce engagement projects and getting lost along the way Conduit suggests taking small incremental steps. "Electronically enable the things that happen every day: price, availability inquiries, submitting an order and generating an invoice - then we add new things they can't do currently."
The ultimate goal is to enable the reactive and ultimately the proactive requirements of your trading partners. Everything that is process related is open leaving room for the distribution companies to add value such as training, planning which often gets left out because the sales reps are too busy answering questions about where the order is.
One Conduit client, Unisys New Zealand for example uses its U-online procurement system to let customers place an order and look up on the web and see whether its in process, has been dispatched or invoiced. She believes many companies in New Zealand are ready for this next stage in electronic enablement.
Market Squeeze Demands Speed
A phrase increasingly used to encompass the movement of goods or services within an enterprise is logistics resource management (LRM). This is essentially browser-based software or services to plan, ship and monitor movement of product. This is being used internally and as part of the supply chain, enabling trading partners and customers to have access to real-time data via the Internet.
Aberdeen Group research indicates that the rapid flow of goods must be complemented by the real-time flow of logistics data synchronised with goods movement.
LRM data on the web, through email or wireless devices, can be used to give visibility to inbound and outbound shipments to a company, its customers, and its trading partners, reduce transportation costs, provide real-time notification of exceptions and help determine the true cost of sourcing materials for production.
It can also be used to determine accurate promise dates and total delivery costs for customer shipments at the time the order is placed, predict the costs and time delays of doing business across international borders, gain more accurate replenishment cycles, evaluate transport costs and extend inventory and warehouse management by accounting for goods in-motion or on order.
Aberdeen research indicates that LRM allows enterprises to make better choices, increase efficiency and establish stronger relationships between themselves and their suppliers, partners, and customers.
"As enterprises seek to reduce costs, tackle global marketplaces, and reach shorter lead times, a comprehensive, advanced, and alert-based logistics environment is needed. Large enterprises with multiple locations, international factories, complex inbound and outbound logistics requirements, and thousands of shipments per day need to adopt LRM environments that are capable of automating the huge volume of every-day logistics activity, and proactively alerting business managers on an exception base."
Aberdeen's research shows that enterprises will highly benefit from an LRM platform, based on a central logistics activity's repository and integrated with Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and enterprise software, which can proactively generate alerts, identify the problems, and map out the best options available for all involved parties.
In summary, we see the New Zealand economy laying the foundations for robust e-distribution services. With 'distribution' set to be one of the big efficiency winners from the Internet and given the size of the local economy, the current leadership shown, the solutions available and the rate of development, it is the one area of e-business where New Zealand has the potential to become a world leader. Whether you are an exporter or a local distributor, it's all good news for your business. Stay tuned...
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To find out more about some of the solutions mentioned in this report use the following links to exhibit pages or request further information directly from the company involved:
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