About This Case


15 Dec 2010, 11:59PM PT

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28 Oct 2010, 12:00AM PT


  • Advertising / Marketing / Sales
  • Consumer Services / Retail Industry
  • Enterprise Software & Services
  • Government / Politics / Global Issues
  • Internet / Online Services / Consumer Software
  • Logistics / Supply Chain
  • Media / Entertainment
  • Start-Ups / Small Businesses / Franchises
  • Telecom / Broadband / Wireless
  • Transportation / Travel

The New World of Logistics


Closed: 15 Dec 2010, 11:59PM PT

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UPS loves logistics and is looking to start engaging with others who share its passion -- and who have an appreciation for the modern complexities of combining the latest technology with efficient supply chains. The global economy is more interconnected than ever before, and global logistics can make the difference between success and failure. The competitive advantage that integrated global logistics provides can help to improve customer service, to expand into new markets and to improve the bottom line -- and we'd like to hear about your stories.

To start off this conversation, we're interested in hearing about "new logistics" -- such as experiences involving small businesses that have leveraged logistics to take advantage of international markets, or how logistics helped you and your company to better compete with larger companies by creating new opportunities, or simply explanations of what "new logistics" means to you and how it has helped build up your company's operations.

Relevant information to include in your insights:

  • The type of business you're describing and how logistical obstacles are met
  • Summaries of how your logistical challenges were ultimately successfully resolved
  • Examples of modern logistics -- describing the challenges for smaller businesses just starting out
  • Technologies that have advanced (or will improve) logistic operations (eg. RFID, 4G wireless networks, etc)
Based on the responses we receive, we'll follow up with future cases on other topics -- or cases that further delve into viewpoints on related subjects.


6 Insights


The future of small business logistics includes several key points; some are more achievable than others. 

1. ZSF distribution - a zero square foot (ZSF) distribution model means we have no actual warehouse.  In the ideal ZSF distro model, Every item needed is ordered on demand, and every item sold is made on demand.  In reality, one can get close but due to manufacture times and other risk mitigation, a small cache of items is usually required.  The goal of ZSF is to minimize this amount to reduce cost and speed up turnaround times.

2. Perfect tracking - ideally, you'd know where all your orders and shipments are at any given time.  This is not technically possible, but you can get pretty close with RFID tags on every shipment.  Of course, RFID tags are only as practical as their ability to remain secure, which leads to the next point.

3. Secure shipping - generic ship boxes and labeling plus secure order detail data are required to maintain shipping security.  High value items that can be easily identified from outside the box are likely theft targets.  The higher risk my cargo, the more likely I would be to take measures such as shipping under generic names or other steps to reduce the likelihood that a high dollar shipment would be identified as such and stolen in transit.

4. Pickup/Drop shipping - door to door service on shipping orders on a daily basis.  This helps achieve ZFS, but it also reduces costs especially for startups.  Automated order system stub scheduling of pickup/drop makes it a seamless experience for the small business owner -- one less thing they have to worry about all day.

So with all of these things, I can achieve the following scenario: I need no warehouse, so my costs are minimal.  I and my customers know exactly where packages are, yielding higher customer service and backoffice statistics.  I know my shipments are as secure as they can be, minimizing my risk in shipment, and I get seamless pickup and drop shipping when orders are placed.  In other words, logistics are a transparent, utility-like service for my small business.

I am a Lead Systems Consultant for a major telecommunications company.

UPS clearly sets a standard for timely, cost-effective delivery; but as these factors are taken more and more for granted, other factors are becoming increasingly more important.

A recent study showed that while UPS rated highest for a combination of care in handling, speedy delivery, and cost, like all other carriers, except the USPS, handling was too rough, and "fragile", etc., labels actually result in worst handling.

An incentive program, where UPS sends dummy packages loaded with accelerometers, etc., and rewards the handlers who show the most care; followed by a PR program showing the results, would be the best way to improve logistics beyond the present. 

If I send a delicate <whatever> <somewhere>, I don't want the delay involved in replacing it due to damage in shipping, even if I am reimbursed by the carrier! To me, that is <slow> delivery, not just damage in shipping!

Gene Cavanaugh (Marion Eugene Cavanaugh on the USPTO web site) specializes in small entity patenting (what the founding fathers intended in the US Constitution).

A company in the Home Furnishings market was excited about the possibilities for online sales of its products, and began to explore ways to generate new business outside of its traditional retail/distribution model. The technical obstacles were standard:


  1. Develop digital strategy and assets to generate leads and sales conversions
  2. Identify supplier/seller conflicts with new channel
  3. Establish delivery/customer service process geared towards online selling versus in-store selling
  4. Take advantage of enhanced technology and tracking systems to deliver product faster and with more certainty to retail customers.


The modern wisdom is that all sales are moving online and thus companies must adjust to this with new manners of selling and transportation.  The speed of delivery was improved, and sales were generated from the website, but the company quickly recognized that the customer service/repair/return model was not as conducive to online selling.


  1. Customized orders suffered a higher percentage of returns with unacceptable losses. Expectations from online buyers were not tempered/directed with human contact.
  2. Logistics difficulties in creating home/business delivery from scratch created a new layer of overhead, as existing infrastructure was tasked to the retail division.  Possible conflicts of interest for selling precluded the use of that existing infrastructure.
  3. Bulk transportation efficiencies were lost when delivering from a national instead of regional focus.  
  4. Customer service departments were not prepared for online selling.  Creation of a mature system was required to meet the demands of a fast-paced and demanding online shopping experience.


Success in this case was defined as a refocusing of the digital strategy to support current logistics, instead of taking advantage of a new logistics to alter the industry.  Existing partnerships and infrastructure had to be incorporated and thus the online selling turned to support of the current business model instead of a new division within the parent company 

While the promise of fast delivery and instant online purchase was possible, the company recognized it needed to restructure its internal systems and processes to prepare for the benefits of the new logistics.

Jim Durbin is the owner of an interactive marketing firm and an executive search firm specializing in social media.

At Sify, We are into Data Center and Information Infrastructure Management. We build out and assist customer in migrating Datacenters often working as part of large ecosystem of IT providers.

Logistics of Handling Data Center equipment when is properly packed in manufacturers packaging is relatively safe and proven activity.

Due to the Rise in Virtualization and Unified Infrastructure Technologies, there is need to consolidate datacenters. I was part of three such projects in the last six months.

These projects require moving old equipment in relatively short time windows often less than 48 hours due to the business critical nature of the data and applications residing on them.

The best of the providers without naming names including UPS did not have any well thought out solutions other than corner protection, shrinkwrap or Blankets. At best a shock resistant base. custom solution like purpose built Crates are both expensive and time consuming for production use.

Ideally I would like to see a service which can move full 42u Racks in a Shock-Protected Resistant Reusable container. and smaller reusable containers for 1-u, 2u, 3u up 12 u size chassis of Datacenter equipment(server, storage arrays and networking gear)

The development of RFID and Sensor technologies may allow easy capture of Shock and temperature data in transit. For Critical equipment, It may be a good idea to build these sensors into the reusable containers mentioned above.

I wish there could be a easy way to know the Shock and Temperatutre data(Logging and Retrieving using a USB key) of new and old critical equipment in transit to quickly isolate and complex issues due to damage-in-transit to the equipment. This will  allow the IT manager to plan the alternative for damaged equipment  will help immensely reduce the overall downtime.

In my view there is a huge oppurtunity to spur innovation in DC-buid outs if there is consistent Logistics support available. The Entire DataCenter Build cycle can be reduced as we can integrate in controlled locations and ship complete racks of equipment to the destination as a single ready to use units.

This is very different from the Containerized or Data Center on Wheels approaches that are becoming popular due the simplicity and Ready-to-use capability. I am wondering what role companies like UPS can play in Containerized DataCenter rollouts.

UPS ...share your love for Logistics to DataCenter equipment. Invest tools and technologies for hitech reusable containers. UPS may be able to convisnce large OEMs to use these containers for new equipment too. It may be frugal, safer and greener than the expensive packaging we discard during every datacenter rollout and migration. UPS can reap the benefits of this booming industry with such innovations.

In the future of logistics I see packages with more quickly updated tracking information and estimation of delivery times including estimated travel time to the next stop and how many stops there will be.

Having the ability to specify time of delivery and location of delivery, this would be something along the lines of if delivery is to be made before 1:30PM deliver to X, if delivery is to be made after 1:30 deliver to Y. That would allow for better handling of packages that require a signature at delivery.

To improve on the condition of the packages instead of focusing on the unload time of trucks that results in conveyors being overloaded and causes packages to fall. Focus of the load time of the trucks so that the packages are less likely to backup and eventually fall.

Create a "store front" or embedded script for online retailers to have process orders and place a pickup time for in stock items. This will allow online stores to streamline the shipment process a bit easier and set blocked times and shipping delays for out of stock items and rush times.


Recent grad with a BS in Management. I am looking to be starting my business in the next year or two and will be shipping several bulky items frequently.

New logistics are becoming part of our everyday life -- before we even know it...

In fact, it's as close as your local public library. Last month I placed a stack of 10 books on a check-out counter, and my librarian startled me by instantly producing a receipt showing every single title and its due date. Every book was tagged for RFID detection, so the technology actually "knows" every book, literally sensing it instantly by its proximity to the counter. And this gave the library a foolproof security system, since nothing could be removed from the building without being detected and scanned against a database of checked-out materials.

My library constantly faces funding shortfalls, but they've used technology to save money and improve customer service dramatically. They could've hired new employees to speed up their check-out times, but instead they just installed a row of machines that lets patrons do it themself!  Children today will grow up with memories of their parents holding books over an infrared bar code scanner, triggering a friendly beep of recognition as each book is checked out. And books can now be renewed online, 24 hours a day, just by entering a unique 14-digit patron code to pull up a list of checked-out materials.

It's happening all around us, and without even realizing it, I've made purchases from dozens of small businesses located in different states and even different countries. Using new logistics to compete, they're listing their inventory online, and drawing customers from around the world. I'll never forget the day I noticed that a local antique store had closed their high-rent storefront in a downtown shopping district. In their window, they'd placed a sign that said "Moved to eBay."

They'd discovered a global market which was just as profitable as the locals, and they'd eliminated their single biggest monthly overhead item: their rent. (The antiques were actually stored in a warehouse at the edge of town, and the storefront had been a second where they displayed them to prospective customers.) On the other side of the equation, I'm out there making purchases of obscure items most stores would never want to carry - and I'm more likely to search for them online.  One day I searched eBay for the soundtrack for my favorite B-movie from 1967, and discovered a used record store 2,000 miles away selling a copy for only $4.00.

Small business are what's really driving the success of Amazon and eBay. Thousands of small businesses have been woven together into one unbeatable superstore. Yet they're also able to create their own independent storefronts online, offering the same customer service as Amazon itself, including cheap online customer service and 24/7 shipment tracking. Someday I'd like to see shipments tracked with a GPS unit, so shoppers could even follow their shipment's progress on a map in real-time!

But the next frontier is probably smartphones. J.P. Morgan Chase has launched a program that lets customers make deposits using a smartphone -- just by transmitting a photograph of the complete routing information at the bottom of any check. Consumers are already using smartphones to get vast amounts of new, customized information -- for example, lists of nearby restaurants based on your location, along with crowd-sourced reviews. Imagine an app which taps into the inventory of local stores, then tells you the closest location for purchasing a particular item -- along with its price!

In the future, businesses will have to keep up with these new audiences. (UPS already offers its own smartphone app for package tracking -- and in the future, it may provide more and more detailed information.) But the thing to remember about new logistics is that it's real, its powerful, and it's happening right now. I learned that the day I saw my public library had installed RFID capability into a book that still had an ink-stamp showing its first check-out date in 1905.

As a technology reporter, David Cassel has been covering technology for nearly 20 years.
usb sticks w
Thu Mar 21 3:34am
I am looking to be starting my business in the next year or two and will be shipping several bulky items frequently.