One of my supply chain and logistics predictions for 2017 was that software vendors and third-party logistics providers (3PLs) would embrace Simplicity-as-a-Service as a new value proposition for customers. Here’s how I define Simplicity-as-a-Service:
Simplicity-as-a-Service is enabling customers to achieve their desired outcomes in an ever-changing business environment with less time, effort, cost, risk, and resources.
It points to a deep-down reality in the marketplace: manufacturers and retailers don’t really want to buy supply chain software; they want to buy outcomes — cost reductions, productivity improvements, revenue growth, increased market share, improved working capital, and so on. As Harvard marketing professor Theodore Levitt famously said, “People don’t want to buy a quarter-inch drill; they want a quarter-inch hole!”
What shippers want, in essence, is the right mix of technology, services, and consulting to help them achieve their desired outcomes, which is why the business models of third-party logistics providers, software vendors, and consultants have been converging over the past few years.
This convergence, coupled with Simplicity-as-a-Service, is what underpins MercuryGate’s announcement yesterday about its Logistics Integrator Program, which combines “the demonstrated power of MercuryGate’s TMS technology with the proven design, delivery and execution best practice capabilities of select, pre-approved logistics services providers (LSPs) that have demonstrated competence in meeting the evolving needs of shippers today.” MercuryGate (a Talking Logistics sponsor) also announced that it has selected Redwood Logistics as its first Logistics Integrator.
On Talking Logistics yesterday, I had the opportunity to speak with John Carey, VP Worldwide Channels & Partner Ecosystem at MercuryGate and Al Toliver, Chief Logistics Officer at Redwood Logistics, about what shippers need to extract maximum and ongoing value from a TMS. We started by discussing some of the hurdles or roadblocks shippers have to overcome to effectively address the many challenges they face today to achieve their objectives.
“It runs the gamut from lack of tools, lack of resources, lack of experience,” said Toliver. “Change management is another big factor that a lot of companies overlook and don’t prepare for as well as they should…You also need to have the right level of stakeholder and management support in the organization. Those are some really important roadblocks that we try to get organizations to think about before we really embark on anything because if they’re not prepared it doesn’t matter what kind of technology we have or what kind of process we have, if the organization isn’t ready for it, it’s going to be a difficult road.”
Carey underscored the importance of effective planning and project scoping. He also echoed Toliver’s comments about change management: “It’s important to create a vision of what that change could mean. Is it cost reduction? Is it a new revenue opportunity? Is it a competitive advantage? What are the three things that are going to be important at the executive level that people are going to actually put their money behind and put their effort and support behind?”
With regards to transportation management systems, many companies spend a lot of time and effort putting together a request for proposal, evaluating vendors, and ultimately selecting a solution. But then it comes to successfully implementing the TMS and going after the promised savings and benefits, a lot of companies fall short of their goals. Why is that? If a TMS by itself is not a silver bullet, then what else is needed to extract maximum and ongoing value from a TMS?
Check out the short clip below for Toliver’s response:
“A TMS is like any other technology,” said Toliver. “You have a small percentage of people that really understand it and utilize it well. The power of the technology is there, all of the functionality is there, but what it comes down to is really being able to understand how it applies to your business and really being able to make sure you leverage it [effectively].”
Toliver’s comments reminded me of what a logistics executive said at a conference a few years ago: “You can give me a Stradivarius and you can give me a violin from Walmart, and if you ask me to play them, I will make them sound equally bad. It takes no talent to buy software; the value comes in how you use it.”
Translation: If you buy the equivalent of a Stradivarius TMS but don’t know how to implement and use it effectively, or you don’t have the skills, knowledge, and resources to continuously fine tune it in response to changing market or customer requirements, you might as well buy a crappy TMS — you’re wasting your time and money either way.
I encourage you to watch the rest of my conversation with John and Al for more insights and advice on this topic, including what’s required from a technology standpoint and from a service provider standpoint to help shippers keep pace with the rapid changes in the market and achieve ongoing benefits from a TMS.
The bottom line is that the convergence continues, and so does the march toward Simplicity-as-a-Service, as shippers continue to seek the right mix of technology, services, and consulting to achieve their desired outcomes.