RBI Think Return Before Investment

Parcel Shipping & Distribution: Spring, 2003
by:Mason Kauffman

In the 90's clients were sold on the business concept of return on investment (ROI). Unfortunately, this left clients feeling that they had to pay a significant up-front investment and then wait for a potential return which may, or may not occur. And all too often, projected ROIs did not materialize.

In today's cost-conscious business environment, the old "ROI" term is quickly being replaced by the new business paradigm of "Return Before Investment" (RBI). While the term "ROI" began as a noble ideal, the days of the big up-front investments have given way to a more real-world transaction-based economy where technology companies have to prove their worth each day. "The Bank of America wholeheartedly supports the concept of RBI. Who wouldn't?" asks Dick Whitehurst, transportation and logistics strategy leader, Bank of America.

How can we achieve the goal of RBI in the logistics world? Here are three tips to get you started.

Information-focus

Having access to complete and accurate real-time information is the first step toward achieving RBI. Client focus groups consistently share their interest in utilizing the information available through today's Web-based services to replace the up-front costs and maintenance associated with traditional onsite hardware and software solutions. Instead of investing in traditional mailing, shipping, and other logistics systems, many clients are now beginning to expect a strong RBI with no up-front costs and strong ongoing expense reduction.

A great example of this trend is in the way desktop shipping is replacing many of the traditional mail center shipping functions. Similar to the way desktop word-processing programs replaced the old Wang-type word processing systems in the 80's, multi-carrier desktop shipping alternatives like AccuSHIP are providing shippers with the up-front routing knowledge, address accuracy, cost center validation and online reporting required to virtually eliminate the duplicated efforts still performed in many traditional mail centers.

Another example is how major retailers and manufacturers are using the same Web-based warehouse information network to replace inventory with information. By providing online shipment processing and inventory visibility for all inbound, outbound and third-party shipping activity, onsite inventory levels and the associated inventory carrying costs can be significantly reduced. The additional benefits of achieving optimal carrier routings and vendor compliance are where RBI starts to turn into an information grand slam. "Information is the reason Coca-Cola has been able to control logistics costs so well," states John Hardy, strategic procurement manager for The Coca-Cola Company

Independence

Clients want one site to manage all logistics activities. With the realization that no one transportation company represents more than five percent of the total logistics spent, you quickly realize that logistics systems need to support all modes and carriers. No Fortune 500 company uses, or will ever use, just one carrier; most use hundreds.

While each carrier's operations are very unique, companies like AccuSHIP have the experience and technology to map each carrier's core data elements (e.g. tracking number, origin, destination, pieces, weight, charge, discount, cost center, etc.) into a common database. The end result is additional RBI through the ability to truly optimize the use of all modes and carriers. "Nike uses hundreds of quality carriers, and it's great to have one online system that can manage them all," adds John Turina, USA transportation manager for Nike.

Clients need logistics technologies that will collaboratively interface with and complement all installed technologies. Additionally, to eliminate the need for ongoing training, the design focus must be on ease of use, then speed and functionality. The ATM is a great model to follow. When you think about it, no one ever taught you how to use an ATM due to the simple elegance of its design. This same concept is true in maximizing the RBI for logistics initiatives.

Enterprise Solution

The strong trend toward consolidation is unmistakable. Think about it; whether it is grocery stores, retail stores, travel systems, credit cards, Internet search engines or logistics information systems like AccuSHIP, everyone is moving toward business models that provide all logical choices so clients will not have to be locked in to just one alternative.

The simple fact is that what you ship is exactly what you want to track, account for and report on. As logical as this fact is, today's shippers often still have one PC-type system to process shipments, utilize the Web to track shipments, process invoices via EDI or paper through another network, and receive reporting through yet another system. All of these functions have to be put back together in the same seamless database for all modes and carriers to achieve maximum RBI.
Microsoft is able to provide its entire suite of Word, Excel, Access and PowerPoint for the approximate price of any one competing module. Likewise, AccuSHIP is able to provide its entire STAR enterprise of shipping, tracking, accounting and reporting applications for the price of just a traditional shipping system, supply chain, accounting or reporting alternative.
The combination of enterprise services like AccuSHIP's STAR system creates an RBI opportunity significantly greater than any of the individual components.

These initial tips will provide you with an excellent insight into the new services available to help your company achieve RBI. We welcome you to contact our team to find out how much your company can benefit from a strong return before investment program.

Mason Kauffman, AccuSHIP Chairman & CEO, is recognized as one of the world's foremost authorities in logistics information technology. Contact him via email at mkauffman@accuship.com or by phone at 901.271.1936