Logistics: Less muscle power, more technological savvy

Occasionally at a party, TechniPak LLC President Mark Scheidt will find himself trying to explain what his logistics company does. Finally his listener will nod and say, "Oh, you're just a warehouse that ships products."

Scheidt smiles: If it were only that simple.

Logistics companies, which manage the flow of goods from supplier to consumer, are tech-savvy operations that rely more on computer chips than muscle to manage, track and move products.

"The backend technology is just amazing," Scheidt says.

Advanced logistics companies such as TechniPak are among the targets of economic development efforts in northern Nevada.

Supply chain management systems now are Web-based, so customers and logistics managers can track everything in real time from anywhere from the moment an order is placed, to its time in the distribution center, through transport, and for overseas shipping, through customs and finally to its destination.

Heightened visibility is one of the greatest products of technology innovation.

Most logistics providers, such as Leach Logistics in Sun Valley, do business with companies all over the world. Before shipping raw materials to Leach's Nevada facility, a customer in India can log onto the logistics provider's system and view exactly how much of his product is at the distribution center and where it is in processing, President Greg Leach says. Besides warehousing, order fulfillment, packaging and transportation services, Leach Logistics provides milling and processing for food companies. Fine-tuned tracking systems are especially important for food products, and the technology has grown more sophisticated due in part to concerns about bioterrorism.

Thanks to satellite technology on truck trailers and ships, goods also can be tracked while in transit, whether they're on a truck rumbling through the Sierras on Interstate 80 or on a ship docking at a port in China.

Today products move faster and more efficiently through the supply chain with far fewer errors, says John Peddie, senior vice president, warehouse operations, for OHL. The global logistics provider, headquartered in the Nashville area, has 26 million square feet of warehouse space in the United States and more than 1 million square feet of warehouse space in four buildings in Sparks. Just from Sparks, OHL ships an astounding 15,000 orders a day to places all over the world. Products include coffee, books, medical supplies, food products and more.

When goods arrive at the distribution centers, Peddie says, "Our system knows where to place the product, and if the primary location is full, the system has a backup."

Everything is tagged, scanned and recorded electronically, Leach says, and the warehouse management system knows the location of each item, from bottles of salad dressing to board game pieces.

Even pallets are going high-tech. OHL and other providers use RFID Radio Frequency Identification on pallets when requested by customers. The RFID paper labels include tiny computer chips that store information for supply-chain management in distribution centers and inventory control in retail stores. So far, RFID tagging on pallets and cases hasn't taken off as much as some in the industry had projected, Peddie says. Wal-Mart is still among the only retailers mandating its use by suppliers.

Technology also allows logistics companies to manage carrier capacity against shipper supply-chain demands to reduce costs and improve cargo flows for clients, as well as ensure customers adhere to global compliance requirements, says Russ Romine, president of Griffin Transport Services Inc. The Reno-headquartered company provides transportation, warehousing, supply-chain management and customs brokerage services through facilities here and in San Francisco and Los Angeles.

"We expect our technology to do most of the work, allowing our staff to focus on problem solving and service," he says.

Griffin is working on enhancing its online technology to allow for more remote management tools and customized solutions that let customers integrate Griffin electronically with their other trading partners. The company works with a client in San Jose, for instance, that sells technology products manufactured by U.S. and foreign vendors. To manage distribution remotely, Griffin worked with all the partners to set up a secure Web environment, allowing orders to pass simultaneously from the client to Griffin and to the manufacturers.

Once orders are built, manufacturers retrieve the order information and shipping instructions through a secure Web site and process the orders, with the information visible for tracking and delivery.

"From Reno we can centralize the management of global shipping from multiple origins," he says.

Big companies like OHL have robust internal IT staffs.

"We can work with any type of system anybody has," Peddie says. "There's not much we haven't been exposed to."

For smaller players the challenges are getting the funding for technology and choosing the right people to provide guidance, Romine says.

TechniPak, which opened a Sparks distribution center in August, was started 10 years ago with basic, inexpensive technology and grew slowly without incurring any debt, Scheidt says. The company went to a Web-based inventory management system four years ago and invested in custom software that allows it to integrate with any of the 200-some online shopping cart systems in the e-commerce universe.

Another challenge is to ensure the technology is easy to use, even as it grows more sophisticated. "You want every process to be like, push a button, get a banana. It has to be that simple," Scheidt says.

TechniPak provides order fulfillment, distribution and call center services for retail and business-to-business customers. Today the company ships products to 125 countries every week.

The next steps in logistics technology? Peddie sees room for improvement in how technology manages labor and inventory. He says technology will play a greater role in managing workforce production to get the maximum benefit out of employees' time.