Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Guest Commentary: Transportation Sourcing Doesn’t Have to Be a Painful Process

Cloud/Software-as-a-Service | By •

As the economic recovery continues, several things are certain: fuel costs will eventually rise, truck capacity will tighten, trucking fleets will decline, driver availability will be constrained and pricing control will begin to shift away from shippers.

With base rate increases and fuel surcharge fluctuations on the horizon, best-in-class companies understand the need to become carrier friendly and establish strong carrier relationships to mitigate these future challenges.

Since the majority of transportation expenditures are typically incurred through long-term carrier contracts, strategically sourcing transportation services is fundamental to successfully managing supply chain costs. But conducting a freight procurement event has traditionally been a tedious and time-consuming process. Many companies waste valuable time and resources sorting through spreadsheets or complex databases and wading through different bid formats or faxed submissions.

Advancements in technology, particularly the emergence of software-as-a-service (SaaS) e-sourcing procurement platforms, are making transportation sourcing a less painful process. These applications enable companies to source carriers and other transportation providers quickly and easily, even without a transportation management system. They allow companies to solicit and optimize carrier bids, as well as award freight rates and capacity, in an automated, streamlined, and repeatable manner.

So, how can your company streamline its procurement process with technology? Here are 5 reasons to move away from “spreadsheets and fax machines” and utilize technology to manage the entire transportation procurement process:

  • Efficiency – Streamline and shorten procurement cycles using repeatable and automated processes.
  • Metrics – Measure the effectiveness of procurement events by evaluating the financial impact of proposed rate changes before business is awarded.
  • Scalability – Invite all or only a few of your carriers to bid and react faster to changing business conditions.
  • Consistency – Bids are received in a uniform format from carriers of all sizes and sophistication. Receive faster, more accurate responses.
  • Cost-effective – Reduce time and cost by sourcing quickly and easily as often as needed. Also, with SaaS-based technology, there is no software to purchase.

Furthermore, companies can evaluate scenarios side-by-side using embedded dashboards, reports and benchmarks to make better award decisions. The simplicity of using web-based applications allows for initial or subsequent RFPs in addition to periodic benchmarking. A SaaS procurement solution also enables companies to:

  • Quickly solicit and contract rates, capacity and lanes
  • Monitor event activity in real-time
  • Run procurement events by lane, region or network – as often as required
  • Benchmark rates prior to event and during evaluation
  • Observe how bids are progressing and trending
  • Receive faster, more accurate responses with a carrier-friendly web app

From seasonal volume profiles to equipment requirements to incumbent carriers to lane-based shipper targets, SaaS-based procurement applications consider key business factors for greater evaluation into market rates. The results not only consider transportation costs, but also include available carrier capacity, carrier risk, and carrier partnerships.

Simply put, SaaS procurement applications enable companies to structure and execute sourcing events online that deliver real, measurable results without the substantial commitment of time, resources and financial investment.

Chris Timmer is Chief Operations Officer at LeanLogistics. Chris is responsible for overall strategy, positioning and growth of the LeanLogistics solutions, including SaaS platform development and deployment and the expansion of the company’s service footprint internationally. Chris has over 20 years of experience in transportation and logistics management and he regularly speaks at industry events and has been recognized as a leader in the SaaS solution space.

Driving Labor Efficiencies with a Multi-tenant WMS

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I’ve been paying attention to multi-tenant Warehouse Management Systems (WMS) ever since they appeared in the market about five years ago. A multi-tenant system has an architecture where users from different companies and different parts of the world access the exact same Internet-based software. Salesforce.com is the best known enterprise solution based on this architecture.

Historically, multi-tenant WMS was an extremely low-cost solution – in some cases as low as $500 per month for an unlimited number of users – which had a fast payback period, usually less than a year. However, the payback came in a different manner compared to a traditional WMS. The payback from a multi-tenant WMS came from the cost savings associated with almost perfect inventory accuracy, not from increased operational efficiencies. These solutions were simple and used primarily at small warehouses that had previously been paper-based.

RedPrairie, a leading WMS supplier and an ARC client, acquired SmartTurn, the best known of the multi-tenant WMS vendors, in 2010. In a briefing RedPrairie gave me in November, the company talked about the enhancements it has made to the solution, which is now called On-Demand Warehouse Management. RedPrairie mentioned that it has added waving functionality, a key feature necessary to drive labor efficiencies. When I mentioned that I would be interested in talking to one of its customers using waving, RedPrairie introduced me to Tim Markley, the CEO of Markley Enterprises.

Markley Enterprises, headquartered in Elkhart Indiana, is a manufacturer with annual revenues of $7-8 million. The company designs, produces and distributes sales and marketing support products. Historically, Markley Enterprises differentiated itself on service, particularly its willingness to take last minute orders. However, doing distribution well while being part of a manufacturing company was difficult, so the company split off the distribution arm. The distribution side of the business has a 20,000 square foot warehouse with a five person workforce. Tim says that the distribution arm has allowed the company to entrench itself more deeply into its customers’ business.

Despite the company’s small warehouse, this is an interesting operation. Picking is a manual operation using carts. Every cart has an iPad attached to it, which pickers use to get directions and input data instead of using a handheld barcode scanning gun. Scanning would require a higher-end server in the warehouse that the company did not want to invest in. Its floor-level personnel are connected to the iPads via a standard wireless server.

Even before RedPrairie added waving, Markley Enterprises had figured out how to do it, but its solution involved a workaround. In addition to receiving and inputting data into the WMS solution, the pickers were also entering data into iForm, a low cost, SaaS application sold online at the Mac App Store. It brings business grade, offline data collection to iPhones, iPads and iPod Touches. Markley Enterprises had each of its workers wear a mechanical pedometer that counts the number of steps they take. After each pick, the pickers capture the time and the number of steps taken. This data is later exported to a spreadsheet.

Using this data, the company was able to prove to itself that intelligently grouping orders by aisle or customer (creating a wave) was more efficient than just dropping orders to pickers in the sequence in which they first appear in the WMS. In short, to accomplish waving, the company needed to export orders from the WMS, massage them, and stick them back in the system in logical groupings by picker.

Now RedPrairie has added templates to its WMS that automates waving. The waving workaround, which required about an hour of effort a day, has been eliminated. Further, the company has proven to itself that waving allows it to be about 30 percent more labor efficient. One proof point is that the warehouse is still employing five people despite significant growth.

Markley Enterprises is still using iForm to capture start and end times by task as well as the number of steps taken. Tim feels that this keeps efficiency top of mind for their distribution labor force.

Finally, Tim is very, very happy with RedPrairie. He says the support has been great, and the new functionality has come as a standard part of their existing SaaS contract; they have not had to pay extra for it.

Guest Commentary: Logistics Flow Control: How to Control What You Don’t Control

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Who would think that the movie Forrest Gump would provide a great analogy for logistics operations? Unfortunately, the movie quote “Life is like a box of chocolates. You never know what you’re gonna get” applies to the inbound operations of too many retail and distribution companies. Despite the best laid plans using concepts such as collaborative planning, the flow of products from suppliers too often fails to match the requested quantities or delivery dates. Our work with customers in the retail and distribution markets shows that the multiple parties involved have execution processes and supporting technologies that are in conflict, causing actual inbound delivery performance to vary greatly from plan. This is particularly true when the freight is “prepaid” by the supplier and moved via less-than-truckload (LTL) carriers to the retailer/distributor’s distribution center (DC).

The problem is that the “sum of the process and technology pieces” from the retailer, supplier and LTL carrier don’t provide for effective coordination of information and actions across the inbound logistics chain. For the typical inbound logistics flow, shipments are planned for delivery by suppliers, given to LTL carriers for execution, enter the LTL carrier’s network and eventually make it to the retailer’s dock door. Both the supplier and carrier would rightfully claim that they have planned with the intention to make the retailer’s requested delivery date. Even though they have an agreed upon plan, in fact, the supplier and carrier transportation management systems (TMS) are “pushing” product at the retailer with no real idea if the retailer can accept it at the time the supplier and carrier plan. In addition, the serial set of decisions is adding time into the execution process that can cause shipments to be late.

For example, with retailers/distributors using some form of dock appointment scheduling process or technology, the LTL carrier typically cannot schedule an appointment until it has knowledge of the shipment, which typically means goods in hand and evaluation all of the deliveries it needs to make. At that point, because of DC capacity constraints, the retailer/distributor’s schedule may not offer a delivery window that makes the contracted date. Or the LTL carrier is not aware of the impact of “slight” changes to the delivery date, and changes it to allow more deliveries to be consolidated before scheduling an appointment. In the end, the goods fail to show up on time and depending upon the contractual agreement, fines are levied on the bewildered supplier.

To be on time and know exactly what is arriving, the retailer, supplier and LTL carrier need to collaborate during the end-to-end shipment execution process. We call this form of collaborative execution Logistics Flow Control. What makes the Logistics Flow Control concept different is that it spans the entire purchase order (PO) to DC dock door process. The retailer, supplier and LTL carrier are all involved. Inventory/shipments are planned and maintained in one place and “pulled” to a logistics chain-wide synchronized delivery appointment. The Logistics Flow Control concept provides all three parties with a unifying process with a single goal and supporting technology where they all have PO/shipment visibility. Because all of the POs are known, they can be appropriately consolidated in advance and appointments can be prescheduled with confidence that the retailer will accept them upon delivery. Using a simplified “360⁰” scorecarding metaphor, the impact of changes made by any of the parties can be instantly assessed and made aware to the others.

Concepts such as Logistics Flow Control can also change how retailers communicate and manage rapidly evolving PO priorities with their suppliers and in-transit goods. For example, with the advent of a major hurricane this past summer, one retailer used the Logistics Flow Control concept to reprioritize goods in transit, to move up deliveries for items such as flashlights, batteries and water, and hold back other nonessential goods from blocking DC capacity. Without a unifying process, the retailer could not have quickly coordinated not only the suppliers, but the carriers with goods in-transit.

The merging of software-as-a-service (SaaS), logistics networks and retailer, supplier and carrier communities is making concepts like Logistics Flow Control possible. Logistics Flow Control is a true multi-party process where a combination of network integration and human interaction are required to make it effective. Cloud technology is the perfect place for collaborative execution approaches like Logistics Flow Control as it offers a single place where all inbound logistics participants can access the data and services.

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.

Guest Commentary: The Future of Logistics Networks

Cloud/Software-as-a-Service | By •

Logistics networks have been around for 30 years in many forms, from cargo community systems to mode-specific and general value-added networks (VAN). In the beginning, these networks were built on highly proprietary technology that required complex integration. Their use was limited to the largest and most technologically sophisticated companies. The Internet weaned companies away from the use of proprietary networking technology, and portals made the networks more accessible to the “low tech” organizations, albeit in a limited way. Yet, traditional logistics networks have not reached much of their potential community or value. Limitations such as being a registered party, “wired” only networks and “Valueless VANs” have kept much of the logistics community from fully leveraging the network effect. The following are three technological advances that will dramatically change the value and future of logistics networks (see Figure 1).

Figure 1: Logistics Network Evolution (Source: Descartes Systems Group)

Breaking the “Registered” Paradigm:  Logistics networks work on the simple premise that all parties on the network are predefined entities. This works fine in a static world, but logistics operations are more dynamic in nature. Partners and increasingly people enter and exit the logistics process. For example, if shipped goods are damaged and a picture of the damage is needed to file a claim, how could an existing network help facilitate the process to capture the picture and connect it to the associated shipment and purchase order documents? The same challenge applies to connecting and collaborating with the three truck “no tech” operations that are casually used to move the freight. New, smart and secure messaging technologies are being developed to allow transient logistics parties to connect and collaborate through the logistics network. With nothing more than an email address or phone number, transient parties will be able to interact as part of the network. For many logistics organizations, this new messaging technology will remove the “flying blind” problem they face when they use carriers, other logistics services providers or even individuals with whom they have only a casual business relationship or no technological capability.

Merging of the Wired and Wireless Networks:  Traditional logistics networks have also been limited to “wired” connectivity. Even the Internet has drawbacks for logistics organizations – the “wired” Internet that is. Since an increasingly larger percentage of logistics workforces are in the field, tethered solutions, web-enabled or not, fail to enable the increasing majority of logistics workers. Waiting to get to a truck stop, depot or home to get to the web browser does nothing to more dynamically and better manage the mobile workforce. But, what if the network could converse with mobile devices of all kinds, from handheld applications to machine-to-machine? The network could then truly be the conduit for real-time information that could be used by multiple parties to more effectively manage the flow of goods and reduce cash-to-cash cycles. New carrier- and device-agnostic gateway technology is being developed to connect the wireless and wired worlds. With these networking advances, a broader range of logistics organizations can now participate, resulting in a larger connected and collaborating logistics community.

Greater Value Through Network-Based Applications: What was the original value driver for VANs – message movement and transformation – has become the “price of entry” and a market commodity. Yet, logistics networks are a perfect place to offer true value-added applications. Since logistics operations are mostly inter-enterprise processes, networks are great aggregators and disaggregators of information for network-based logistics applications. Because of the preexisting connections and critical mass of the community, logistics networks accelerate the time to value for network-based applications versus standalone applications. In addition, new multi-party business processes can be defined as the participants can collaborate more readily. The difference between network-based and standalone SaaS applications is the pre-integration into the logistics network, including the ability to process and publish the information moving through the network. Because the logistics network has the flexibility to move and transform messages and documents across organizations, network-based applications also provide greater flexibility than standalone SaaS or cloud applications to allow the quick assembly of the multi-party business processes most appropriate for the logistics operation.

Speed and agility have become the cornerstones of today’s logistics competitiveness. The fundamental changes in logistics network technology that are underway will increase “network effect,” accelerating time to value and flexibility of logistics operations. Going forward, logistics organizations need to view their logistics network as the enabler of new and differentiated business processes and extending their command of operations to all of the parties – static, transient and mobile — that are critical to their success.

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.

Guest Commentary: Dannon Saves Time and Money by Gaining Visibility into Transportation Process

Cloud/Software-as-a-Service | By •

As part of a webinar series on software-as-a-service (SaaS) TMS, the Director of Transportation at one of our clients, The Dannon Company, provided an overview of the benefits the company achieved by gaining greater visibility and control of its transportation process. Here are some of the highlights of what he presented.

Dannon, which is headquartered in White Plains, New York, is one of the top manufacturers and distributors of fresh yogurt in the United States. The company has been bringing good tasting healthy products to America for 65 years. Within the food and dairy industry, which is a very competitive market, yogurt is one of the fastest growing segments. The market has seen 30 percent growth in the past 30 years and yogurt consumption has basically doubled every seven years.

So, how does Dannon yogurt get to your grocer’s shelf?

Dannon operates in three manufacturing facilities with six 3PL distribution companies across the country. The Minster, Ohio plant is the largest yogurt manufacturing plant in the world, producing 230,000 cups of yogurt an hour (three million cups per day). Dannon utilizes third party trucks to help distribute products throughout the United States and Puerto Rico.

Prior to leveraging a true SaaS TMS solution, Dannon utilized a traditional on-premise TMS to manage its transportation process. However, the company realized that it needed to improve efficiencies in its carrier-related processes, as well as improve customer service and costs. Another pressure point with Dannon’s transportation process was outbound and inbound appointment scheduling. It was a manually-intense process, requiring time-consuming phone calls or faxes between the numerous departments at Dannon, the shipping facilities, and the carriers. The dock scheduler at each location was the only party with visibility to the entire schedule, creating bottlenecks and limiting alternatives. As a result, customer service was impacted by limited visibility to shipment status or the ability to monitor on-time delivery.

The company implemented a true SaaS solution to improve communications with carriers, capture and record every event in the transportation process, and make the information available to all members of the organization who needed it.

“Our initial implementation was much faster than expected — seven weeks instead of ten,” said the Director of Transportation, The Dannon Company. “Furthermore, additional modules were also implemented quickly which allowed us to realize efficiencies sooner.”

By gaining visibility into its transportation process, Dannon was able to:

  • Improve Order Fill Rate: More than 98% fill rate due to better inbound/outbound visibility.
  • Save Time by Scheduling Labor: Saved 1.5 hours per day due to improved appointment visibility and online scheduling.
  • Reduce Detention at Dannon Controlled Sites: Reduce detention costs at production and 3PL facilities by 80%.
  • Improve Carrier Performance: On-time pickup and delivery percentages are continuously improving, enabling increased sales to customers and better dock management in facilities.

“Visibility to shipment information throughout the organization is drastically improved,” continued the Director of Transportation. “With the addition of a true SaaS based TMS, Dannon is able to start building more collaboration between supply chain departments –Transportation, Customer Service, Product Deployment, Operations Planning and Central Inventory.”

With additional visibility, Dannon can proactively address potential issues in a more timely manner, such as late delivery to distribution centers or service failure to customers. By utilizing a SaaS TMS, Dannon can ship delicious dairy treats to your local grocer on-time and more efficiently.

Chris Timmer is Chief Operations Officer at LeanLogistics. Chris is responsible for overall strategy, positioning and growth of the LeanLogistics solutions, including SaaS platform development and deployment and the expansion of the company’s service footprint internationally. Chris has over 20 years of experience in transportation and logistics management and he regularly speaks at industry events and has been recognized as a leader in the SaaS solution space.

Guest Commentary: TMS–Build vs. Buy?

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A few months back, the spring on my garage door broke. My wife told me that I had the skills to repair the garage door and she said, “Wouldn’t it be a nice weekend project?” As I sized up the situation and repair job, I could envision the weekend ahead of me: reviewing repair websites, making multiple trips to the hardware store, calling in favors from friends…essentially spending the entire weekend tackling the project. I knew that a professional could easily finish the repair in two hours tops, so I “explained” to my wife that while I could do the job, I really shouldn’t do it. I felt a better use of my time would be cheering my twins on at their cross country meet and going out for celebratory burgers afterwards. Plus, my work at home doesn’t come with a warranty.

The build vs. buy decision that many companies face when considering a transportation management system (TMS) can fall into the same vein as my garage door repair decision: Yes, you can build your own TMS, but should you? I hear it said often: “We have a home-grown TMS solution already” or “We’re looking at buying, but we may build or rebuild our own instead.” Cost, time to benefit, technology, complexity, requirements for your industry, and the ability to differentiate your business are key considerations for any company making the TMS build vs. buy decision.

It’s also imperative that you look beyond the traditional discussion points when evaluating build vs. buy. For example, it is now six months after your “build” system has been moved to production. Except for a few help desk calls, things are going smoothly. You’ve managed to master the hardware, middleware, enterprise integration, security, and even nailed the functionality, when the CEO announces the new facility in China. The fun and excitement really starts when everyone realizes the local carrier integration requirements are entirely different from any other carrier you’ve worked with…and the TMS reports and user interface have to be available in Mandarin within the next two weeks! Acquisitions, divestitures, and the search for continuous process improvement mandate the need for adaptable solutions that companies can deploy quickly and support globally.

Here are a few questions that you need to ask when discussing build vs. buy decisions.

  • Is the existing solution enabling the business and driving improvements or doing just the opposite? A key reason companies move away from the build option is the cost and time required to modify their existing system to work with new carriers or take advantage of new service offerings.
  • Is the solution you are building and maintaining 2X better than a commercial solution you can purchase? If you can’t deliver 2X more functionality on day one, then the challenges of supporting and adding new functionality will take its toll on your ability to build, test, and deploy functionality moving forward for the business. The key reason for building is being able to leverage the solution to differentiate and drive true competitive advantage within the business. When the organization can’t easily see and articulate the 2X, or you are not in a position to deliver it, will your homegrown solution really allow you to differentiate?
  • Is cost a factor? The emergence of software-as-a-service (SaaS) TMS has eliminated the requirement to purchase hardware and make an upfront capital investment. SaaS allows a company to start small and match their investment with solution expansion based on actual utilization. SaaS is quickly eliminating cost as a criterion in the build vs. buy discussion.
  • Can you keep pace with technology? Ten years ago, I didn’t realize that I would be lost without a device that easily slips into my pocket, holds my music libraries, accesses the web, and delivers more applications than I could ever think of using. This is the world we live in today; solutions have to be accessible on multiple platforms. Employees entering the workforce over the coming years will expect and demand solutions that leverage the technology they use every day.
  • Can you go all in? In today’s competitive environment, companies have to move beyond incremental improvements and spend more effort on the BIG. If you can develop industrial strength transportation and global trade solutions, and you can deploy it globally and provide the framework for your employees to drive BIG change, then keep on trucking. If that’s not the case, then partner with a solution provider that enables BIG change.

When I tell the story about my garage door repair, I typically don’t discuss the cost or time saved. I talk about the joy of cheering for my twin boys and kicking back at our favorite burger place discussing their hopes and aspirations. I’m not saying that you don’t have the talent or expertise to build — just ask the tough question: should you build?

Edward A. Boclair is President of Precision Software, a division of QAD Inc. Boclair is responsible for global operations, including sales, marketing, research and development, and services. Boclair has a Masters of Business Administration from Texas Christian University plus a Bachelor of Science in Computer Science and a BBA in Management from Mississippi State University.

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