BUSINESSWEEK ONLINE : NOVEMBER 20, 2000 ISSUE
BUSINESS WEEK E.BIZ -- SPECIAL REPORT

The Evolution of Logistics


The Internet is changing the face of logistics, speeding up how companies communicate with suppliers and move goods. Here is an example of how the Net is overhauling the way Nabisco ( NGH) and Wegmans Food Markets do business.


STEP 1

THE OLD WAY
When the cashews arrive in Jacksonville, Fla., a freight forwarder handles the paperwork needed to clear the shipment through customs and scurries to find a truck to deliver them to Nabisco plants. The truck may travel only half-full and have no cargo on the return trip, making it costly for Nabisco.

THE NEW WAY
Shippers and truckers always have up-to-date info via an online exchange like the one being developed by Nistevo, a startup based in Eden Prairie, Minn. It's a collaborative logistics network that connects multiple manufacturers and transportation companies. The exchange matches orders and makes certain trucks have full loads.


STEP 2

THE OLD WAY
Nabisco alerts its Brazil office via fax or phone, and employees deliver orders in person to local cashew growers. Farmers put the raw cashews on trucks, which take them to the port. The shipping company notifies Nabisco when the cashews set sail.

THE NEW WAY
There's not much difference here, only Nabisco now contacts its Brazil office via e-mail. Employees still have to contact local farmers in person.


STEP 3

THE OLD WAY
Nabisco, of Parsippany, N.J., figures the amount of Planters cashews that Wegmans Food Markets in Rochester, N.Y., might sell in a quarter--without consulting the supermarket chain.

THE NEW WAY
Nabisco and Wegmans exchange sales forecasts via the Web and agree on an amount to supply Wegmans. Calculations are largely based on current sales data from the checkout counter, past patterns, and upcoming promotions.


STEP 4

THE OLD WAY
Trucks take the cashews to Nabisco's manufacturing plants. After the nuts are roasted and packed, trucks carry them to Nabisco's 12 warehouses nationwide.

THE NEW WAY
After arriving at the manufacturing plants, the cashews are roasted and packed. Nabisco sends Wegmans' cashews to the warehouse of a consolidator, such as ServiceCraft, which replaces the Nabisco distribution center.


STEP 5

THE OLD WAY
The nuts are in a warehouse and ready for shipment, but they may not be close to the store where Wegmans needs the cashews because regional demand was not discussed. If Nabisco ordered too many cashews, they turn soft in its warehouses. If it ordered too few, Wegmans will buy cashews elsewhere.

THE NEW WAY
Because Nabisco knows Wegmans' needs, there isn't a shortage or oversupply of cashews. From the consolidator, the nuts are put on trucks going to Wegmans with other products from competitors. Transportation, unloading, warehousing, and inventory costs drop.



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EBIZ Cover Image, link to ebiz table of contents
EBIZ Contents for issue dated Nov. 20, 2000


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