In May, MercuryGate issued a press release announcing that it had been awarded a “2011 Total Cost of Ownership Supplier Award” from Celestica. MercuryGate (an ARC client and Logistics Viewpoints sponsor) was in competition with over 20 other software vendors for this award (MercuryGate also won the 2010 award).
I recently spoke with Ryan Bloor, Celestica’s Global Logistics Director, about this award. We also discussed the types of transportation moves supported by MercuryGate’s TMS, and the history of the Celestica/MercuryGate relationship.
First, a bit of background. Based in Toronto, Celestica provides innovative supply chain solutions to OEMs in a wide range of markets. With over 20 operations worldwide, the company’s 2011 revenue was $7 billion. MercuryGate offers cloud-based transportation management systems (TMS) to shippers and logistics service providers.
Four plus years ago, Celestica was looking for a TMS solution that would not only support its operations, but would also serve as a platform for selling logistics services to mid-sized customers. Celestica believed that by leveraging its transportation spend, it could provide mid-sized companies with cost savings those companies could not garner on their own.
Celestica began by searching for a TMS that would be a leader from a total cost of ownership (TCO) perspective. A key driver of TCO for the company would be driven by the cost of onboarding new clients for its logistics services. If onboarding a new customer required a level of effort that rivaled a brand new TMS implementation, offering logistics services economically would be difficult. The time elapsed from when a customer signs a contract to when Celestica executes the first freight tender on behalf of that customer would be a critical success factor in driving its logistics services business.
After doing due diligence, Celestica concluded that MercuryGate would best support its needs.
MercuryGate did provide a fast implementation. Within three months, the first phase of the implementation was operational and Celestica was able to use the TMS to support its internal operations.
The scope of how Celestica is using MercuryGate’s TMS has grown substantially over time. Four years later, the company is using MercuryGate on a worldwide basis, both inbound and outbound, and to support air, ocean, truckload, less-than-truckload, and small package shipments. Celestica now provides transportation services to about 20 customers. And the time to value in Phase 1 implementations for customers is 30 days. When putting together a phased plan for implementation, Celestica focuses on the customer’s pain points and the cost saving opportunities, and executes an initial project that will provide significant value to the customer quickly.
Key to the value MercuryGate provides to Celestica is the solution’s cloud-based architecture and frequent product upgrades. Because of this, when MercuryGate customers ask for new carriers to be added to the network, and the carrier’s EDI messages are mapped, all MercuryGate customers benefit. Thus, when Celestica on-boards a new customer, the work surrounding connecting that customer to a carrier network is far easier and quicker than it would be with a traditional TMS.
In summing up their relationship with MercuryGate, Ryan says the velocity with which Celestica can provide value to a new customer is continuing to improve, as is the Return on Invested Capital delivered by the MercuryGate solution.