With 80+ sessions across five tracks and amazing customer and partner speakers, Evolution 2018 reflects Descartes’ continued dedication to help our customers be more successful. One panel discussion on transportation management provided insights from Tim Motter, SAP Solutions Manager; Lance Healy, Co-founder and Chief Innovation Officer at Banyan Technology; and Ken Wood, Executive Vice President, Product Management at Descartes and addressed questions from attendees in three areas:
- Competition and Growth
- Market Conditions and Regulations
- Technology, Innovation and the Future
The discussion was kicked off by a few examples of how the convergence of ecommerce, capacity constraints, and heightened customer expectations have elevated transportation management to the executive boardroom, and the pages of mainstream press. The panel cited a number of examples, including a story in The Guardian highlighting how Kentucky Fried Chicken restaurants in the United Kingdom had to close because they had no supply due to transportation issues, a Wall Street Journal article on how A Shortage of Trucks Is Forcing Companies to Cut Shipments or Pay Up, an article in Reuters on Corporate America’s new dilemma: raising prices to cover higher transport costs, and a CNBC story on blockchain and how UPS dives into blockchain technology as trucking companies seek to evolve. Ultimately, these forces represent an opportunity and a threat. The visibility and increasing importance of transportation management in serving and delighting customers is an opportunity to invest and win, but the stakes are much greater.
Questions and Answers from Transportation Management Panel Discussion
Competition and Growth
Q: Can you each share a customer example showing how transportation technology is used to create competitive advantage in their market?
Tim [SAP]: A Canadian railway is using event tracking technology to unearth unknown accessorial charges, such as demurrage. This had led to a $1M revenue uplift as they monitor hundreds of thousands of events per day. On top of that, they cut 12-17 days out of the time to invoice.
Lance [Banyan Technology]: A manufacturer of industrial equipment implemented an inbound portal that enables vendors to leverage the company’s freight tariffs and replace expensive and assumptive routing guides. They save huge amounts of time processing shipments, cost savings are over 20%, and they get increased visibility into the actual shipping of orders before shipments depart their vendor's docks.
Ken [Descartes]: We worked with a retail healthcare company to create better visibility that had a significant impact on their inventory safety stocks. With a more accurate view of what was in-transit and when it was arriving, they had more confidence in their supply, enabling them to lower safety stocks. Furthermore, the more accurate data enabled them to identify where they could reduce lead times.
Q: One of the largest US-based retailers is testing deliveries by employees; a 3PL is using Uber for hyper local deliveries instead of FedEx or USPS. What transportation strategies are emerging to support ecommerce and omnichannel retail?
Lance [Banyan Technology]: Aggregating local carriers has increased in recent years through acquisition as well as through core carrier enterprise solutions. The next wave of visibility and interaction is arriving through communication hubs that span across the carrier’s systems. This will allow shippers and 3PLs to access their carriers the same way they connect with LTL and Parcel carriers.
Q: Could you give some examples of how getting “back to basics” in day-to-day transportation operations can drive significant opportunity and costs savings?
Tim [SAP]: The industry depends heavily on close relationships between shippers and logistics service providers. Technology today is making the ‘linkages’ between each easier, which provides greater transportation transparency across suppliers, logistics providers, and manufacturers/distributors/retailers thus increasing service and reducing costs. Some examples would be:
- If you are asset owning, work with your suppliers on MRO to improve the combined repair part inventory levels and locations availability.
- Up your level of sophistication with baseline technology such as data mining across internal siloes. Work with business partners to up their level of electronic communication to reduce the manual and error-prone activities often used today with smaller business partners.
- Solidify your supply of equipment and drivers. As a shipper, use your data to help the carrier through better forecasts, lane density, new opportunities, etc.
- If you are the carrier, stay focused on a win-win partner model (e.g., dedicated lanes, minimum commitments, operational insight, etc.). Bring opportunities to each other and work together through more frequent sales forecast sharing.
- Enhance your online presence and help your customers make better decisions by including all service options and costs and near real-time visibility to order/equipment status.
Q. Visibility has always been a top priority, but often hard to justify. Can you outline where there has been the biggest progress in the last three years? Where do the biggest gaps remain? How does this vary by mode (ocean, air, TL, LTL, parcel), and leg/step (first and last mile, drayage carriers)?
Ken [Descartes]: In the past few years there has been tremendous progress in real time visibility of trucks using GPS. We have seen our customers who use MacroPoint create significant cost savings with GPS location updates as frequently as 15 minutes. This allows them to greatly improve their dock and warehouse receiving, adjust production schedules, and ensure downstream processes are not impacted. On the customer-facing side they are using the visibility to improve customer service. An area where we still some gaps is in drayage, and in longer/international moves.
Q. There has been a lot of concern for driver shortage, and economic growth is adding demand. Can you outline some business innovations or partnerships that you have seen with shippers to help address the shortage?
Ken [Descartes]: A leading home improvement retailer is launching a pilot with Deliv for home delivery, which highlights the crowdsourcing option that is happening now. We also see innovative brokers exploring how they can work with their carriers and other 3PLs to share capacity and better serve the shippers while driving out costs, versus simply margin compression.
Q. How do you see December 2017’s Phased-In Compliance ELD milestone affecting the industry over the 2-year phase in period and beyond?
Lance [Banyan Technology]: Those that are compliant can leverage this connectivity with rapidly evolving technology to connect drivers to more shippers instantly. Independent carriers that embrace technology will leap frog the efficiency and profitability of their larger fleet competitors because of tools hitting the market. The bundled ELD devices/load boards know where you are now, where you are going and when you’ll be ready for another load. Technology can push new opportunities to drivers through machine learning and analytics to automate much of their back-office needs.
Technology, Innovation and the Future
Q. What impact will digital freight vendors have on the transportation management market? Which modes are seeing the biggest transformation? What are the barriers and risks you see?
Tim [SAP]: Technology is merging with logistics, providing opportunities that have not existed previously. Certainly, time definite, last mile delivery has been the most visible change to the average consumer. The conventional delivery methods like parcel vans and networks will change as the use of local stores with drones, robots, and even cars for local delivery changes the customer experience. Inside the industry, I wonder if the lines between modes is starting to blur as some companies become a single source supplier of logistics services. As Lance mentions, innovation is happening quickly with technology and is a very real differentiator. The risk will be for those companies that do not embrace change and make the necessary investment as their customers grow to expect it.