When e-logistics and e-procurement technologies entered the marketplace a few years ago, they did so amidst great fanfare and high expectations. Since that time, the excitement has cooled down a bit, and a number of the early players have fallen by the wayside. But those remaining have learned much from those early experiences. The e-logistics and e-procurement solutions that have emerged today are more driven by customer demands rather than technological glitz. Here's what's new in these two areas.

Those public exchanges, initially set up to provide shippers a place to locate carriers and electronically schedule shipments, have seen a significant shakeout. Shippers were uncomfortable about using unknown carriers, preferring to remain with their core carriers except for the occasional "offline" load. Carriers were equally uncomfortable, realizing that they would have to bid for business in ways that would further erode their already thin margins. "As a result, there is a lot of consolidation taking place in the industry," reports Chris Newton, a senior analyst with AMR Research (www.amrresearch.com). "This doesn't mean the area is not legitimate. It just means that a lot of companies who went after this business didn't really understand transportation issues."

Since that time, most exchange providers have transformed themselves to better meet marketplace need. Some have become digital brokers, offering Web-based menus of service options to shippers, allowing them to select from a number of carriers. One such provider is Transportation.com (www.transportation.com). Its Shipment Manager is an online public Internet tool. "Users can view point-to-point where they need to ship products," explains John Norris, a company marketing executive. They can review a list of approximately 500 carriers with which Transportation.com has pre-contracted rates and then conduct their entire transaction online.

Others have shifted from public exchanges to private or semi-private ones, run exclusively for a selected number of shippers and their carriers. These providers offer platforms allowing shippers and carriers to collaborate on the Internet, and many also offer backhaul opportunities. "Shippers want to build and maintain relationships with carriers," explains Matthew Menner of Logistics.com (www.logistics.com). "They want to understand carrier capabilities, work together to increase efficiencies and drive out costs, and have access to real-time information on carrier whereabouts."

Other providers have transformed themselves into application service providers (ASPs), renting software to users online. This allows shippers to gain access to specific applications software using their Web browser, eliminating the need for them to purchase and install the software on their own corporate servers. "A lot of companies are purchasing software packages and services via this hosted model," adds Newton of AMR.

A number of logistics providers are using the Web to enhance the traditional services they offer. A good example is Landstar Logistics (www.landstar.com), which offers a range of transportation services throughout North America. The company has introduced a new Web-tracking feature that allows customers to track the progress of their shipments via multiple means—from office or portable computer to cell phone or pager. Through this feature, shippers can get an updated status of their freight anytime or anywhere—whether they are in the office, on the road, or at home.

As for the future of e-logistics, AMR's Newton expects to see many of the software providers and service providers coming together. "The service providers are the ones with the assets that can actually make the moves," he explains. As such, he sees the convergence of the asset-based and non-asset-based providers. Example: A combined provider may offer a set of transportation management service applications in a hosted model while also providing data services. "In this way, users can rent software from them, have the provider come in and manage its operations using someone else's software, or actually outsource physical moves through the provider," he suggests.

A survey conducted earlier this year by the National Association of Purchasing Management (www.napm.org) and Forrester Research (www.forrester.com) found that 81 percent of companies surveyed used the Internet to identify suppliers, 71 percent purchased at least some indirect materials online, and 45 percent purchased some direct materials online. There's no question that e-procurement is here to stay, but in what form? Like e-logistics, the industry is reinventing itself to more closely meet customer needs.

According to Pierre Mitchell, a research principal with AMR Research, the major focus these days is on the e-sourcing segment of e-procurement, rather than on e-purchasing. e-Sourcing includes all of the activities that lead up to creating the contract for the goods and services you plan to buy. e-Purchasing is the execution of these buys against the contract and includes technology such as electronic catalogs. "e-Sourcing is where the real value is being added today," says Mitchell.

The two major elements of e-sourcing are spending analysis and workflow/negotiation tools. The former focuses on how much you spend, with whom, and on what, so that you can identify the greatest opportunities. The latter focuses on reverse auctions and other tools that support the RFQ leading up to the contract. One provider specializing in e-sourcing is FreeMarkets, Inc. (www.freemarkets.com). In the summer of 2001, the company introduced QuickSource 3.0, an ASP-based product that enables online creation and execution of RFQs, as well as online negotiations.

A second major trend, says Mitchell, sees companies attempting to get out of the indirect material procurement business altogether. "Many of our clients are treating indirect purchasing as a non-core competency," he explains. As such, many of them are outsourcing this activity to third parties. Still others are joining buying groups to gain price reductions.

Technology is also improving the way companies manage inventory. SupplyPro (www.supplypro.com), for example, provides supply chain automation for indirect materials at the point of use with three different products. One is a high-security automated cabinet. Authorized employees swipe their ID cards, then select items by punching a keypad. The items drop down to a door, where they can be retrieved, much like what happens when you purchase snacks at a vending machine. "The technology keeps track of who orders what," says marketing chief Claude Hooton of SupplyPro.

A second option is a supply closet. When a card is swiped, it opens all of the doors, allowing employees to take all of the items they need. "This is a lower security option," he states. The third option is an open shelf bar-coding system. Here, employees push buttons to signal when they are taking items from the shelves. "This option works well when items are too large to be stored in the cabinets and closets," explains Hooton. Common to all three options is automated ordering.

If you are in the market for e-procurement technology, AMR's Mitchell offers the following recommendations. "This is a good time to be a technology buyer because there are a lot of inexpensive options." First, decide what you want your corporate sourcing and purchasing execution process to look like in the long term. Then, determine your appetite for risk. "Some providers may not be around for the long term," he cautions. Finally, select a provider that is aligned with where you want to go in the future.