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Comment: "The Logistics Imperative" - American Association of Railroad Superintendents to discuss 'L' word at upcoming annual meeting, by Frank Richter


Transportation has a new rallying cry in the term "logistics." And that goes for the railroads, too. In many respects, logistics can be looked upon as bringing together the full spectrum of any company's activities starting with a raw material and all the way through to the end product being put to use. It puts even greater emphasis on transportation as the supply chain that connects the links. In many respects, that means the railroad — and, more important, the scheduled railroad.

That has prompted the railroad superintendents to bring logistics up front and center at the forthcoming annual meeting of the American Association of Railroad Superintendents, which will include a special panel: "Logistics and the Scheduled Railroad."

But why connect logistics with the scheduled railroad? That's because no matter what kind of commodity is involved, the scheduled railroad has become a more critical part of the very fortunes of practically every railroad. In that sense, logistics — as it has come to be today — can be looked on as the new catalyst that brings railroad and customer closer to one another than ever before.

Look upon it as ongoing imperatives that have been around for a long time, but by different handles, and now have become components of logistics. They still have their own brand of specialties: procurement, materials management, inventory, warehousing, distribution and traffic management.

Railroads approached the advent of logistics differently. Most felt pretty well served by their freight sales contacts with shipper company freight managers.

"Marketing" also was beginning to surface as logistics was just over the horizon. Yet, for many shippers, their production, inventory and warehousing had complex and often costly elasticity. In fact, it was the historic industrial engineering time-and-motion studies that took Deming to the just-in-time, all-the-time dynamics that made him famous. For many companies, the transport links began to get critical attention as supply-chain connectors, but also as inventory carriers.

Jump from that to the computer/communications revolution and its quantum growth in timing, tracing, evaluating and control. That in itself brought on specialist logistics companies, including the present plethora of logistic Internet companies. Those newly formed Internet offshoots of the logistic imperative have had growing pains of their own.

On the logistics side, the Council of Logistics Management and other such organizations have clarified and pointed up overall progress and that of specialists that also have emerged. Many companies also have seen fit to unify the basic elements — or imperatives — as a special corporate function with its own part of the whole in terms of cost (including transportation), efficiency/reliability (including transportation) and customer orientation.

And wouldn't you know, the commercial and financial world also has been introduced to a new appraisal index of the cost of logistics as a percentage of total corporate costs and profitability. And the railroads haven't been far behind, drawing on their own communications/computer advances to generate new measures of efficiency, as car on line, empty/load ratios of cars and time-attuned car turnover.

Lacking here as a railroad logistic imperative is a more concerted and unified effort to bring on the scheduled railroad. It came close when advanced train control started out as a mission, followed by interline service management and electronic data interchange, real-time information management and the new world of data transmission getting the printed word on the moving train.

The Internet services that have emerged to track shipments in real time in itself puts a sharper edge on scheduled transport service and hewing to it. Other disciplines have emerged that can help in advancing the elements of rail service in the supply chain. But the scheduled railroad gets to the heart of it with its own imperatives of reliability, more efficient exception management and better ability to quickly respond to change in daily operations.

It also is well to note that logisticians are paying a lot more attention to supply-chain management — which leads directly to the importance of the scheduled railroad in the same framework. And when that happens, the operating manager has the pivotal role and responsibility in seeing to it that the scheduled railroad is an actuality 24 hours a day, seven days a week.

That's a mighty chunk of the logistic imperative for the Superintendents to work on with their special panel.

Frank Richter, co-founder of Progressive Railroading, remains a highly interested observer of the railroad industry. He can be reached at Franzjrichter@aol.com.