Synchronizing and Streamlining Transportation and Logistics Systems
The pace of change and its complexity continues to drastically redefine entire industries, with those reliant on supply chains, logistics and transportation services seeing the greatest benefits and risks. Globalization is also re-shaping industries the fastest who rely on transportation as a key part of their value chains. United Parcel Service is a company that is representative of the pace and complexity of change that has occurred in business processes, strategies, and information systems over the last one hundred years. UPS was founded in 1907 in Seattle, Washington by Jim Casey, and today is one of the leading transportations services companies globally. The intent of this analysis is to explain the differences between business information systems and methods widely used in 1910 and how they compare to the common enterprise-wide systems and methods of today. The telephone, telegraph, paper record keeping, and many face-to-face meetings pervaded the approach to doing business in 1910. In 2011 the use of enterprise-wide systems that support Enterprise Resourcing Planning (ERP), Customer Relationship Management (CRM), Supply Chain Management (SCM) and 3rd party logistics (3PL) logistics processes and strategies globally have become commonplace (Das, 2011)
. The pace and complexity of change has been accelerated by these systems and the valuable information and insight they can provide executives for managing global product and services models. This paper concludes with a series of predictions as to where business information systems will be in 2020 and how the unmet needs of corporations globally are quickly riving these developments. The pervasive use of the Internet will also accelerate entirely new platforms for creating, delivering, maintaining and customizing Web-based applications by 2020 and tablet-based PCs running the Google Android, Apple iOS and other competing operating systems will dominate nearly every industry with transportation being an early adopter due to the highly mobile nature of the businesses in this industry. A full analysis of predictions for 2020 is provided as the last section of this paper.
A Century of Progress in Business Information Systems
At the most fundamental level, the differences in business systems from 1910 to 2011 center on the aspects of accuracy, speed, scalability and reliability. These four attributes quickly define each set of business information systems compared to their 2011 counterparts. Taken together, these four attributes serve as the foundation for creating a platform for global growth as well. Globalization would not have been possible without business tools progressing rapidly to encompass the four attributes of accuracy, speed, scalability and reliability. For businesses in the transportation industry, these four attributes taken together were the catalysts that led to entirely new global markets opening up. For UPS specifically, the telephone and telegraph were indispensible as tools for their rapid expansion from 1907 to 1913 along the coastal regions and state of the Western U.S. In many respects the advances in telephone performance during those years along the dimensions of accuracy, speed, scalability and reliability served as the "market development" platform for UPS as they moved into larger, southern markets including San Francisco, California and Los Angeles, California. Telephone and telegraph together also revolutionized the concept of a distribution supply chain and made it possible for UPS to expand out of the western U.S. And eventually become national in scope (Perna, 2001). The same holds true of how the company relied on railroads and other forms of transportation to create a broader value chain that would eventually go global. Communications technologies of 1910, rudimentary by today's standards, were considered revolutionary for the time as they multiplied the productivity of the businesses across distance and saved time at a pace no one thought possible before. Technology was beginning to change people's expectations of what time was and how it could be invested. Time as a resource took on added significance, and in the value chain of transportation businesses, it was more readily turned into profitable, billable activity. Communications technologies that could deliver higher levels of accuracy and speed were in constant demand in 1910, which eventually led to more pervasive adoption of the telephone first across the U.S. And then globally.
While communication technologies continued to focus on accuracy and speed, the manually-based approaches to record keeping were not keeping up with the pace of change necessary for growing business. No doubt, UPS was frustrated at the lack of flexibility these manually-based approaches provided for measuring the profitability of each route, package service or hub based on their services strategies. The revolution in communications technologies was outpacing the advances in record keeping and business information systems for accounting and financial analysis. As a result, the pace of business growth was slowed due to the very long cycles to gain critical accounting and financial insights into how a business was performing. The pace of accounting and finance reporting in 1910 would not support even the most fundamental business model in 2011. Manually-based reporting methods for managing production, hand-written customer purchase records and recording of their preferences, and the managing of suppliers, all on paper, became the precursors to ERP, CRM and SCM systems of today. In 1910, the business models of transportation services companies were constrained from growing by the lack of scalability and reliability of manually based approaches to capturing, analyzing, reporting and acting on financial data. The initial approaches to automating accounting and finance using computers in the 1940s by IBM concentrated on processes that were easy to replicate as they lacked variation. The initial processes that were automated and today form the foundation of the accounting modules in ERP systems included debit and credit entries, Accounts Payable A/P) and Accounts Receivable (A/R). In the last 70 years the pace of change in automating accounting and finance functions within transportation businesses has grown exponentially in terms of depth of functionality and support for analytics (Zhong, Zhou, 2011). Today there is support for a very broad series of business processes, in addition to support for in-depth, real-time analytics that can provide an immediate view into the financial health of the business (Ata, Van Mieghem, 2009). For UPS, this aspect of 21st century business is the most critical in creating new services and managing their transportation-intensive ones including air, land and ocean freight, 3rd party logistics (3PL) services, and electronic enablement programs. With analytics, UPS can manage all of these businesses from real-time dashboards that are designed to capture Key Performance Indicators (KPIs) and metrics that give managers the ability to quickly spot trends that will influence the business (Perna, 2001). These dashboards also report back levels of operational performance by sector and region of the world, levels of customizer satisfaction, and costs associated with any specific service, strategy, route, location or division. Today UPS can manage their business nearly entirely based on real-time analytics based on the state-of-the-art business information systems they have. Of all areas of business information systems, this area of financial reporting and analytics is what UPS management teams rely on the most to also plan out new businesses as well (Alghalith, 2005). The rapid advances of the Internet in general and Web-based applications specifically enable all of these innovations in real-time reporting and analytics.
The Need for Integration in Business Information Systems
From the early days of UPS and the use of manually driven systems, the need for process integration was evident. This integration took the form of creating unique approaches to typing transactions back to customer records, defining ways to ensure the right telegraph messages were linked to the right call log, and all activity tied back to the accounting ledgers. All of this is automated today, and throughout transportation companies this is critically important for their business models to function correctly and profitably. Without system integration, there would not be any visibility into the performance of each business unit, how the profitability of each service business was performing, or the costs and profits of their 3PL businesses over time (Winters, Mohr, 2009). System integration is not a 21st century concept yet its real-time automation is.
For a transportation business, real-time integration is critical for their ability to understand the many sources of demand for their services. It is also critical to their ability to accurate interpret it and then translate it into workflows to capture and create loyalty with customers as well. System integration gives UPS the ability to define how they will create demand from customers through marketing campaigns, service offers and the launch of entirely new businesses as well. The system integration aspects also allow for demand-based data to integration with products and services, and the supply chains as well. All of these elements of the UPS business strategy can be seen in Figure 1: Demand Driven Supply Network (DDSN) as defined by Gartner Group, a research consultancy that concentrates on how product and services companies use enterprise systems to attain company-wide initiatives and goals. It is the synchronization of these three areas of any transportation services providers'…