No matter what provider you choose, the Web-enabled supply chain is going to cost businesses and industries a lot of money to implement over the next decade, with no guarantee that the investment will go straight to the bottom line for each and every company. The pressure to identify competitive advantage will intensify, as a result. However, consolidation is one way in which companies bolster their competitive advantages or acquire new ones. A clue that this may be a big year for buy-outs among logistics providers was the purchase in January of Rollins Truck Leasing by Penske Truck Leasing Co. LP, a unit of GE Capital Corp. The combination of the two companies nudges Ryder out of position as the country's largest full-service commercial truck leasing company. More important, Ryder and the rest of the industry are now pitted against the world's biggest company.
Getting the Right Product to the Right Place
Despite the buy-outs, Ryder has made giant leaps in bolstering its competitive advantage to focus on its e-business strategy, Ryder's asset-light coordination of integrated logistics services means shipping customers' goods on other carriers' trucks. Sandy Orr, vice president of Ryder's E-Commerce Solutions group, explains that the company has been motivated by three primary objectives: getting in the game, leveraging its strengths and capitalizing on new opportunities. We couldn't wait to build infrastructure, so we were doing initiatives simultaneously. At the end of 1999, the objective was to pull together what had become a decentralized effort and start generating a return on the company's investment of its time, energy and money.
Under the umbrella offering of Ryder Integrated Logistics, first out of the gate was eChannel Solutions, launched in July 2000, an initiative that Orr describes as an incubator of logistics technology solutions for B2B and B2C customers. The primary technology behind the customer solutions is AmTrix, a messaging system developed by Viewlocity. Distribution centers in Maryland, Texas and California hold inventory from which Ryder will pick, pack and ship. Once an online order is received at the DC, attended and unattended deliveries to consumers are routed through a network of neighborhood facilities. Value-added fulfillment services offered to retailers include gift-wrapping and card insertion. In addition, Ryder will process returns, including pick-up, inspections, return to inventory (or suppliers') and disposal. Orr says Ryder Integrated Logistics also provides quality assurance, paying attention to details such as measuring the distance between the buttons on shirts.
eChannel Solutions created a myriad of offerings.
- RyderShip.com an online purchasing exchange that helps companies simplify procurement processes and source shipping services. Carriers are better able to manage freight capacity, and billing is consolidated on a single invoice.
- RyderTrac.com shippers can track their shipments online in real-time, anywhere along the supply chain.
- RyderFlow.com customers access information about their products, inventories, orders and receipts directly from the warehouses.
By giving companies the ability to view the status of their orders and shipments in real-time they can focus on the time to receipt, not the order-to-ship cycle. Lounsbury uses the airline industry as an example: I fly a lot. Airlines focus on on-time departures, but customers want on-time arrivals. At Ryder I say, Don't look to see if your company is competing with another company. It's your supply chain competing with another supply chain.'
Half-empty Trucks and the Last Mile
Ryder Integrated Logistics is still the largest 3PL in the country, investing heavily in the information technology (IT) infrastructure and solutions that support eChannel Solutions and other Web initiatives. In 1998 Ryder System outsourced $1.5 billion worth of IT consulting and management business to Accenture and IBM Global Services, a 10-year engagement intended to bring the company's services online and manage them while it concentrates on running its core business units.