The Shipper Project Overview
In Chapter 3 of my book, Pull, I describe the opportunity for a number of parcel shippers to come together and build a new set of independent standards for the shipping industry. My goal is to provide a forum in which companies that ship a lot of parcels can come together and work with a nonprofit called GS1 to define those standards.
The problem: There are essentially 3 carriers in the US today: UPS, FedEx, and USPS (DHL, which purchased Airborne in 2003, stopped domestic service in 2008). Each of these organizations has its own set of codes, bar codes, and data formats. The data is in all the carriers’ systems, but it doesn’t flow from one system to another. Because everything about the flow of information is proprietary, shippers (companies that ship parcels) need to integrate their systems with those of the carriers they use. Because this is a HUGE IT expense, most large shippers just go with one carrier on a contract basis. The marketing term for this is vendor lock-in. Carriers spend a lot of money to woo clients, get the account, and then make sure everything is as complicated and proprietary as possible, to provide a barrier to entry for competitors.
That was fine for the 20th century. But in the 21st century, that’s not going to work. We don’t need to reinvent the wheel. We just need to define common formats and force the carriers to switch to them. These common formats should be backwards compatible, so it’s easy for each carrier to adopt them. Rather than try to translate between systems, we’ll develop a canonical shipping language that everyone can translate to, and then eventually phase out the old standards as the new ones take hold. Here’s how it works:
Once we reach the final phase, where the data and messaging formats are integrated into all systems, the magic happens:
- Both shippers and carriers spend a LOT less on IT.
- Shippers can easily choose the best carrier for each part of the route and combine carriers for more efficiency.
- Software can determine the best combination of choices for a given route and send a package on its way automatically.
- The recipient controls the delivery of any package. For example, if a recipient needs to return the item or expedite it even before it arrives, she can.
- ALL shippers get the same full-strength software the big companies have, no matter what size they are.
- Shippers can move to ASP software that runs in a browser from anywhere, giving everyone full system control even from a mobile phone without installing or maintaining software.
- New mash-ups of data and messages can start to use this infrastructure in novel ways to solve problems better. Factories and retailers can carry less inventory because they can control the flow of goods in.
- Everyone saves money. I wouldn’t be surprised if the carriers ended up being more profitable this way, since they can stop reinventing the wheel all the time.
- Packages spend less time waiting on the dock or in a distribution center.
- The environment benefits from more efficient movement of packages.
Recently, FedEx announced its SenseAware system, which can send you real-time information about your package as it travels to you. That’s a start. But if each carrier implements this functionality separately, the semantic Tower of Babel will only get taller. Using common formats we can open a new era in shipping, where people can invent and implement solutions easily and cheaply, and the pace of evolution in the industry will increase to meet the ever-changing needs of shippers and their customers.
To do this, shippers will have to band together and insist on a new set of common standards. At the moment, the carriers have their customers locked in, the old fashioned way. But if we harness the power of the Parcel Shippers’ Association, the experts at Parcel Magazine, GS1, The Open Applications Group, and others, we can turn the tables and start to make this industry work for customers, not vendors.
Keep in mind this is a $150 billion industry. I can only imagine that through better use of information this group of companies could collaborate, rather than compete, save at least $20, maybe as much as $40 billion, and provide better service. That’s what the pull paradigm is all about.
For more, see our pages on the shipper project.
ATTENTION SHIPPERS! If you are interested in helping spearhead this project, I need all the help I can get! I’ll provide the forum and connections, you help provide the energy and direction. I need help gathering supporters. Please contact me if you can help or have any ideas. The right people are out there – we just need to get them all into one web site.