I’ve written a lot about transportation procurement over the past year (see here, and here, and here). The reason is simple: due to favorable pricing conditions, many shippers have put their freight out to bid to reduce their rates. And software vendors have responded by introducing new transportation procurement solutions. Here are three examples:
CombineNet: In September 2009, the company introduced RFxpress, a “self service” software-as-a-service sourcing solution that “provides a simple six-step wizard to create sourcing templates that enable buyers to manage bidding events and conduct ‘what if?’ scenario analysis.”
LeanLogistics: In January 2010, the company announced LeanSource, a “do-it-yourself” software-as-a-service transportation procurement app that allows shippers to “quickly create their own private transportation marketplace for soliciting and contracting rates, capacity and lanes in a replicable fashion.”
Manhattan Associates: In July 2009, the company announced Express Bid, a software-as-a-service solution that enables customers “to announce bidding events, distribute bid information, receive and analyze bids, and award contracts — all online — for the entire network, individual lanes or supplemental contracts.”
Are you seeing a trend here?
Let me give you a hint: the keywords here are self-service/do-it-yourself and software-as-a-service.
Historically, transportation procurement was a strategic engagement for most companies, a process conducted every two years or so. At the end of the engagement, companies would enter their new rates and preferred carriers into their TMS, or they would publish a routing guide, and then they would focus on execution until the next contract renewal cycle. Strategic procurement engagements—i.e., where companies take a holistic view of their transportation network, especially when significant changes have occurred—remain valid today. But a new best practice is emerging: leveraging transportation procurement solutions as a complement to carrier dashboards and business intelligence applications.
In other words, view transportation procurement apps as continuous improvement solutions, not just standalone applications that are used once every year or two.
Things change after a transportation procurement engagement is completed: capacity requirements in a given lane might be significantly greater than anticipated; new lanes are added to your network; preferred carriers are rejecting too many tenders in certain lanes or their service levels are degrading; and so on. These are the type of performance data that companies should be tracking using their TMS dashboards (and if they are not using a TMS, well, shame on them!). Addressing these issues often requires conducting “mini bids” to add capacity, find alternate carriers, and obtain rates for new lanes.
And that’s what these new breed of transportation procurement solutions are well designed to address—i.e., they are an affordable, easy-to-use-and-deploy alternative to spreadsheets and fax machines.
BI/analytics tools identify transportation performance issues; transportation procurement solutions help to “heal” them. And maybe that’s why BI/analytics and transportation procurement are the TMS capabilities customers are most demanding, according to a survey of leading TMS vendors that we conducted last year.
TMS Functionality in Demand (Source: ARC Advisory Group; click to enlarge)
Do you agree that transportation procurement apps should be viewed as a continuous improvement solutions, a complement to TMS performance dashboards? Post a comment and share your viewpoint!
(Note: LeanLogistics and Manhattan Associates are ARC clients).
