Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Guest Commentary: Managed Procurement Services Allow Companies to Optimize Transportation Investments

Guest Commentary | By •

From weight loss goals to cleaning out the garage, resolutions are around every corner as we kick off 2013. While you work on improving your lifestyle, why not do the same for your transportation sourcing?

Transportation sourcing is a significant challenge for many companies. Typically, the procurement process to identify potential new carriers and award business requires a major investment of resources. The transportation team must develop a request for proposal (RFP), follow up on carrier responses, evaluate multiple award scenarios, and implement new carriers into the mix. In many cases, companies do not have a dedicated resource to manage the freight procurement process, resulting in usage of key personnel from other areas to support the sourcing event. This is disruptive to current operations, and prevents the development of functional expertise to drive continuous improvement in the transportation network.

Lack of carrier profile data, vetted capabilities and industry benchmarks are also common issues for many companies. Without comparative data points, companies do not know if carriers are costing too much or if lanes are inefficient. Capacity can become an issue but it remains unclear if that is due to the current carrier’s inefficiencies or if more carriers are required to meet demand.

Managed procurement services that combine transportation procurement skills, knowledge of carrier capabilities, and supply chain expertise, can optimize a company’s transportation investment. These types of procurement services provide industry benchmarks and technology to more efficiently and effectively handle transportation procurement.

Typically the managed procurement process begins with a holistic review of a company’s lanes and rates to determine which need attention to best deliver on overall corporate goals. By comparing performance internally against external industry benchmarks, managed procurement service providers focus on out-of-tolerance conditions, identify new carrier opportunities and discover strategic cost and service improvement opportunities. Once a company’s current performance is analyzed, a transportation procurement project plan is created.

Companies leveraging managed procurement services can:

  • Optimize transportation and spend across lanes, carriers and modes
  • Identify which lanes and carriers represent the greatest opportunity for improvement
  • Increase efficiency of the transportation sourcing process

In addition to unlocking savings, transparency into carrier routes and pricing drives overall improved bid response quality. And with improved quality comes the likelihood of achieving expected results from your procurement awards. This shift from a manual to a technology-driven process may save companies up to 80% of their typical transportation procurement event costs. Managed procurement services offer fast realization of awarded rate reductions, introductions to new carriers and best-in-class cost performance across all lanes.

Lisa Kerr is Director of Services for LeanLogistics, Inc., a global solutions provider of transportation management system (TMS) applications and supply chain services. Lisa is responsible for the development, commercialization, and business consulting support for the suite of services offered by LeanLogistics, including Transportation Procurement Services, Managed Transportation Services and Supply Chain Optimization Services. Prior to her current Product Management and Business Consulting role, Lisa served as Director of Managed Transportation Services at LeanLogistics for four years.

This Week in Logistics News (November 26-30, 2012)

Cloud/Software-as-a-Service | By •

I didn’t win the $585 million PowerBall jackpot this week, which is not surprising, because when it comes to lotteries, taking shortcuts through town when I’m late, and picking the fastest checkout lines, I’m like Hemingway’s old man: “salao, which is the worst form of unlucky.”

On to the news, which is dominated this week by transportation management technology.

Almost three years ago I envisioned an app store for logistics software, and the news from LeanLogistics this week is another step in that direction. The company announced the On-Demand TMS® SuiteApp, built using NetSuite’s SuiteCloud Computing Platform. Think of SuiteApp as an app store where customers shop for apps to extend their NetSuite cloud-based ERP system, similar to Salesforce.com’s AppExchange. According to the press release, “NetSuite customers can leverage industry leading transportation management technology with a low cost, plug and play solution built into NetSuite ERP for quicker ROI compared to traditional TMS software.”

The “app store” model, especially one linked to an enterprise system with a relatively large customer base, is another avenue for TMS vendors to reach small and midsized companies, a segment of the market where managing transportation with spreadsheets and fax machines is still the norm.

In other TMS news, Precision Software announced that it has achieved Oracle Validated Integration of Precision Software Transportation Management System (TMS) Parcel v2012 with Oracle Transportation Management 6.2. According to the press release, “Precision Software TMS extends the functionality of Oracle Transportation Management by making it easier for customers to consider parcel carrier services during rate analysis and planning.”

Simply put, manufacturers and retailers today are looking for TMS solutions that go beyond truckload and less-than-truckload capabilities. Parcel shipping, fleet management, and global trade capabilities (ocean and air, plus customs compliance) are moving from the “wish list” to the “must have” list.

Last year, in “The IT Dilemma for 3PLs,” I raised the following question: Should 3PLs continue to develop their own IT systems in-house or should they implement third-party solutions instead? There are good arguments for both approaches, as the comments readers posted illustrate. A 3PL that invests significantly in its own solutions is CH Robinson. The company announced the latest update to its Navisphere technology platform, which is used globally by employees, customers, and service providers. Enhancements to the platform include “a modernized user interface, streamlined access to business-critical data, and customization to support customer requirements across global workflows.”

The platform also addresses a critical, but often overlooked, component of transportation management systems: network connectivity. Via Navisphere, customers “gain access to a centralized network of more than 100,000 supply chain partners, without the need to integrate with each provider individually.”

I’ve been saying it for years and I’ll say it again: when it comes to enabling supply chain and logistics processes, software is not enough; you also need B2B connectivity, and I believe companies should access it as a service, just like electricity or any other utility.

In another example of how smartphones and mobile devices are playing a bigger role in transportation management, Roadnet Technologies launched its MobileCast vehicle GPS tracking software on the Android™ smartphone operating system. Here are some excerpts from the press release:

The Roadnet Technologies MobileCast vehicle GPS tracking software enables companies to see a fleet’s transportation routes in real-time, combined with the ability to make changes to particular routes based on occurring events or conditions, such as traffic or the needs of customers.

 

The mobile application allows drivers to review their daily routes, complete stop surveys, examine stop information, record arrival and departure times, complete stop reconciliation, add delivery receipt information and mark stops as undeliverable. Roadnet has also taken advantage of integrating other Google Android technology such as voice navigation and traffic in order to provide a complete solution for delivery.

And finally, in another example of how innovations in packaging can result in transportation and warehousing operational efficiencies, Staples announced “the launch of new packaging technology nationwide that customizes delivery box sizes to each order.” Among the benefits cited in the press release: “Customized box sizes allow more shipments to fit on each line haul and more orders in each delivery truck. In addition, just-in-time packaging with Smart-size reduces costs and warehouse space from storing delivery boxes.” For related commentary, see “Del Monte Foods: Packaging, Transportation, and Sustainability” and “The Importance of Packaging in Supply Chain Management.”

And with that, goodbye November, hello December. Have a great weekend!

Song of the Week: “Wishing I Was Lucky” by Wet Wet Wet.

(Note: CH Robinson, Descartes, LeanLogistics, and Precision Software are Logistics Viewpoints sponsors).

This Week in Logistics News (November 12-16, 2012)

Cloud/Software-as-a-Service | By •

Get your Twinkies and Wonder Bread while they last. Hostess Brands is going out of business.

In more important news…

Routing and scheduling, mobile, and telematics solutions continue to converge, as evidenced by Descartes’ announced acquisition this week of Exentra, a UK-based provider of software-as-a-service (SaaS) driver compliance solutions for the European Union, for about $17 million in cash. Here are some details from the press release:

In the EU, every vehicle over 3.5 tons is required to have a tachograph. A tachograph is a device fitted to a vehicle that automatically records its speed and distance, together with the driver’s activity. Exentra’s cloud-based compliance management platform, Smartanalysis, helps customers leverage the data from a vehicle’s tachograph to comply with EU-wide legislation governing driver compliance, such as the EU working-time directive.

 

“The EU driver compliance legislation has been in place longer than comparable regulations in North America. In the EU, not only is every vehicle required to have tachograph hardware, but the hardware is standardized and fitted during vehicle production,” said Steve Fisher, CEO of Exentra and Director of Compliance at Descartes.

Descartes also made some other product-related announcements at its annual Descartes Evolution Global User and Partner Conference, including the unveiling of Descartes Community, a cloud-based service that allows Descartes customers “to more deeply interact in their daily business within their industry and find new ways to grow.” Some additional details from the press release:

Descartes is making its industry leading Standard Messaging Format (SMF) communication protocol publicly available for use, free of charge, to those wishing to connect to Descartes Global Logistics Network (GLN). Designed to help build communities and enable industries to improve their productivity and performance, the Descartes Community service offers members the ability to connect with Descartes GLN members through collaboration tools and automate multiparty processes by utilizing the SMF business document definitions [emphasis mine].

In many ways, Descartes Community is aiming to provide the same type of communication and collaboration capabilities that GE is enabling with its GE Colab social network platform, except Descartes’ network extends across different companies. What started out as B2B connectivity is now morphing into a social network platform for supply chain and logistics, with apps to execute processes. Other software-as-a-service providers with built-in trading partner networks, as well as 3PLs, have the same opportunity, and I know of at least two other providers that are moving in this direction too.

Speaking of B2B networks, E2open announced the availability of the newest version of E2 Cloud Connectivity that brings “industry-first productized maps that speeds data transformation across industry standards such as X12, EDIFACT, OAGIS and others.” Lorenzo Martinelli, Senior Vice President, Corporate Strategy, at E2open says the following in the press release:

“One of the biggest challenges to rapid and cost-effective trading partner connectivity is the traditional practice of one-off, custom, point-to-point maps for transactions and data. Working with some of the most complex supply chains, and hundreds of customer deployments, we have created a next-generation model that enriches our network content using open canonicals and cross-standard maps.”

B2B connectivity is not a sexy topic, and the technical details are lost on most people, but it’s a critical piece of the IT puzzle. Without it, most supply chain applications would be worthless, like a Web browser without Internet connectivity. Many companies still build and maintain their own connectivity networks, but I believe B2B connectivity should be accessed as a service, like electricity or any other utility. And by plugging in to an existing multi-party network, you gain access to the collaboration and social networking opportunities mentioned above. Just my two cents.

In other technology news, LeanLogistics announced the release of On-Demand TMS® version 12.3.0 that “enables shippers to enact compliance, risk management, governance and control specific to global logistics.” Part of this new functionality is enabled via partnerships with INTTRA and Amber Road. Here are some additional details from the press release:

LeanGlobal enhancements in version 12.3.0 include connectivity with leading ocean carriers and NVOCCs to facilitate booking management. In addition, version 12.3.0 provides global trade compliance that includes product classification, import and export control checks, documentation determination, restricted party screening, ocean freight settlement and global business intelligence all within the On-Demand TMS.

Finally, UPS introduced UPS Order Watch, “a cloud-based technology platform that allows customers to more efficiently collaborate with international suppliers and better manage their inbound supply chains.” According to the press release:

Enhancements to the service include added capabilities to enable greater accuracy and timeliness of overseas vendor bookings; improved processing and management of suppliers; automated exception management; near real-time shipment status and detailed line-level visibility of in-transit inventory; improved internal operational processes; and facilitation of purchase order (PO) consolidation and optimized shipping plans.

This is yet another example of how the business models of software vendors, 3PLs, and consultants continue to merge. Simply put, if you are looking for supply chain and logistics technology, you have many options besides the “usual suspects” of software vendors. 3PLs and consultants might have the solution you’re looking for.

Also, did you notice that all the solutions highlighted above are cloud-based? Are there any other kind these days?

Have a great weekend! Gonna grab me a Wonder Bread and mayonnaise sandwich.

Song of the Week: “Feel Again” by OneRepublic.

(Note: Descartes, LeanLogistics, and Ryder are Logistics Viewpoints sponsors)

Guest Commentary: How Companies Can Leverage Technology to Manage Transportation Scheduling

Guest Commentary | By •

Scheduling and managing freight has never been more complex or costly than it is today. A shortage of drivers, high fuel costs and limited reinvestment in equipment have significantly reduced carrier and capacity options. When combined with customer demands for quicker response, smaller deliveries and shorter allocation windows, the situation becomes even more difficult to manage.

Many companies are still managing these complexities using manual processes and spreadsheets. Even companies with programs and SOPs find it difficult to communicate the transportation schedule with all involved supply chain parties — from simply making dock locations available at the scheduled times to mapping the right trucks to the appropriate doors to ensure there’s enough manpower available to manage the workload. An overarching lack of visibility into a company’s shipping schedule can cause internal and external frustration, idle time for workers, and customer service issues.

Some companies attempt to manage these issues by adding more personnel to the transportation department. This increases costs and creates opportunity for errors through profound decentralization of this important logistics function. What if companies could easily share their schedules with internal and external parties, have access to carrier requests and exceptions while seeing real-time performance metrics that help optimize transportation?

Web-based appointment scheduling solutions are a carrier-friendly, easy way of organizing a company’s transportation schedules. Companies no longer have to rely on spreadsheets or whiteboards to manage the transportation schedule. Everything is visible and manageable through an online application created to provide greater visibility and insight into carrier and company performance.

As the transportation industry increases in complexity, there is an opportunity to stand out from the competition by offering better service. Transportation appointment scheduling technology provides the mechanism to:

  • Manage docks by exception using automated processes to drive standardization
  • Reduce safety stock with inbound inventory and timeline visibility
  • Increase visibility to all activity including non-managed (pre-paid) freight
  • Optimize employee productivity through better time management and trailer placement
  • Reduce carrier dwell time and save money through lower detention fees
  • Satisfy more customers and partners with on-time and accurate order delivery
  • Become “Shipper of Choice” in the carrier community, which indirectly impacts rates

Transportation is traditionally viewed as a necessary cost of doing business. What if a company could decrease shipping and receiving costs while transforming a transportation department into a competitive advantage? Web-based transportation appointment scheduling is one way to materially impact the bottom line while increasing performance and visibility across the supply chain. It’s time to stop thinking of transportation as a necessary evil and start thinking of it as an opportunity.

Jon Kuerschner oversees sales and marketing at LeanLogistics and he has nearly 20 years experience in defining, building, marketing and selling innovative supply chain solutions.

The Science Behind the Benchmarking of Lane Rates

Business Intelligence | By •

Gathering benchmark data to drive better procurement is a very valuable exercise. In the realm of transportation, this means getting benchmark data on what companies are paying to move freight on particular lanes. However, for a benchmark to be valid, you need a sufficiently large sample size, which is not a  problem if you are moving freight from New York City to Chicago, but what if you have regular flatbed shipments between Helena, Montana and Evansville, Indiana? There is little chance you can find a sufficient number of companies shipping on this lane to have any sort of validity to your benchmark data.

In a benchmarking exercise, you also need to make apples-to-apples comparisons. What this means for lane benchmarking is that you need one origin-destination benchmark for reefers, a different benchmark for flatbeds, and so forth.

Yet CH Robinson, LeanLogistics, and Chainalytics provide truckload lane benchmark data for the United States. All three are using a similar methodology that I am convinced is valid even for lanes with little traffic. How can this be?

This is where the magic of clever mathematical modeling comes in.

I attended a presentation on this topic by Kevin McCarthy, CH Robinson’s Director of Consulting Services, at TMC’s Interactive Client Forum last November. I recently had a follow up conversation with him about benchmarking, and also with Chris Johnson, the VP of Research & Development at LeanLogistics. Both CH Robinson and LeanLogistics are Logistics Viewpoints sponsors.

TMC is a division of CH Robinson that uses its own software-as-a-service (SaaS), platform-style Transportation Management System (TMS) to plan and execute loads for its clients. Some customers have chosen to purchase the company’s TMS and not use TMC’s managed services. LeanLogistics is also a provider of platform TMS and transportation managed services.

Both companies have a nice data set. CH Robinson is one of the largest 3PLs in the world and it has extensive brokerage operations. The company is leveraging its internal lane data and supplementing it with data from TMC customers that choose to opt in. If TMC customers don’t provide data, they don’t get the benchmark data.

LeanLogistics is a division of Brambles, which also owns CHEP. CHEP makes a very large number of transportation moves, and that data can also be leveraged. At LeanLogitics, new customers sign a contract where they are told their data will be aggregated for benchmarking purposes. All LeanLogistics customers have access to the benchmark data in the form of in-line analytics that show the current lane benchmark as well as the historical trend.

All three suppliers create a regression model to create a benchmark rate for a low volume lane. They begin by looking at whether an origin or destination is a location with balanced demand and supply; whether it tends to have many trucks coming in full but going out empty (IN); or whether it has a lot of shipments going out (OUT) but has less demand for trucks coming back.

Going back to my Helena-to-Evansville example, there might not be any shipments in the data set between this O-D pair, but the model can use all the data on Helena outbound flatbed shipments to all other destinations to see whether this is an IN location or an OUT location.

I suspect Helena is an OUT. Helena probably has lots of trucks containing lumber going to other parts of the country, but far less demand for inbound flatbed shipments.

Because getting a load for the return trip will be difficult, a carrier needs to charge a premium that will cover the empty miles it has to travel in both directions. For example, once the load is delivered, the carrier might have to drive to St. Louis to get a load to Denver. The miles from Evansville to St. Louis and Denver to Helena are empty miles the carrier needs to be compensated for. By looking at what the average national rate per mile is and comparing it to the rate per mile of a particular origin or destination, the model can understand whether the location is an IN or an OUT and the extent to which that is true.

Kevin tells me TMC is getting r-squared values in the high 80s and low 90s. Although statistics was my minor in grad school, I’ve forgotten a lot of it, but I know that r-squareds that high indicate very, very high predictive value. Young professors trying to get tenure would kill for this kind of a result.

In addition to using this benchmark data for procurement, it is also extremely valuable for network design projects.

Chainalytics is the granddaddy for doing benchmarking in this area. But there are some advantages to getting this kind of data from a TMS provider with a SaaS platform. First of all, if you are a TMC or LeanLogistics customer, the reports are free. Secondly, this is not a manual process where you have to send your lane data to a third party on a quarterly or semiannual basis; LeanLogistics and TMC already have your data. And finally, while lane rates overall don’t change all that much over the course of a year, some rural locations can have a significant volume shift that would affect a lane benchmark. With TMC and LeanLogistics, the lane data is constantly refreshed, it is not one quarter out of date.

One of the things I love about platform-style TMS solutions is their ability to monitor network data and drive value in new ways. This is a prime example of that.

(For related commentary, see “The Missing Link in Transportation Business Intelligence”).

Guest Commentary: Bridging the Global Logistics Gap with Transportation Technology

Global Trade Management Solutions | By •

Global shippers today face the challenge of orchestrating end-to-end logistics processes while managing the interplay with other third parties, such as customers, suppliers, ocean carriers, freight forwarders, customs brokers and government agencies. Doing so effectively is difficult, regardless of whether the shipper is importing or exporting freight. Part of the challenge is dealing with international laws, global regulations and multiple languages, currencies, and units of measure; supply chain security and compliance programs, such as the Customs-Trade Partnership Against Terrorism (C-TPAT) and Operation Safe Commerce, place even more burdens on the proper execution of global logistics.

Simply put, there are numerous challenges, both from a systems and operations perspective, to ship product via any mode, anywhere in the world.

Currently, management of international freight is still largely dominated by manual processes and point/siloed technology solutions. Additionally, since many global supply chain organizations are decentralized with separate groups and often separate systems, the issues become multiplied. That is changing quickly, however, with the emergence of global transportation management systems (TMS) that have the functionality and built-in connectivity needed to manage all the moving parts of global logistics in one system.

Global SaaS-based TMS solutions provide multi-modal planning, execution, trade compliance, built-in carrier connectivity, financial reconciliation, and reporting features to effectively manage global transportation. Global logistics technology enables companies to successfully manage all modes of transportation under a common umbrella while providing complete visibility and direct communication between shippers and carriers.

With SaaS global logistics management technology, companies can:

  • Manage the complexities of multi-leg, multi-modal movements by synchronizing international and domestic legs.
  • Connect instantly with ocean carriers, forwarders and NVOCCs.
  • Automate import and export processes to enable goods to flow unimpeded across international borders in the most efficient and compliant way possible.
  • Extend “track and trace” capabilities by configuring a multi-partner workflow with explicit milestones to tightly manage end-to-end supply chain process and provide real-time visibility with event notification to all stakeholders.
  • Eliminate third-party freight payment services by automating the freight audit process and authorizing payment to supply chain partners.
  • Manage supply chain partner performance and streamline operations by evaluating transportation spend management through the use of analytical and reporting tools.

By leveraging a global TMS, shippers can become empowered with a comprehensive solution for managing domestic and cross-border freight, which directly impacts the bottom line.

Automated communications, processes, and workflow between supply chain partners allow companies to improve efficiencies while gaining visibility into freight payment and discrepancies before they impact the company’s finances. Global transportation technology bridges the gap for multi-divisional enterprises, enabling global logistics management in a centralized system that delivers significant value for shippers and carriers.

Jon Kuerschner oversees sales and marketing at LeanLogistics and he has nearly 20 years experience in defining, building, marketing and selling innovative supply chain solutions.

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