© 2008 Smart Business Network Inc. Reprinted from the January issue of Smart Business Chicago.

Insights Logistics

Insights Logistics is brought to you by AIT Worldwide Logistics, Inc.

C onventional wisdom once held that in the process of logistics, finance processes and supply chain manage-

ment consisted of two separate entities.While one controlled tracking and tracingfunctions and the movement of product,the other was responsible for oversee-ing the organization’s day-to-day transac-tional activity and bottom-line financialprocedures.

However, because of advances in tech-nology and the innovation and integrationof financial management processes, themetrics and landscape of that relationshiphave been redefined in recent years.

“The antiquated and archaic ‘paper-push-ing’ processes of the industry have beeneliminated, bridging the gap between chan-nels of distribution and finance in recentyears,” says Joe Kayser, vice president offinance for AIT Worldwide Logistics. “Theindustry’s maturation from paper to elec-tronic, coupled with the effective imple-mentation of forward-thinking ideas, hasdynamically transformed the ways inwhich flows of capital and data are bothreported and analyzed at every point alongthe global supply chain.”

Smart Business asked Kayser to discussthe collaboration between finance and thesupply chain in today’s logistics businessenvironment.

What’s the role of financial management sys-tems in streamlining financial businessprocesses?

There are several end-to-end businessprocesses involved in making sound finan-cial transactions along the global logisticspipeline — invoicing, creating purchaseorders, processing payment, for starters —making it absolutely critical to foster anefficient financial environment providingcustomers with a ‘one-stop shop’ for theirglobal trade and finance needs.

Financial settlements are integrated intoall aspects of a logistics organization —beginning with the quoting process in cus-tomer service. When your company aver-ages tens of thousands of shipments permonth, each attached to approximately sixor seven different transactions, you need areliable system in place to accurately and

efficiently extract and integrate your orga-nization’s data flow. Streamlining theseoperational and financial processes intoone comprehensive system has resulted intremendous gains in job efficiencies, cost-saving opportunities and profit potentialfor logistics organizations.

Technological advances, such as opticalcharacter recognition scanning software,have facilitated this process by takingredundant tasks and automating them, vir-tually eliminating manual data entry andcovering every step of invoice processing,from capture to post.

You’ll have reporting discrepancies todayand you’ll have them tomorrow, but auto-mated systems absolutely keep your com-pany’s inefficiencies to a minimum.

In light of the economic downturn, how doesa logistics organization best deal with post-poned or negligent payments?

The current credit crisis is just that — acrisis. Whether involving setting stricterbudgets, altering your company’s financialforecasting or finding additional cost-cut-ting measures, our industry is obviously

going to be impacted by the current finan-cial state of the economy.

Luckily, logistics providers are increasing-ly challenging that ‘ship now, pay later’ men-tality in order to protect the best interestand assets of their organization while elimi-nating disputes before they can materialize.

For example, at AIT, we have implement-ed a rather dynamic process through afunction called the Agent Service Center.All financial charges and terms are settledupfront through the electronic system ofchecks and balances. Since the partnerswe select for this system have to gothrough a rigorous qualification process,including everything from credit history toindustry reputation and our own experi-ence with them, they are held financiallyaccountable for the service they provide.

Because these relationships are ascribedby trust, we don’t shut down our businesswith them at the first sign of a postponedpayment — instead, we work with themtoward setting reasonable and realisticexpectations and timelines.

What are the necessary factors in buildingsuccessful financial relationships with ven-dors, partners and customers?

Communication is a critical componentin building relationships with your networkof partners — after all, a delay in paymentis no different than a delay with a ship-ment. Both situations require immediateattention and an urgent resolution.

We are the so-called ‘number crunchers’of the organization. But as with any otherjob in any other industry, it’s the intangibleattributes that truly drive success: innova-tion, customer service, interpersonal effec-tiveness, teamwork, and organizing andplanning are all at the core of finance.

Systems can only take you so far.Without a talented team in place to strikethat delicate balance between payablesand receivables, your service can suffer.Ultimately, the financial flow of your busi-ness is only as successful as the peoplewho analyze it. <<

Joe KayserVice president of financeAIT Worldwide Logistics, Inc.

JOE KAYSER is vice president of finance for AIT Worldwide Logistics, Inc., headquartered in Itasca, Ill. Spanning numerous nationwide

locations and an ever-increasing network of international partnerships, the global transportation and logistics provider delivers tailored

solutions for a wide variety of vertical markets and industries. Reach him at jkayser@aitworldwide.com or (800) 669-4AIT (4248).

Redefining a fundamental supply chain relationship

Freight and finance