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Changing the rules in transportationmanagement.

July 2006

Market conditions propel logistics heads tomake the moves they've always wanted.The demands of corporate management have changed little overthe past decade. The mantra “increase service levels, reduce cost”is repeated every year in shipping departments across the country.

Market realities, however, have created new mailstreamchallenges. Today's logistics and distribution managers are facedwith unusually adverse conditions: higher fuel costs, consolidation,hidden fees, new security requirements, capacity constraints andhigher-than-ever customer expectations that affect carrierselection, fulfillment accuracy and inventory management.

Instead of using these new market realities as an excuse – savvymanagers are leveraging these challenges to instill fundamentalchanges in how companies view shipping and logistics. The endresult: once thought of as an end-of-the-line process,transportation management is now taking center stage with keyroles in customer service, marketing and operations – greatlyincreasing the value that transportation organizations deliver tothe enterprise.1

The difference? Top performing logistics departments are movingbeyond execution to instill a stronger process orientationthroughout the company.2 Keys to these initiatives includecentralization, web-based cost controls and streamlinedcommunication.

Centralization in a non-centralized world.The notion that a centralized approach to shipping creates addedefficiencies is nothing new. This strategy has been at the forefrontfor years. However, 63% of companies report that they still havefragmented transportation operations.3

Traditional roadblocks include organizational structures thatcreate “silo mentalities” – where each division is focused onspecific objectives and narrow goals. In the past, best practiceleaders have looked for opportunities to streamline mailstreamplanning, but have often met resistance. Today, however, twodevelopments are creating opportunities to bring up the topic ofcentralized administration again:

• Rising costs making headlines.While rising gasoline prices have been in the news, a broadrange of shipping fees have been on the rise. Theseaccessorials – which include add-on services such as fuelsurcharges, residential delivery fees, dimensional weighingand address correction – can vary by carrier and often falloutside the scope of pre-negotiated contract terms. Leftunchecked they can drive shipping costs, which may alreadyexceed 2% of a company's total sales, even higher. In a worldwhere a well-managed supply chain can provide a truecompetitive advantage,4 centralized oversight is required atevery turn. And with escalating fuel costs making headlines,more people are open to the idea that changes are required.

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• Adoption of thin-client technology.Smart managers know that you can't just apply technology toa problem and expect it to go away. Effective changemanagement involves integrating new technologies intoexisting processes – and making necessary adjustments toachieve the desired goal.

Thin-client technology describes an environment where auser's computer serves as an interface, but the bulk of theprocessing occurs on a central server. When applied totransportation management, it allows the brains of a firm'sshipping operation to be managed centrally – whilemarketing, customer care, operations and finance still haveaccess and control of essential functions. In this case, acentralized server manages activity throughout the entirenetwork – and creates a scalable mailstream solution that canaddress ever-changing business needs and shipping volumes.The end result: rapid improvements can be made withoutdisrupting an entire organizational chart.

Leveraging web-based technologies to addcontrol, reduce costs.Unlike older-generation software that has been “web-enabled”simply by adding a control panel that's accessible via the web,today's winning solutions are designed with a web-mentality fromthe ground up. These powerful transportation managementsystems enable any business – from standalone plants andwarehouses to enterprises with multiple production anddistribution sites – to gain full control over their shippingprocess. Web-based technologies offer three additionaladvantages: real-time procurement, streamlined integration andrules-based decisions.

• Real-time procurementCarrier bidding can now take place online – using the mostup-to-date rates and routing data. The best systems includeaccess to information that carriers don't make available intheir traditional software packages – giving you more optionsto compare. Intelligent logic allows you to shop in real-timeand make decisions that contribute to your bottom line.

In addition, by aggregating procurement through acentralized system, companies are in a better position tonegotiate volume discounts from carriers. The carriers benefittoo, as they have a single point of contact – and simplifiedaccount administration.

• Streamlined integrationThe use of modular, extendable web-based design also makesit easy to integrate your transportation management systeminto your firm's existing business processes. With the rightsolution, logistics managers have been able to connectdirectly into enterprise resource planning, financial analysis,enterprise accounting, warehouse management and ordermanagement software. This not only creates tremendousprocess efficiency – it helps gain buy-in from departmentheads across the company.

• Rules-based decisionsThe combination of thin-client technology and web-baseddesign makes it easy to administer rules across the entireenterprise. With carrier data linked directly to a sophisticateddecision engine, users can compare time-in-transitcommitments, rates and company preferences – and renderoptimal selections every time.

The technology exists today where you can even automatedecision making based on specific requirements for individualcustomers – or provide for real-time customer self-selection.

Meet the information-based demands of co-workers, management and customers.The other key initiative in stepping up to today's marketconditions involves communication. In fact, transportation groupsnow rank increased demand for delivery status and cost data astheir number one pressure – even greater than pressures toreduce cost or improve service.5

That's not surprising, as information drives all the underlyingprocesses in any logistics enterprise. Collecting, sharing andmanaging this information is clearly a key to success.

• CFOs are becoming better educated on the financial impactof the mailstream – and want to have a concreteunderstanding of total transportation costs.

• Customers expect accurate information, instant responses andproactive notification – especially if there's a chance that anorder may be delayed.

• Order-entry and customer service representatives needinstant confirmations.

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• Division heads and marketing executives want to analyzeshipping data to find ways to lower cost, improve offers andbetter meet customer needs.

• Logistics and shipping managers are using informationthemselves to create benchmarks and identify opportunitiesto reduce costs even further.

The right transportation management system will provide whatleaders call “enterprise-wide shipment visibility”. The benefits aremany: You can shorten the order-ship-invoice cycle. Increaseproductivity and service levels. Enhance business practice.Improve overall customer satisfaction. And, of course, greatlyreduce total transportation costs.

A superior approach to centralization,control and communication will enable youto overcome significant hurdles. PitneyBowes can make it happen today.Pitney Bowes has been the leading supplier of multi-carriershipping solutions for over 25 years. And for the past three years,Pitney Bowes has been ranked as the number one supplier oftransportation management systems.6

The Transportation Management Systems Worldwide Outlookstudy, conducted by ARC Advisory Group, looks at solutions thataid in the planning, optimization and procurement oftransportation services and activities. “Attributes shared by theleaders in this industry include a global presence, broad solutionfootprint and large installed client base,” said Adrian Gonzalez,director of ARC's Logistics Executive Council. “Pitney Bowesembodies all three and continues to make progress on its strategyof integrating products and services into a complete end-to-endsolution from mail and package creation to final delivery.”

Pitney Bowes solutions already help thousands of companies meettheir unique transportation management challenges. For example,

Pitney Bowes has harnessed the power of thin-client technology tocreate PB TMS, an intelligent multi-carrier, multi-site system thatenables you to reduce costs, meet rising demands and easily adaptto change.

Support for the industry's largest selection of rate libraries lets PBTMS handle your carriers, from mail and expedited letters to LTLand truckload shippers. Its IntelliShop tool quickly compares ratesand carriers for your shipments and easily identifies the fastestand lowest-cost options. And its highly configurable business rulesallow you to designate preferred carriers for your customers,automatically generate the special documentation a customer mayrequire, or apply special instructions as needed.

PB TMS provides extensive database programming capabilities andgives you the ability to store and retrieve data in a variety offormats – with unparalleled scalability and reliability. And best ofall, Pitney Bowes provides a professional installation process thatallows you to quickly implement and integrate these solutions intoyour business.

Today's market realities require a new way of thinking. You need tocentralize decision making while still allowing end-user access.You need to make the most of web-based technologies. And youneed to effectively collect, manage and communicate information.You can make it happen, with Pitney Bowes.

1 Aberdeen Group, Best Practices in Transportation Management, 20052 Supply Chain Digest, Ten Trends in TMS Software, 20063 Aberdeen Group, Best Practices in Transportation Management, 20054 Adrian Gonzalez, ARC Advisory Group, The Elevated Role and Importance of Transportation

Management Systems, 20035 Aberdeen Group, Best Practices in Transportation Management, 20056 Pitney Bowes Press Release, #1 Transportation Management System Supplier, 10/4/2005

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