There’s a revolution going on. Headlines are saying it. Shippers are experiencing it. And your business is likely being affected by it, in ways both large and small.
Technology is empowering consumers to purchase an unimaginable range of goods through their computers and smartphones. Amazon, Walmart and other shippers are already seemingly light-years ahead of their supply chain peers in exploiting this trend and preparing for whatever comes next.
At the very center of this maelstrom is technology or, more precisely, the way it has embedded itself within our lives.
And, as with most revolutions, this one is making many participants uncomfortable. How, for example, do businesses maintain focus on their daily operational strategies when the very nature of commerce is changing all around them? How does a transportation services provider mitigate the impact of continuing disruption? Should it become a disrupter in its own right?
And, perhaps most important, how can supply chain businesses make sense of the dizzying array of new technologies available to help move their businesses forward in such a tumultuous marketplace?
“In today’s business environment – where we’re inundated with news about Amazon or Walmart’s latest strategy – it’s easy to get distracted from the fundamentals of your transportation business, especially when it comes to technology,” said Ray West, Senior Vice President and General Manager, TMS solutions for TMW Systems. “A central part of our responsibility as a technology provider is to help customers separate those ‘shiny new things’ from solutions that can help our customers improve operational performance and competitiveness.”
Measuring Business Value
“Shiny new things” can indeed be distracting in an age when delivery drones, driverless vehicles and other potential game-changers are on the horizon. More often, however, the need for new solutions is driven by rising customer expectations, according to Kyle Johnson, Chief Financial Officer for Leonard’s Express, a Farmington N.Y.-based provider of truckload, LTL, refrigerated, flatbed, intermodal, warehousing, distribution and other services.
“Shippers are demanding that we supply more and more data on every load,” he said. “My chief concern is how do we control that flow of information so we’re able to provide what they need without giving up our secret sauce?
“We will continue to invest in technology to better serve our customers, but those investments also have to provide tangible value for our own business.”
As a leading regional food carrier, Leonard’s followed this blueprint with its recent investment in trailer-based telematics needed to comply with the U.S. Food Safety Modernization Act. The business also has invested in freight visibility and electronic imaging and will soon integrate a business intelligence platform into its TMS.
“We don’t have a formal process for (investing in technology), but everything begins with identifying the business need,” Johnson explained. “We look at what opportunities the new capability could bring us and whether it can be a value-add for our customers. And we look at what it can do to our bottom line – how many claims, for example, will it help us avoid per year?”
Visibility solutions rank high on the list of technology investments for many transportation businesses, reflecting the impact of e-commerce and shrinking inventories within the North American supply chain. It’s no longer enough simply to know when a load is picked up and delivered; shippers and, increasingly, consumers, want to know where it exists, in real time, at every step of the transportation lifecycle.
Better Decisions, Faster
Carriers, brokers and 3PLs are also increasingly looking to business intelligence solutions to help identify strategic opportunities and make faster, smarter decisions. BI tools offered through SaaS architecture are bringing the power of advanced analytics to a much larger audience of prospective users, according to Tim Leonard, Executive Vice President of Technology for TMW.
“The ‘democratization’ of data is helping to level the playing field for small and mid-size businesses in many industries, including the transportation industry,” he said. “Our customers’ businesses generate massive volumes of data, and it is imperative that they leverage that information to unlock ways to operate more efficiently and profitably.”
While Big Dataand the ultimate promise of predictive analytics is becoming a transformational tool for many businesses, the most effective approach is to target and achieve incremental wins that enhance business performance. That’s the intent at Leonard’s Express, according to Kyle Johnson: “We’ve gotten to the size and complexity where if we can’t make good decisions quickly, it will start costing us money,” he said. “It’s a logical step in our overall technology strategy.”
Final Mile of Opportunity
While seemingly everyone is talking about the fundamental changes in the global supply chain, one small link in that chain – the final mile – is garnering a lion’s share of the attention.
The volume of parcel and other last mile/final mile deliveries is likely to double – to some 25 billion packages – over the next decade, according to McKinsey & Company. Considering that the final mile commonly represents up to 50 percent of total transportation cost, it’s no surprise that a growing number of carriers are establishing local delivery capabilities. Yet, this opportunity requires specialized equipment and technologies – particularly as traditional transportation service providers confront the emerging realities of crowd-sourced/on-demand courier solutions such as Uber.
The key, many say, is to accept and manage through the inherent complexity of final mile logistics – and this complexity and the opportunity to provide differentiated services are the transportation industry’s greatest advantage.
“One of the things that’s really important to us is offering customized solutions,” explained Ashley Fox, Director of Technology and Financial Administration for the Customized Solutions Group (CSG) of A. Duie Pyle, a diversified transportation services provider. Technology has played a key role in Pyle’s ever-expanding capabilities, including its Express Solutions final mile operation. The company relies on a software routing and scheduling solution not only for its local delivery operations but to help optimize a broader range of CSG routes, all with the goal of helping customers reduce freight spend.
Optimizing from Within
With analysts and media outlets warning of an impending “technological tsunami” brought on by the achievements of Amazon, Walmart and other shippers, many transportation industry professionals might be looking for a silver bullet – a single transformational strategy to inoculate them from the seismic changes taking place. But TMW’s West and others urge these players not to overlook the many opportunities that exist within their current operations.
“Optimizing the core transportation functions is still the key to success,” West said. “Regardless of the headlines, the real trend has been the shift from long-haul trucking to short-run LTL. Also, moving freight to DCs, freight coming in as containers from overseas and rail’s increased ability to handle containers – each of these realities is manageable with the right strategies and technology solutions.”
West also pointed to emerging driver management strategies, including running relays and offering hourly pay, as opportunities to enhance efficiency and competitiveness. These changes, too, are enabled through modern technologies, he said.
Many of these solutions offer comparatively fast ROI, as well. Kyle Johnson of Leonard’s Express looks at such opportunities as “no brainers. If a technology will pay for itself within 12 months, we’ll do it,” he said.
Reducing fuel expense – well beyond the savings of network discounts – is one example of the “low hanging fruit” available to many carriers. Implementing freight network engineering, enhanced load planning, exception monitoring and other capabilities are helping truckload carriers and others achieve significant savings on a year-to-year basis.Fleet maintenance operations are ripe for optimization, as well, particularly in areas such as warranty recovery, inventory management, labor costs and facility scheduling. Advanced maintenance management solutions are now even available via the cloud to help extend these savings to smaller fleets.3PLs and brokers are more often focused on automating back-office operations – particularly in finding and booking capacity, according to Robert Voltmann, CEO and President of the Transportation Intermediaries Association. “3PLs in general are technology adopters, so at a time where we are experiencing compressed margins due to relatively slow economic growth, you will see them invest in technologies that help reduce overhead.”
Eye on the Ball
Revolutions are noisy. They’re distracting. And becoming distracted is risky in today’s transportation environment. But given all the “shiny new things” being deployed by mega e-tailers and other shippers, how can you chart a logical technology path that will both move your business forward and maximize the value of every dollar invested?
Turn to a leading, fully integrated technology partner. Challenge them to craft a roadmap that addresses your competitive situation. Count on them to help you separate fact from fiction and demonstrate how each prospective investment will pay you back. Expect them to help steer you away from investments they consider unwise. Look for them to expand their own solutions portfolio to help you build bridges to the future.
“A good analogy for an effective technology relationship is the pitcher and catcher in Major League Baseball,” said TMW’s Ray West. “There might be all kinds of crowd noise and pressure, but the catcher’s job is to help his teammate stay focused and play to his strengths against every batter.
“If you can block out those distractions and depend on a partner with a proven record of success and financial commitment, you’re in a much better place.”
Let TMW help you through the revolution in progress, contact us.