In today’s fast-paced, increasingly sophisticated environment, logistics and supply chain managers are using new technologies to better manage operations, coordinate and collaborate with stakeholders.
Four industry executives shared their insights with Crain’s Content Studio on how technology and other innovations are meeting the pressing demands of digital commerce in one of the tightest labor markets in years.
How is technology impacting transportation?
Mitch Weseley: Technology has unleashed a huge amount of data, which is a double-edged sword. On the one hand, it’s an opportunity for insights into new cost savings, better visibility into operations, the chance to share data and provide better customer service. On the other hand, you need the right team with the right experience to leverage it, otherwise it gets ignored. More than ever, companies must invest in their IT teams and super users to maximize their technology. This is particularly important for logistics service providers because they must respond to client demands that can be diverse and unpredictable.
Mathew Elenjickal: Advancements in technology created the consumer marketplace as we know it today. The velocity necessary to keep up with customer demands has increased exponentially, and that requires all constituents along the supply chain-including transportation and logistics-to be more efficient and agile. From freight management and supply chain visibility solutions to driverless trucks, facility management solutions and collaboration platforms, the sky is the limit when it comes to efficiencies that can and will be generated across global supply chains. The more data that these platforms continue to amass, the more they’ll be able to roll out innovative solutions.
Matt Bernstein: There’s a lot of investment pouring into freight technology. VC investment topped $1.6 billion the first quarter of 2019, and it’s been doubling year over year since 2010. Corporate investment has been climbing as well. And freight companies’ growth and profitability are increasingly dependent on how well they utilize technology for operations, visibility, customer relationship management and, increasingly, the back office. That said, old-school relationships and clerical labor will continue to persist until freight technology becomes dramatically easier to implement and use.
David Broering: Technology is challenging every supply chain business to think about their position in the overall ecosystem and how they can do it better, faster and cheaper-and technology is enabling some of that. It’s becoming a technology business, but we have quite a long way to go in areas like truck location and pricing data to prevent us from being declared “there.”
How has transportation management technology changed in the last few years?
Broering: On the operations side, constraining and optimizing tools have gotten smarter and more nimble with more variables than ever before while operating three to five times faster. On the external side, customers have more relevant and meaningful data at their fingertips, in the form of dashboards and custom reports. Additionally, carriers have to do less work, thanks to automated shipment updates and streamlined audit and payment functions.
Bernstein: The biggest change we’ve seen is interoperability-the ability of different systems to connect within an enterprise and across enterprises. The leading transportation management systems are becoming true platforms that support integrations with dozens of specialized technology providers. This means that customers-including third-party logistics firms, carriers and forwarders-can access killer applications that are best in class and fit within their overall stack. HubTran is an example of a tech offering that can’t exist in a vacuum; it works only in conjunction with the transportation management systems that freight companies are already using.
Elenjickal: The electronic logging device, or ELD, mandate that went into effect in 2017 has been one of the most impactful tech events in freight trucking. It requires that nearly all truck drivers use an ELD to track their working hours. The proliferation of these devices and the data collected is being used to help transportation managers plan better, streamline manual processes like location check calls, and more efficiently utilize their fleet capacity.
Weseley: Some providers are totally rethinking how a transportation management system should be designed, so uses have expanded beyond the traditional routing and cost savings. For example, a TMS can serve as the hub for data coming in from internal and external sources, and it can automatically translate and share that data across an organization or with vendors, carriers and partners. Another change is user empowerment; users have the freedom to configure the technology themselves, so companies can move faster, experiment, and make the TMS work for their specific needs.
How has the abundance of data affected transportation processes and entities?
Weseley: In transportation, you’ve got data flowing between companies and vendors, partners, carriers and others. It comes from different sources and in different “languages” — whether it’s orders, shipments, loads or something else. The question is, what do you do with it? Some companies spend huge amounts of time translating or reworking it-or worse, ignoring it because it’s too time-consuming to manage. The good news is that technology can automatically translate and share this information, and that ability is making a big impact because it helps processes become more transparent, faster and easier to manage for companies and their partners.
Broering: Paralysis by analysis is very real and alive in our supply chain space. The tidal wave of data we have coming at us every day can leave us wondering what to listen to or focus on, leaving businesses flat-footed when they should be moving. When implementing a data-based decision, it’s incredibly important to focus on desired outcomes, which will lead to better value for the data coming in.
Elenjickal: The companies tapping into the most robust data networks are reaping the most benefit, leveraging the insights of that pooled data to streamline operations up and down the supply chain. For example, the platforms with the densest data networks are using machine learning to drive a continuum from reactive (“Where’s my truck?”) to proactive (“When will my trucks be there?”) to predictive (“What are the risks to my loads, and what can I do to avoid them?”) to prescriptive (“These are the risks to my loads, and they will be fixed automatically”). This functional evolution is only possible for those platforms that are ingesting huge quantities of data each and every day.
Bernstein: While there’s a ton of data floating around in transportation, it’s not usable if your system doesn’t naturally ingest the data it needs to do its job. If it’s a “project” to find, organize or cleanse data, it’s not going to be useful. For example, HubTran uses three data sources to automate payables, which all flow into our platform naturally, without effort by us or our customers. Our customers and their carriers don’t do anything special for us to use the data.
What technologies are you most optimistic about?
Bernstein: We’re bullish on machine learning. Each day millions of freight transactions rely on old-fashioned documents-bills of lading, rate confirmations, invoices, receipts-to settle up. Tens of thousands of people spend their days reading these documents, manually sorting them and retyping information into their companies’ systems. Much like facial recognition tech can identify people in photos, we use machine learning to identify freight documents and pull relevant information from them.
Broering: Application program interface, or API, really excites us. The flexibility of the connection in combination with the “real-time” feel of the transactions allows for a greater value from a connection and the effort associated with it. As more companies upgrade their core infrastructure and become more adept at consuming this type of connection, the ability to share different types of data and derive more from that data will expand rapidly. This will be enabled, in large part, by API technology.
Weseley: Supply chain execution software is opening up better visibility and faster communication between partners. Because they’re still relatively new, it’s not clear which technologies will survive, and which will work best for what issues. The good news is that a TMS can be the platform for any of these technologies, so shippers, brokers, third-party logistics firms and carriers can rest a little easier knowing that their TMS will be there, no matter the winners or losers.
Elenjickal: When machine learning is applied to a vast pool of transportation data, like the one FourKites collects, managers can become more proactive and even prescriptive in their planning. They can make better decisions based on trends in the data analytics, and steer clear of future bottlenecks that they receive alerts on-even before a load has left the facility.
Why are tech solutions that have been around a while hard to implement?
Bernstein: Until recently, freight tech providers focused on serving the industry leaders-an approach that breaks down in a fragmented market like freight. Fortunately, new “software as service” offerings are making advanced solutions more attainable for small companies, and more configurable for large ones. For example, we serve freight companies that range from six to 6,000 loads per day and we’re able to easily connect those companies to their customers and suppliers.
Broering: Many of the older tech solutions require both parties to be technologically adept and ready-made with data to flow through those connections. Those have definitely always been more applicable to the bigger players in the industry. Newer tech solutions come with more interchangeable options for integration and make it much easier to consume for the small- to medium-sized business.
Weseley: Older products were designed for a different era and don’t do a good job of addressing today’s issues. But some providers are totally reimagining how tech solutions should be built, in ways that give users more freedom and flexibility. To maximize these advances, companies need to invest in their IT teams and super-users-individuals who are the most familiar with the software and how it can address the company’s challenges. Long after the consultants have left and the project team shuts down, the super-user continues as the go-to resource and expert.
What services or innovations will most likely change the industry?
Elenjickal: Given that nearly 40 percent of trucks on the road are empty at any given time, bridging that gap would yield a huge impact. More efficiently using that capacity is also critical for sustainability. Reducing deadhead miles requires collaboration among shipper and carrier networks, and the technology is ready to make it happen.
Weseley: Our industry has long struggled with data visibility; it’s typically been reserved for only the biggest companies that could afford huge visibility projects. But that’s changing, and it’s really exciting. Small- and mid-sized companies can now have full visibility into the flow of data and, importantly, the tools to act on it. New innovations are allowing organizations to gather data from internal and external sources, integrate and interpret that data, and share it with partners. That’s opened up a whole new world of opportunities for cost savings, automation and efficiency.
Broering: Artificial intelligence and machine learning are already beginning to impact the industry, and they’re just starting to scratch the surface. The ability to derive value from real-time data and provide intelligence back to the business in a proactive format is exciting and very real in the near future with these combined technologies, and it will continue to reshape our industry for years to come.
As transportation becomes more reliant on tech, what’s the outlook for winners and losers?
Elenjickal: Finding a technology platform that enables you to maximize efficiencies and pivot to meet market demands is no longer a “nice to have,” but rather a necessity to stay competitive in the market. Winners are adopting a more agile, data-backed approach and seeking out innovative ways of streamlining their operations and reducing overhead costs. Those will be the companies that achieve consistently high levels of customer satisfaction and positive relationships with their supply chain partners. Companies who refuse to consider such solutions will have an increasingly difficult time keeping up.
Bernstein: The narrative in freight has been “bigger is better.” But instead of the big eating the small, we see tech-advantaged competitors winning, regardless of size, by leveraging best of breed applications and a smart blend of internal and external solutions. These competitors are increasingly focused on the “network” to connect with carriers, customers and partners and build an ecosystem where information moves easily and economically. And great tech is just step one. Winners use tech to rethink people and process for maximum advantage.
Broering: Adaptability and the willingness to be open-minded about what you know about your space and the way it’s changing will be key to finding the right balance of technology and operations to keep up with marketplace momentum and drive profitability. Those who are slow to adapt or unwilling to admit their approach to the market is getting stale are going to find themselves racing to catch up.
Founder, CEO, HubTran
MATT BERNSTEIN is founder and CEO of <strong>HubTran</strong>, which provides back-office automation for transportation companies. Previously, he held leadership roles at GE, RR Donnelley Logistics and ArcelorMittal, as well as several venture-stage companies. He began his career at Booz, Allen & Hamilton, advising clients on supply chain strategy.
President — Non-Asset Solutions, NFI Industries
DAVID BROERING is president — Non-Asset Solutions for <strong>NFI Industries</strong>, a third-party logistics provider that generates more than $2 billion in annual revenue and employs nearly 11,000 associates worldwide. He began his career working for American Backhaulers in Chicago, which was acquired by CH Robinson in 2000
Founder, CEO, FourKites
MATHEW ELENJICKAL is founder and CEO of <strong>FourKites</strong>, a predictive supply chain visibility platform serving Fortune 500 companies and third-party logistics firms. He previously worked for enterprise software leaders such as Oracle Corp. and i2 Technologies/JDA Software Group, and implemented logistics strategies and systems at P&G, Nestle, Anheuser-Busch InBev, Tyco and Nokia.
Founder, CEO, 3Gtms
MITCH WESELEY is founder and CEO of <strong>3Gtms</strong>, a global provider of transportation management software solutions that serves third-party logistics companies, shippers, brokers and carriers. Widely regarded as the “father of the TMS industry,” he has created and sold six successful companies, including Weseley Software Development Corp., dx/dt Technologies and G-Log.