E-Commerce Overview Series - Logistics

Publication Date: March 2004

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Logistics is the process of planning, implementing and controlling the flow and storage of goods and services and related information from the point of origin to the point of consumption.

This e-commerce overview focuses on Canadian service providers in the fields of rail transportation, water transportation, truck transportation and warehousing and storage.

E-commerce Overview

Logistics service providers are using e-commerce due to pressure to cut costs and move goods and services both smarter and faster in a real time environment.

Electronic Data Interchange (EDI) has been widely used in all sectors since many years. Internet base EDI is starting to be adopted to SMEs. Linked to it are the electronic funds transfers and wireless applications, which are essential in applications such as tracking systems (see chart A).

In relation to its partners in the supply chain, truck transportation is lagging behind in the use of most e-commerce technologies, notably EDI on the internet and collaborative tools (see charts A, B & C). This is mainly due to the fact that the majority (78%) are operating at revenues of less than $0.5M with limited resources devoted to technology expenditures ².

Compared to its supply chain partners, this sector’s use of the Internet for advance supply chain applications is very limited. Sharing Inventory data with partners is the area where most gains can be achieved ⁵ (see chart B).

Chart A - Use of Electronic Data Interchange (EDI) On the Internet ¹, 2002

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According to International Data Corporation (IDC) elogistics Survey, 78% of the US Logistics providers indicated that they are likely to use Web-based transportation in the near future ³. Internet based technologies are changing logistics from being a packaging and moving function into an information business ⁴

Chart B - Use of Supply Chain Technology Over the Internet ⁵, 2002

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E-commerce Focus

Collaboration and visibility within the whole supply chain is the main focus for logistics providers and their partners. It enables buyers, manufacturers and service providers to collaborate on product forecasts and product flow ⁴. (see chart B).

The sector does not play a key role in adopting traditional e-business aplications, such as e-procurement, web site, intranet and selling over the internet. The situation has not improved significantly between the 2000-2002 period.

Benefits

According to Statistics Canada 2002 e-commerce survey, the main benefits for logistics service providers is better coordination with suppliers, growing from 10% in 2000 to 29% in 2002. Lowering costs is the second highest priority to providers, passing from 17% in 2000 to 25% in 2002.

Reaching new customer is not the priority anymore, sliding from number one with 23% in 2000 to fourth with 18% in 2002. Reducing time to market is stable with only 10% in 2000 and 2002 ¹.

Future Trends

The trends of visibility and collaboration through the whole supply chain, the implementation of e-procurement platforms as well as replenishments systems are expected to grow in the near future.

Since it is not practical to exchange substantial product flow and other demand driven data between various players via EDI technologies, Internet is extremely well suited for this type of application ⁴.

It is anticipated that Internet based collaborative tools and standardized protocols will continue to accelerate in the future. Their adoption by Canadian logistics service providers is essential to gain a competitive edge.

Chart C - Transportation and Warehousing Traditional Activities on the Internet ¹, 2002

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In IDC’s elogistics Survey, shippers who had used Web-based workflow automation services achieved between 20-30% in savings off their transportation management costs. One of the reasons shippers outsource transportation management is to keep pace with technology. The web-based transportation management service providers have already put together best-of-breed technologies that would otherwise take years for shippers to build, test, and implement in-house ³.

Chart D - Transportation and Warehousing, Key Benefits Using of e-Business Applications ¹, 2002

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To do business and access new opportunities on the net, register your firm at www.sourcecan.com

For more information on e-business, visit ebiz.enable.

Source :

1. Statistics Canada 2002 e-commerce survey
2. 2002 Statistics Canada Census
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3. Are shippers ready for web-based Transportation Management Services Bulletin - IDC, IDC elogistics survey 2002
4. E-commerce Sector Impact Study on Supply Chain and Logistics study by Industry Canada and The Association of Supply Chain and Logistics Management
5. Who’s Sharing What With Whom?, Statistics Canada, March 2003

Visit us at:

• http://strategis.ic.gc.ca/logistics
• www.sclcanada.org