Collaboration is Key

New report: collaborative logistics networks can yield 12.3% gained efficiencies

MINNEAPOLIS - October 2, 2000 -- Omni Consulting Group released a study today that concluded organizations could realize an efficiency gain of up to 12.3% in their logistics process by participating in Collaborative Logistics Networks, such as the one offered by Nistevo. This gain is achieved through technical, economic and operational efficiencies.

Commissioned in April 2000, Omni Consulting Group analyzed the economic behavior and trends of Collaborative Logistics networks based on a detailed study of a major consumer packaged goods company and applied accepted economic theory pertaining to market structures as well as Game Theory practices (cost minimization and profit maximization relative to the interest of shippers and carriers.)

The current logistics market is marginally 16.3% inefficient due to labor intensive, manual processes, and an information void created by a highly fragmented market, said Frank Bernhard, managing principal of the supply chain and telecommunications practice at Omni Consulting Group. The timeliness and quality of information shared between network members has an incredible influence on supply and demand. The more information that is shared, and its accuracy, can result in real economic gains.

Currently, little if any real visibility to lane and route demand exists for freight that flows between carriers and shippers. With the advent of the Internet and the technology available through Collaborative Logistics networks, members can gain the forward visibility into demand, price, and supply. As a result, smoothing of demand and price due to improved information offers economic efficiencies thus eliminating the lumpiness effect found in traditional logistics operations.

Collaborative Logistics is an emerging market, offering the opportunity for both shippers and carriers to achieve real economic benefits said Kevin Lynch, CEO and president of Nistevo. This study validates the concept of Collaborative Logistics networks and provides valuable insights into the relationships between market behavior, demand visibility, and Web-based technology.