Collaborative Logistics


It was 14 years ago that Dr. C John Langley, now professor of supply chain management at Penn State and director of development for the Center for Supply Chain Research at Smeal College of Business, laid out the seven immutable laws of collaborative logistics.

“Immutable” turned out to be the key word. Despite how much has changed in terms of technology, global participation and data, much else has remained the same over time.

“The seven laws are still very valid,” Langley says. “Many of the priorities we had 14 years ago are very much alive and well, and we’ve seen some real progress toward fulfilling them.”

Langley’s laws were aimed at “promoting the things that collaborative relationships should really have,” Langley says. They ranged from, for example, the need to support open integration with other services to providing a flexible security model.

So what’s changed? For a start, the numbers. At the time, the Internet already had made a “significant impact on logistics, largely due to its capacity to make data and information exchange easier and more affordable.” According to Internet World Stats, fewer than 361 million people were using the Internet across the globe 14 years ago, compared to 2.4 billion in 2012. Between 2000 and 2012, Internet use in Asia alone soared from 114.3 million to 1.076 billion, representing growth of 841.9 percent. Use in Africa grew 3,606.7 percent, as well as 2,639.9 percent in the Middle East and 1,310.8 percent in Latin America/the Caribbean.

E-commerce also has had an indelible impact; in 2000, the business to consumer (B2C) market was expected to grow to $108 billion and the business to business (B2B) market to $1.3 trillion over “the next three years.” The most recent estimates, however, put those numbers at $1.5 trillion and $109 trillion respectively.

And those customers are driving changes. It used to be said that those who wanted good service would have to pay for it. “But that’s not quite as true today,” Langley notes. “Now, if you want good service, it’s about selecting suppliers who are able to manage their costs and service levels…Even the largest companies cannot optimize their logistics activities by themselves.” No single company is big enough to use all of its assets 100 percent of the time, or to be able to balance all of its lanes at the same time, he said, “and that’s what it takes to drive the costs out of transportation…This stresses the need to work with others in order to achieve leveraged economies. If you’re an individual shipper trying to achieve the lowest cost, it’s just not possible to do it by yourself.”

As a result, he says, collaboration had become more than simply a good idea; it is now the cornerstone of the business planning process.

By Fiona Soltes

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