Insights from MercuryGate User Conference 2014

What do you get when you bring together shippers, logistics service providers, and a transportation management system (TMS) vendor in New Orleans? Lots of interesting conversations, insights, and networking opportunities, which is exactly what took place earlier this month at the MercuryGate User Conference 2014 (MercuryGate is a Talking Logistics sponsor).

Not surprising, capacity constraints was a hot topic of conversation, but from a technology perspective, there was also plenty of interest and discussion about integrating/on-boarding new clients and trading partners; the ability to configure workflows and user interfaces; and business intelligence and analytics.

How can a transportation management system (TMS) help companies find and secure truckload capacity in a capacity-constrained environment?

That was the central question Hope Federer, Senior Solutions Consultant at MercuryGate, addressed in her kick-off presentation. At a minimum, shippers and LSPs should have a defined strategy and business process around carrier on-boarding, management, and utilization. In other words, they should have a quick and efficient way to qualify new carriers and on-board them to their network, and they need to have detailed visibility to carrier performance so that they can detect issues early (such as high tender reject rates) and correct them quickly.

Hope showed how using carrier scorecards and Carma – MercuryGate’s carrier management solution – can help. Carma enables companies to manage the process of qualifying carriers and collecting and updating carrier information, such as safety, insurance, hazmat, financials, equipment, locations, and contact info. Whether you work with tens of carriers or more than 5,000 (as some of MercuryGate’s broker clients do), Carma is a more efficient and automated way of managing carriers than using spreadsheets, emails, and paper documents.

But what happens when a load remains uncovered after cascading down the routing guide? This is where today’s TMS solutions can provide smarter, more automated alternatives to the “dialing for diesels” approach many shippers and LSPs still use today. Hope provided several examples, including MercuryGate’s tight integration with Freight Friend, which the company helped to launch in 2011. On the surface, Freight Friend has similar features to other online load boards. Shippers and brokers can post loads, carriers can post available trucks, you can search for matches, and so on. However, what differentiates Freight Friend from public load boards is that the main objective is not to connect thousands of shippers, brokers, and carriers together, but to facilitate the matching of available freight with available capacity between known and trusted parties (“freight friends”), a process that for the most part still happens manually today.

Hope also discussed ways that shippers and LSPs can use the TMS to match uncovered loads with their managed equipment (such as private or dedicated fleets); how they can leverage existing freight moving in the TMS to perform backhaul matching and create continuous move opportunities; and how they can automate rate quote requests and set up auctions.

For additional insights on this topic, watch my recent interview with Hope on Talking Logistics, and my follow-up post, Finding Truckload Capacity: Insights on Managing the Spot Procurement Process.

What are the benefits and pitfalls of multi-shipper consolidation? How can a TMS enable this process?

As truckload capacity continues to tighten, shippers and logistics service providers are looking for ways to leverage existing capacity as efficiently as possible. Multi-shipper consolidation is a great opportunity for shippers to share available capacity and save money — and for third-party logistics providers (3PLs) to enhance their value proposition — but relatively few shippers have “walked the talk” when it comes to collaborating with other shippers to co-load freight. Has the time come?

Jim Davis at MercuryGate provided an overview of the benefits and challenges associated with multi-shipper consolidation, and the role transportation management systems can play in enabling this process.

One of the pitfalls he discussed was cost allocation issues. His idea, which generated several questions and comments from the audience, is to direct NMFC rate each shipment, take to sum of those rates on all shipments, and then divide the individual shipment cost by the sum, which Jim believes would provide a good representative percentage of the charges for each shipment.

From a TMS standpoint, Jim discussed how to properly configure Mojo, MercuryGate’s optimization solution, to enable multi-shipper consolidation, and he highlighted several important considerations, such as rates (including carrier capacity, accessorial charges, and fuel index), pool points and cross docks, and locations (hours of operation, holidays, handling time, and dwell time).

In short, Jim’s presentation underscored how trying to enable multi-shipper consolidation with spreadsheets and faxes is a fool’s errand, and how even if you use a TMS, there are many pitfalls you have to overcome and factors to account for in the optimization and execution processes.

Jim will be my guest on Talking Logistics this Thursday, October 2nd at 12 ET, where he will share more details and insights on this topic, so mark your calendars and join us then.

Finally, as I mentioned in a previous post, I moderated a discussion panel with several 3PL executives at the conference:

We kicked off the conversation with a discussion about the benefits and challenges of the franchise/agency model, which is gaining traction in the 3PL industry. A key benefit mentioned by the panelists is the ability to quickly and cost-effectively scale the business, along with providing entrepreneurs with a platform to launch their own ventures. On the flip side, driving consistency in culture, processes, and technology deployment are among the challenges they have to manage.

I then asked the panelists about the convergence taking place in the logistics industry, including the convergence of business models, specifically the business models of service providers, technology companies, and consulting firms. They all generally agreed that providing customers with the right mix of services, technology, and advice is more important than ever, but they also cautioned against losing sight of your true core competencies. Trying to be everything to everyone would be a mistake, and in the case of technology, the panelists seemed to favor configuring third-party solutions to their (and their customers’) specific needs instead of developing their own proprietary solutions. The fact that the panelists and all of the LSPs in the audience are competitors but they’re using the same MercuryGate solution in various ways to differentiate themselves is a strong validation point.

But the more things change, the more things stay the same. The ongoing challenge for logistics service providers is on-boarding new clients and trading partners quickly and cost effectively. This includes integrating with clients in a multitude of ways — EDI interfaces with ERP systems, web portals, flat files, Excel spreadsheets, or “however else the client wants to send us the data” — and then having the systems and processes in place to manage data quality. Simply put, logistics services providers are indeed in the trading partner connectivity and data quality management business, and while not sexy or glamorous, it’s the foundation for everything else they do (for related commentary, see The Big (Crappy) Data Problem in Supply Chain Management).