When a shipper decides they need to significantly lower their freight spend while maintaining or improving on time deliveries, there are two main paths forward. They can implement a transportation management system (TMS).  Or the shipper outsource transportation planning and execution to a 3PL; This is a managed transportation services (MTS) engagement.

A 3PL white label strategy involves buying software solutions – like TMS – from leading providers, but then giving this solution their own branded name, leaving the implication that they developed the solution themselves. A TMS is a critical application if a 3PL wants to provide robust managed transportation services. Here are some examples of 3PLs providing managed transportation services, what they call their technology, and the true supplier of that solution.

3PL White Label Name TMS Provider
CLX Logistics Managed Services On the managed services page, they don’t mention the TMS. But analysis of the site as a whole makes it clear their solution is Kewill Transport
DB Schenker SDS Control Tower Services Some client solutions are based upon Oracle Transportation Management (OTM)
DHL/Exel Transportation management solutions; Standardized on Oracle OTM.   Exel mentions that they use a leading TMS, but not who it is. DHL does not mention this.
Ewals Cargo Care/e-Logistics Control Cross Chain Control Center (4C) ORTEC LoadDesigner and Quintiq to provide transportation management capabilities.
Fedex/Genco Genco Managed Transportation They mention they use a leading TMS, but not who. They use MercuryGate’s TMS and Manhattan Transportation Procurement.
Geodis Geodis Flow Management Oracle OTM plus Descartes WinRoute if routing is needed.
Menlo Logistics/ Con-way Menlo Transportation Services Oracle OTM
OHL Transportation Management Mention that they use a “state of the art web-based TMS” but not who it is. It is MercuryGate.
Penske Logistics Penske Transportation Management A mix of OTM, JDA TMS, and proprietary solutions
Ryder Transportation Management Their primary TMS is JDA TMS
Schneider Logistics Transportation Management Oracle OTM

My perspective is that a 3PL can’t possibly internally develop and continue to enhance a TMS solution that will be as robust as the best solutions on the market.

There are exceptions. LeanLogistics, Transplace, and C.H. Robinson TMC all provide both managed transportation services and off the shelf TMS. They are all willing to sell and implement their TMS for customers that would prefer TMS to managed services. Their ability to continue to sell their TMS solutions in a competitive software market is evidence they have developed a mature solution and are continuing to enhance that solution.

A word of warning. The table above is based primarily on the supplier profiles from the last MTS market study that ARC completed at the beginning of last year. We are updating that work again, and will have more updated data on 3PL/TMS relationships when the study is complete.

In conclusion, I believe 3PLs are making a marketing mistake when they white label the software solution used to provide managed services. Logistics executives are increasingly knowledgeable about who the leading TMS suppliers are; in fact, they are usually more familiar with TMS than with MTS.  In most cases, it will be a comfort to potential customers to know their 3PL is using a robust off the shelf solution that is not going away.

uber_ice_creamUber is at it again. With the crowdsourced livery service growing, and facing scrutiny and regulatory issues, the company is branching out again. Much like last year, Uber is offering ice cream day today, July 24th. While hours and prices vary by country, state, or city, the gist is that instead of ordering a ride, you can order ice cream to your door. The promotion is taking place in 252 cities across 57 countries on 6 continents. If you don’t like ice cream, and you live in Singapore or Malaysia, you can purchase Xiaomi’s new Mi Note smartphone, and have an Uber driver deliver it to your house instead. It will be interesting to see what Uber does next…

And now, on to the news.

It was a busy week for Descartes Systems Group, as the company announced two acquisitions. The first announcement came on Monday when it announced the acquisition of MK Data Services LLC. MK Data US-based provider of denied party screening trade data and solutions. In addition to doing denied party screening, the solution has intelligent search functionality.  This means that even if you spell the name of a company slightly wrong, or abbreviate, it will still flag the partner as someone that perhaps you should not do business with.  Denied party screening can do transaction by transaction, or you can do a batch download and clean up your CRM.

Descartes then announced the acquisition of BearWare, Inc. This company is a US-based provider of mobile solutions to improve collaboration between retailers and their logistics service providers. The system scans cartons at each point from the DC to the store. This gives complete granularity into merchandise throughout the entire supply chain. For retailers, this means they have more flexibility over replenishment frequencies, making them more agile. For carriers, routes can be more efficient as they have more data for store replenishments. This acquisition will fit with Descartes’ route planning technology.

leatherThe US leather industry has taken a beating as a result of the West Coast port delays. U.S. hide prices are down over 40% as Chinese tanners and others look elsewhere. Leather makers blame gridlock at West Coast ports, which delayed getting their products to market. Hides packed in cargo containers sat waiting stateside for weeks in February and March as the West Coast dockworkers union negotiated a contract with their employers. The industry was dealt another blow when cargo started moving again in the spring, and U.S. hides flooded the market, driving down prices. This shows the results of the port slowdown is still rippling through multiple industries.

pickupSeattle-based start-up, Fleetzen, is offering to solve a major problem of many shoppers. The company is offering a crowd-sourced service to connect consumers with drivers who own a large SUV or pick-up truck. Founded by former Microsoft employees Nirdesh Mittal and Surendra Shetty, the company insists that people who shop at Costco, Ikea or Home Depot are more likely to make an oversized purchase if they can get it home the same day. The startup plans to expand from Seattle to other West Coast cities over the next year, with a service that promises arrival times within an hour. The cost will be about $50 for loads that take about 30 minutes to deliver.

Macys deliveryMacy’s is expanding same-day delivery to several new US markets. Currently, the company offers same day delivery in eight markets. Macy’s utilizes a partnership with Deliv, a crowd-sourced fleet of drivers that pick-up online orders from stores and deliver them to the customer. The driver behind the move is to keep up with Amazon, and their same-day delivery service which currently operates in 14 markets. Macy’s sees one distinct advantage it has over Amazon – 886 stores to source items from against 50 fulfillment centers.

walmart storeWal-Mart is making changes to approximately 40 of its 24-hour super centers in Philadelphia, New Jersey, and Maryland. Traditionally, these stores have been open day and night. Now, however, the stores will close for at least a few hours every night to allow store associates to re-stock shelves and organize stores in time for peak shopping hours. This move allows the company to get a better idea of actual on-hand inventory as well, which will aid in its omni-channel initiatives. By organizing the store, and re-stocking shelves, online inventory availability will better match actual physical inventory in the store, making for a better customer experience.

And finally, the availability of truckload freight on the spot market remained in a lull during the week ending July 18, reports DAT Solutions. The average rate for vans dropped 2 cents to $1.85 per mile last week as van load availability fell 15%. The van load-to-truck ratio slid to 1.7 loads per truck, meaning there were 1.7 available van loads for every truck posted on the DAT network—a 16% decline. Average spot van rates were down in key markets across much of the country.

That’s it for the news this week. Enjoy the weekend and today’s song of the week, Young Man Blues by The Who.

Categories This Week in News
Comments (0)

deannaRansomIn the volatile and ever changing domestic transportation market in N. America, there is a growing need. What is it? It’s simple; it is a need to efficiently and effectively measure, track and monitor the right metrics to better manage, control and optimize costs. It sounds very simple, but in truth there are complexities.

Complexities such as:

  • What exactly am I spending today?
  • Who exactly are my best carriers and how can I work with them better?
  • How effective is my current transportation strategy and where am I missing the mark?
  • What are the right things to measure to really understand where my transportation strategy is today while getting insight into where it needs to be?

These complexities underscore a mounting concern faced by logistics executives to balance the competing pressures of both cost and service in today’s end to end supply chain. When looking at the pressure around finding this balance, two elements have been highlighted in our conversations with executives as the top two pressures. The first is fuel cost and volatility while under the pressure to compete. The second is a heightened awareness of the general cost and service impact transportation overall has on the business as a whole.

The external pressure of fuel costs and volatility may leave many executives feeling somewhat limited in terms of their ability to control or impact that variant. Combine that feeling with the sensitivity of the general bottom line cost impact to the business and you have a recipe for losing a good night’s sleep. Let’s take a closer look at what to measure and a simple action item that could shift this dynamic at your company.

Here are five key metrics to monitor, benchmark and optimize transportation spend for your business:

  1. Change in baseline freight spend year over year?
  2. What percentage of your carriers are compliant in contract?
  3. What percentage of your carriers are meeting their service level and routing compliance needs?
  4. What is your average time to process and pay a freight invoice?
  5. What percentage of your transportation invoices are currently audited?

By simply beginning to review and monitor these five KPIs, your company will be well on the way to not only optimizing costs, but to better understanding the variable influences and fluctuations of your transportation costs. You will begin to get a clear picture of where the real weaknesses are and which of your carriers are the best partners of your Supply Chain.

However, by utilizing dock scheduling, shippers can reduce carrier wait time and accidents while increasing visibility and optimizing resource planning. I’d like to share a deeper look at the role that dock scheduling plays in not only optimizing costs, but also in automating business. Long waiting times for pick-up and delivery are costing U.S. shippers, carriers and consumers millions of dollars every year. Prior to 2013, truck drivers were allowed to work 82 hours a week. Federal rules have changed reducing these hours to 70 per week. Drivers can complete no more than 14 hours for any shift and may not drive more than 11 hours during the shift. This dynamic really adds to the pressure felt by the executives to balance an already precarious Supply Chain. Dock Scheduling can uncover and enable efficiencies at the dock, enabling carriers, shippers, 3PL’s, and warehouses to coordinate carrier schedules with load and dock availability. By then utilizing multiple communication channels, the driver is allowed to maximize his 70 hours, enabling the required rest period while still providing delivery in a timely manner.

Using the requirements of the specific dock of delivery, Dock Scheduling enables the warehouse or shipper to stage their loads in order of pick-up or delivery while communicating with the carrier company and the specific driver of any loading dock issues. This level of optimization leads to greater efficiencies which produces substantial results.

All parties are able to seamlessly and effectively communicate throughout the entire process. This enhanced communication and visibility enables a faster close loop process of the entire shipping, delivery and reporting process resulting in:

  • Reduced idle times at loading and unloading by 20 – 40% thus lowering fuels costs
  • Increased loading/unloading productivity by 20% +
  • Clarity in the loading-unloading process
  • Decrease of transportation’s overall impact on the business

The key takeaway is to understand what to measure and monitor, understand their influences on your transportation costs and to take action by moving forward with the visibility and automated collaborative insights that Dock Scheduling can bring to your company. Five measures, one step forward with Dock Scheduling and your business will be on the way to experiencing significant spend optimization like TRANSPOREON Group customers, Vinnolit, Swiss Steel and more.

 

Deanna Ransom is a 20 yr. technology veteran with a diverse background in marketing, sales, tele and project management, including the positioning and branding of solutions like ERP, Business Intelligence, Analytics, Predictive Analytics, Big Data, Cloud, Governance, Risk and Compliance, Business Performance Management and Global Trade Services.  She has spent the last 7 years of her career at the #25 Global Brand creating strategies for solution positioning and demand generation across multiple portfolios in addition to serving as the President of the Philadelphia Chapter of the National Association of Professional Women which boasts a membership of over 900+ seasoned and accomplished professional women. Now the TRANSPOREON Group Director of Marketing for N. America, Deanna continues to pioneer innovation and transformation in integrated programming while instilling and building leadership in others as a member of the prestigious John Maxwell Leadership Team.  She holds a Bachelor’s, a Master’s and has a certification in Executive Leadership from Cornell University.

 

The Pacific Rim trade deal, formally known as the Trans Pacific Partnership (TPP), obtained a great deal of media coverage in June as Congress debated legislation aimed at providing the President with “fast-track” approval authority. The intensity surrounding debates and opinions led me to believe that this proposed multi-lateral trade agreement would soon come to fruition. Not even close.

Source: Office of the US Trade Representative

Source: Office of the US Trade Representative

Examining the Details?
Logistics is inexorably linked to international trade. At ARC, we conduct research on logistics processes and technologies that directly support international supply chains. Some of the technologies include global trade management (GTM) systems, transportation management systems (TMS), and supply chain planning and network design tools. Due to the potential impact of this trade deal on these markets, I decided to dig deeper into the details to obtain insight into the imminent changes slated to occur. The scope and structure of the agreement are available on The Office of the US Trade Representative for those interested in viewing the agreement framework. However, obtaining specific details on the proposals is proving to be more difficult. Although details are not yet available, there are some features worth noting.

Reduction of Trade Barriers and Development of International Supply Chains
The TPP participating countries are working to eliminate many of the tariffs placed on each other’s exports. This will serve as an important step toward increased integration of multi-national supply chains through the reduction in government imposed competitive barriers. Examples of current tariffs outlined on USTR.gov include a 27 percent Vietnamese tariff on US made auto parts, a 40 percent tariff on poultry entering Malaysia, and tariffs from a number of countries on US made textiles.  The removal of government duties such as these is likely to make customs management less complex for companies and will also shift the competitive landscape toward those with comparative advantages and increase international trade volumes. The increase in global trade is likely to increase international sourcing, extend production lead times, and increase demand for supply chain visibility solutions that provide insight into upstream supply chain events and status changes.

Rules of Origin
The elimination of tariffs between TPP countries opens the opportunity for non-participating countries to use TPP countries as a transshipment intermediary, or a “pass through” to avoid tariffs and duties. To assure compliance, the TPP countries are looking to develop a common set of rules of origin to determine whether or not a given product or item originates within the TPP region, and therefore qualifies for preferential treatment.  It is questionable how quickly these rules will be developed, as the WTO harmonization program was originally expected to be completed in 1998, but is still ongoing due to unforeseen complexities.  However, specific rules such as the yarn forward rule of origin is being proposed to assure that only properly sourced items will receive the preferential duty treatment. The complexity of the rules of origin and ongoing updates to the agreement will assure that item classification software will remain a critical application for those companies that produce complex products and engage in substantial international trade activities.

Intellectual Property Rights
The World Economic Forum publishes an annual global competitiveness report leveraging its Global Competitiveness Index (GCI). The Index categorizes the most advances economies to be those driven by innovation. It should therefore be no surprise that the US is seeking strong intellectual property rights and protections to be included in the TPP. Patent, copyright, and trademark infringements are major concerns for companies that invest heavily in research and development. Increased protections will help alleviate theft and counterfeiting concerns and encourage additional investment in product innovation. Pharmaceutical IP provisions are specifically mentioned as an area of focus for the US. Also noted is US-Japan bilateral negotiations on motor vehicle trade, IP rights, and phased out US tariffs on Japanese automotive products.

Conclusion
The Trans Pacific Partnership is still a deal in the making. It is a complex, multi-lateral negotiation that is likely to hit a number of speed bumps going forward. Reduction of trade barriers, standardization of processes, and international supply chain integration are all key tenets of the proposed agreement. NAFTA trade flows increased from $290 billion in 1993 to over $1.1 trillion in 2012 (about 7 percent CAGR by my calculation). If NAFTA trade flows are an accurate barometer, then the TPP shows promise to propel pacific trade forward at a rapid pace.

Categories Global Trade, Logistics Trends
Comments (0)

Growing practice of supply chain modeling requires more than just technology smarts

John Ames JrWhat types of supply chain roles are on your company’s career webpage? What skills are important for new hires to possess in order to manage this increasingly critical area of the business? Many of the best practices LLamasoft has advocated related to supply chain design as a repeatable, sustainable process within the business have been highlighted in a recent article, Companies See ‘Massive Shift’ in Search for Supply Chain Talent, Wall Street Journal, May 22nd, 2015, Loretta Chao. Here are a couple of examples.

You can’t hire just anyone to be a supply chain design analyst. In the article Chao states that, “Industry experts say an understanding of technology and an ability to work in a global environment are increasingly important in the supply chain, forcing managers to look for people with a rare mix of specialized skills to manage this crucial aspect of their business.” The large global businesses we work with every day are attesting to the importance of the people and process aspects of developing supply chain design teams. The people side of supply chain design cannot be underestimated, and that means you can’t put just anybody into the role of supply chain analyst. Unlike execution systems, you can’t rely on a software system to simply “give you an answer”.  Leading businesses understand that, with a given set of inputs and distributions there could be a range of outputs that business leaders will review and then decide on the best course of action at the time.

LLamasoft PeopleProceessTech

Analyzing the supply chain requires more than just technology savvy. Developing analytical skills and the ability to understand the growing complexity and interdependencies of cost, service, risk, capacity, tax and demand make the analysis of the end to end supply chain a demanding position and one that needs constant development.

Chao also cites the huge volume of global enterprise data businesses are generating which is both an enabler of more detailed and accurate analyses and a potential pitfall if not managed and understood. Working with some of the world’s most complex supply chains has driven LLamasoft to develop demand classification, inventory optimization and simulation technologies that can incorporate large data sets and include end to end modeling of SKU level flows to understand inventory stocking levels.

Retailers developing an omni-channel distribution strategy are incorporating simulation of digital consumption replenishment processes in order to understand how the continuing shift of digital demand with options of store fulfillment processes can best be designed.

Supply chain design should be a top-down, executive-driven process. Large enterprises are consolidating the formerly independent functions of procurement and logistics and creating broader supply chain executive functions and responsibility. In order to have the greatest impact on the business, supply chain design must be a top-down, executive-driven process with leadership that understand the importance of creating a repeatable design process that is linked to business value and goals. Supply chain design is the third discipline required for supply chain management, sitting alongside planning and execution but requiring different skills, technologies, and processes.

Supply chain leadership should have end-to-end supply chain view for greatest benefit potential. Supply chain design has always been about understanding the end-to-end supply chain and trade-offs among competing metrics: efficiency versus flexibility, cost versus service, local versus global, off-shore versus near-shore, etc. Businesses need to have a team that owns the end-to-end supply chain or they end up creating functional islands and run the risk of missing opportunities for cost savings and efficiency improvements that can only be recognized when viewing the holistic supply chain.

Finally, building a supply chain design center of excellence (COE) has, as one of its driving values, to break the barriers of decisions made in isolation.  Companies that develop these global teams end up developing a more holistic view of the company that can drive out costs and inefficiencies so often seen in departmentalized companies.

Wrapping it up
In short, be aware that it may become more challenging to recruit the right analysts, but don’t hire just anyone who has the right degree. Successful team members should be effective problem solvers—people who think analytically and are natural researchers and implementers of new processes. The growing practice of supply chain design has at its core a view and consideration of the end-to-end supply chain picture, and as such should staff and recruit talent equipped with this holistic perspective as a way to achieve business goals.

 

John Ames is Senior Vice President of Customer Success at LLamasoft. John’s career in supply chain has spanned over 15 years and his expertise spans across numerous technologies including demand planning, inventory optimization, finite capacity scheduling, product lifecycle management, and network design. John has worked with both large and small consultancies to craft partnerships that best serve the end client to deliver best in-class solutions for strategic supply chain analysis. He received his MBA at Northwestern’s JL Kellogg graduate school of management and received his BBA in marketing at Stephen F. Austin State University.