Transplace's Jun-Sheng Li
Not many companies have paid attention to supply chain optimization, claims Jun-Sheng Li, chairman and CEO of Transplace Inc. (www.transplace.com), and he should know. His company is a third-party supplier of logistics technology, including the types of shipment management solutions that automate the optimization process. An industrial and systems engineer by training, Li's practical experience was garnered at two other 3PLs, Schneider Logistics and JB Hunt Logistics.
"Shippers know how to negotiate a price, but there's a science to knowing strategically where to position their suppliers, their DCs and their warehouses relative to their markets and their customers," he observes.
The payoff for applying that science to logistics can be significant. "If you do a good job, you will gain efficiency and a competitive advantage."
The success or failure of an optimization project, Li points out, is in the execution. "People sometimes ignore the details — the nuts and bolts — and they become enamored with a nice concept and hold onto it. But sometimes it's the nuts and bolts that drive the whole process." That includes tactical and transactional activities involved with transportation and logistics, which he says should be viewed as basic, with the supply chain resting on top.
"If you have balanced, or almost balanced, freight with your own system, you have to make sure you don't let capacity leave your system," Li stresses. "You need to keep utilizing carriers so they don't have a chance to get out of your system," which is what a 3PL like Transplace can offer.
"We have a lot of freight moving in all directions. As soon as a truck is empty, we have freight available to fill that truck right away. It's the law of large numbers. If you have a lot of freight going in all directions, you lump it all together and the variance is going to be smaller than the individual variance."