Visibility is among today’s logistics buzz words particularly thanks to the globalization of supply chains. But imagine, almost 20 years ago, in 1996, UPS Supply Chain Solutions actually achieved this capability thanks to a Dutch IT company, Lunatech. Initially it only involved one aspect of visibility – reporting the delivery status of each shipment to the vendor to give them visibility of the UPS-managed supply chain. According to Lunatech’s Peter Hilton, this was difficult because the warehouse operation did not know when shipments were delivered – it did not have access to information from the transport organization. As such, Lunatech developed a system that integrated incompatible data sources into a single data model. This enabled the system to generate consolidated delivery status reporting, so that UPS could provide their customer with the delivery information they needed. The next year, Lunatech took this thought one step further by integrating information for shipments from multiple warehouses, delivered by multiple carriers. By 2000, UPS had introduced 4PL solutions – the management of the complete supply chain from warehouse to transportation and customer delivery by utilizing Lunatech customized solutions.
Fast forward to today and one can fully appreciate the beauty of this partnership. Lunatech’s goal was to create end-to-end visibility for UPS’ 4PL solution. This meant developing software to consolidate information about orders and shipments from numerous companies. According to Hilton, this kind of visibility is a major challenge in supply chain operations – to systematically gather information companies who may be competing with each other.Such capabilities allow asset light companies to effectively compete with asset heavy companies. Now, envision a potential entrant into the 3PL or even the integrator space with these capabilities – perhaps Amazon. Amazon has built out an impressive fulfilment network combined with stringent delivery time requirements along with the management of an assortment of transportation service providers. The company has also launched its own fleet of delivery vans for its expanding Amazon Fresh service. Imagine the data created from all these processes. Combined into a data model as described by Lunatech, it could maybe rival that of a large 3PL or integrator.
Is Amazon heading down this path? One can only speculate. An interesting article from DC Velocity suggests, however, that Amazon is making changes to its network that would indeed set them up to compete against FedEx and UPS. According to the article, “Amazon plans revamp of US shipping with mix of private fleet, regional carriers, USPS” the top 40 markets, comprising half the US population, will be served by Amazon’s private fleet. The next 60 markets will be served by regional parcel delivery carriers, and the remainder will be served mostly by the US. Postal Service. If this is indeed true, the key to an Amazon success will lay with complete visibility across its entire supply chain.