Electronic shipment tracking system implementation at Southland Distribution

Southland Distribution and Electronic Shipment Tracking

Introduction to Supply Chain and Tracking Concerns at Southland Distribution

The cost reductions relative to wireless communication networks and increased efficiency in logistics and tracking within a shipping company are potentially enormous. Not only does tracking shipments make sense from a customer service standpoint, but the company actually saves money when shipments are tracked and sent to the proper destinations. Even within the current logistics system of a company, tracking shipments makes sense in order to solve delivery problems and issues. Many shipping companies use tracking programs and systems to help them stand out above other companies and services in a world where the economic recession has decreased the demand for shipping worldwide.

Southland Distribution is a company that does business through shipment of goods. The services it provides include multi-modal forms of transport as well as time-sensitive delivery of goods. Within a system such as this, it is imperative that a tracking system be implemented that is both flexible enough to handle the unique and different internal demands as well as robust and comprehensive enough to handle the day-to-day and hour to hour complexities of this industry. There are many potential solutions for a company of this size to implement, and a careful consideration of the goals and potential for increased productivity, profits, and customer service is imperative before a company like Southland Distribution can begin to build an effective electronic tracking system.

The sharing of information within a company is a major tool in the fight against inefficiency and waste (Heaver, 2002). Companies that are able to freely move and share information relative to products and movements of these products do much better than companies that do not have such systems implemented. One of the biggest reasons for this lies in the company's ability to create the most efficient, effective service models and shipment services. When services are optimized and costs reduced, not only does the company earn more profit, but they can pass these profits to the customer in the form of reduced rates along with the added benefit of a more intelligent supply chain.

Necessity

Shipping goods from one place to another seems rather mundane and simplistic. But consider shipping a product or package via multiple different modes of transportation, all having multiple stops along the way. Here the logistics problems involved in the packaging, storage, and placement of the shipment on the vehicle itself begin to appear. This is not to mention the logistics nightmare of expected delivery times and the instances where deliveries are made in error or to the wrong locations and recipients. Tracking systems, as a way for a company to share information, make sense in all of these logistics issues. By accurately tracking a product, the company itself can best plan the route, packaging, and packing location that the product will exist within (Heaver, 2002). This seems rather simple, yet it is one of the most basic and most fundamental problems within the shipping world.

Tracking packages through an electronic system also has benefits during times of company crisis or delay. If a company is shipping goods and the goods become delayed, an adequate tracking system can be the first step in successfully re-routing the goods in order to maintain the same delivery date. This goes a long way in keeping customers happy and reducing the ultimate associated costs and frequencies of the shipping mistakes. It is nearly impossible to tell a customer where their goods are at if there is no way to track their movement. With shipment tracking, in an electronic format, real-time estimates can be given and problems can be more successfully dealt with as they appear.

Besides helping a company to reduce shipping errors and increase their capability to handle shipping errors and mistakes, tracking systems can actually help a company grow to incorporate more shipping locations and modes of transportation (Heaver, 2002). Since much of the shipment business deals with logistics, a tracking system can help to reduce the complexity and confusion surrounding a multi-hub, multi-modal shipping system. Companies can increase their efficiency and therefore increase their range, saving costs and giving them the ability to offer more services and options to their customers. This is advantageous because it helps a company separate itself from other companies that are less efficient and logistically effective.

Limitations

There are, however, some significant limitations to most tracking systems within a company. Since Southland Distribution is a multi-modal transportation company, it is vulnerable to logistics issues stemming from the fact that most tracking software and systems only deal with one company, and are usually geared toward single modalities (Karkkainen, Ala-Risku and Framling, 2004). This usually occurs due to the fact that the complexities involved in just one mode of transportation limit the scope and scale of any software and logistics solutions. Just as companies that involve other companies in their supply chain do not often have many smooth transitional commonalities within a software solution; companies that involve multi-modal transportation solutions have an equally hard time integrating one software solution into these multiple modes of transport.

It can be seen that for a company like Southland Distribution, a tracking system for each mode of transport would be beneficial, yet would involve an increased logistics support system and a larger initial investment in the tracking infrastructure. A company such as this may benefit more from a less complex, less efficient, but equally as effective singular tracking system that incorporates all the modes of transport into one central logistics hub (Holmstrom, Kajosaari, Framling, and Langius, 2009). This sort of short-term, multi-hub tracking system would be the best solution for a multi-modal company like Southland Distribution. It would help the company internally while creating the least amount of drag on the transport system itself. It would also create a system of accountability and help provide solutions in the event of lost cargo or improperly shipped goods.

Customer Service Concerns

Customers are always curious about their shipments since their livelihoods often depend on the reliability and accountability found within a shipping company like Southland Distribution. Companies looking to boost their customer satisfaction are always looking for new and cost-effective ways to make customers happy and offer new and unique services at good prices. Southland Distribution could implement a tracking service that helps show customers, in real-time, the location of their shipments and the estimated time of delivery. This would help customers feel as though they could trust Southland Distribution with their business and would help the company garner more support and build a bigger customer base. Many of the largest shipping companies have similar tracking systems, and work hard to incorporate this into the goods and services they offer their customers (Karkkainen, Ala-Risku and Framling, 2004). Companies like DHL and UPS offer customers tracking services based upon the last place the shipment was received. This is great, but it does not provide a snapshot of the current location of the shipment as it is in transit.

Southland Distribution could help set itself above these and other companies by offering real-time tracking of their shipments instead of estimates based upon the last known checkpoint the shipment passed through. Even though, by comparison, Southland Distribution is far smaller than these two companies, it could offer a unique service to help attract customers as well as new business that is more concerned with real-time tracking. This could help the company grow within a niche that serves high-end and sensitive cargo needs.

Associated Costs

Since a company like Southland Distribution covers so many shipping destinations as well as modes of transport, the tracking system implementation stage would likely be the most costly of all the stages required in building such a system. This is due to the simple fact that the sheer number of goods, machinery, and employees that would need to adjust their behavior to incorporate such a system would lead to a major cost obstacle (Ramdas and Spekman, 2000). This stage of implementation would be a closed loop however, and slowly, over time, this loop would be built up from the inside to incorporate the new tracking system. So, over time, the marginal costs of implementing such a system would drop within the company. Southland Distribution stands to gain much from a real-time tracking system, and the benefits far outweigh the costs of implementation.

Besides the up-front costs of implementing a tracking system, there is the maintenance costs associated with it. These costs are relatively small in comparison to those involved in implementation, but none the less should not be overlooked. A company like Southland Distribution could implement and manage an overarching, multi-modal tracking solution relatively easily if it incorporated the proper technology. This technology could include RFID chips, electronic scanners, and computer-based tracking and cost minimization software (Holmstrom, Kajosaari, Framling, and Langius, 2009). There have been many recent technological developments relative to tracking systems and how they follow goods on an item-level, instead of a materials level. Now, each item can be conveniently and cheaply tagged with a chip in order for a tracking system to track it. A system such as this would be rather easy for Southland Distribution to implement, since the shipment of goods does not usually involve many small items, but instead larger, singular items contained within large packages, pallets, and boxes.

In Summary

Many companies outsource their logistics and tracking system management. This can come at great cost. For a smaller company like Southland Distribution, outsourcing of these systems is likely not a good idea. However, larger companies have to deal with some related cost factors when they outsource their logistics systems. These costs considerations include: centrality of the logistics functions to the firm's core competency; risk liability and control; cost/service tradeoffs in operations; information and communications systems; and market relationships (Rao and Young, 1994). A company like Southland Distribution would likely want to retain complete control of their shipping system and supporting logistics infrastructure for the simple fact that since it manages a multi-modal delivery system, the security and logistics concerns relative to multiple countries and economies is great. Southland Distribution is also still relatively small, and is not in any position to truly benefit from outsourcing its logistics systems and concerns in the ways that larger companies benefit from.

Southland Distribution has much to gain from a technologically relevant, multi-modal electronic tracking system. The company itself is rather small, and has much room to grow, which makes it an excellent candidate for real-time tracking technology. While the initial costs of implementation and adjustments associated with best and most efficient practices could be relatively high, the multitude of benefits and cost savings that such a system could potentially provide far outweighs any initial costs (Ramdas and Spekman, 2000). Southland Distribution's management system and techniques would benefit from such an implementation and the company could set itself apart from other larger, international companies that do not yet employ such real-time tracking systems.

Southland Distribution would likely enjoy more efficiency benefits and increased profits by not outsourcing its logistics infrastructure and management and by including technologies like real-time tracking software and RFID chips into its shipments, the company could increase efficiency and customer satisfaction. And since the company is multi-modal, a more simplistic, singular approach to tracking would likely be best instead of trying to implement complex, individual logistics and tracking solutions for each mode of transportation or destination. The company could also help to maximize the shipments and profits as well create a niche for itself in the higher-end, sensitive cargo shipping industry with such a tracking system. This system would need to allow for room for growth, since the technology that is being used to ship and track the shipments within the company is always changing.