If I ask you to guess who announced new transportation management software (TMS) functionality yesterday, who would you guess?
My bet is that you would name a software company, perhaps a best-of-breed TMS vendor like some of our sponsors, but the right answer is actually a third-party logistics provider.
Yes, a 3PL.
Yesterday, Ryder announced the launch of Ryder TranSync™— “a patent pending, automated technology tool used to provide Ryder Dedicated or Transportation Management Solutions customers with dynamic transportation planning.” As the video below illustrates, the solution enables customers that use both common carriers and either dedicated or private fleets to “make better transportation decisions and save money by analyzing the best combination of transportation modes at the lowest total network cost in real time, load by load, every day.”
“There is a misconception in the industry that you can identify the lowest total network cost based on optimizing lane rates only,” said John Diez, President, Ryder Dedicated Transportation Solutions in the press release. “Ryder TranSync enables our team to consider a number of other factors, such as available capacity and drivers, fixed fleet costs, and backhauls, and automatically calculate the true lowest network cost, as well as the best resource allocation for the customer.”
I haven’t had a chance to speak with anyone at Ryder yet or see a demo of the solution, but this news caught my attention for several reasons.
First, it underscores a point I made last year in Putting Software Vendors and 3PLs in a Box: That the answers to “What is a third-party logistics provider?” and “What is a transportation management system?” don’t fit so neatly in a box any more. The boxes and labels of yesterday are giving way to a single amorphous category: “Providers of Supply Chain Software and Services.”
Second, it further validates what I’ve been hearing from shippers and other TMS vendors that either have or are working on developing similar functionality: that there is growing demand for TMS solutions that can integrate common carrier and private/dedicated fleet functionality in a more intelligent and seamless manner. Historically, many companies have managed those operations in silos, and as a result, TMS solutions have treated them as silos too. But the tide is starting to change, as companies face increased cost pressures, capacity constraints, and more stringent customer expectations (e.g., faster, more frequent deliveries), which is leading them to finally break down the silos. The integration of common carrier and private/dedicated fleet capabilities has been a hot topic of conversation this year, both at the Descartes and JDA Software user conferences last month and in recent briefings with LeanLogistics, MercuryGate, and UltraShipTMS (all are Talking Logistics sponsors).
Third, this announcement raises, yet again, the build vs. buy question for 3PLs. Why did Ryder develop this solution instead of working with a third-party TMS vendor? I don’t know for sure since I haven’t spoken with them, but this quote from the press release provides a clue (emphasis mine):
“With TranSync, Ryder account teams provide Dedicated and Transportation Management users with a competitive advantage by providing them with seamless planning across all providers, as well as flexibility, visibility and reliability,” continued Mr. Diez. “We are proud to be the first to bring this much needed automated planning tool to the market, offering customers the opportunity to experience cost savings while achieving continuous improvement.”
Simply put, for 3PLs that continue to develop their own solutions, the decision is primarily driven by two key factors:
IT as a Competitive Differentiator: Having the ability to offer customers different and more targeted and enhanced functionality than their competitors. Here is how one 3PL put it to me a few years ago: If we and most of our competitors were using the same vendor’s TMS, then how can we differentiate if we’re all basically offering the same capabilities to customers?
Faster, More Responsive Innovation: Having full control of the innovation cycle versus being at the mercy of a software vendor’s release schedule. Simply put, when new functionally is required, either by a customer or an internal request, 3PLs want to enable it as quickly as possible. In many cases, developing the functionality in-house is faster than submitting a new feature request to a third-party vendor and keeping your fingers crossed that it gets included in the next release, which could take six months or more.
There are valid counterarguments to the build approach, as Monica Wooden from MercuryGate discusses in The Build vs. Buy Decision for 3PLs and John Urban from GT Nexus talks about in The Cloud Technology Opportunity for 3PLs.
What does this all mean for manufacturers and retailers looking for a solution provider?
I’ll repeat what I’ve said many times before: The first step remains the same — you have to clearly define your desired outcomes. But when it comes to finding the right partner to help you get there, you need to take a fresh look at the market — beyond the traditional labels of 3PL, software vendor, and consultant. The reality is that manufacturers and retailers have a diversity of options today, and the right partner (regardless of what you label them) is the one that can provide the right mix of technology, services, and advice to help you achieve your desired outcomes.