Above the Fold: Supply Chain Logistics News (January 24, 2020)

By Adrian Gonzalez

“We don’t see many patients like you,” the dentist told me after poking around my teeth and gums.

It’s a good thing too, because if all patients were like me, he wouldn’t be in business for very long.

49+ years with no cavities, no eroding gums, no crooked teeth, no anything.

The streak continues.

(My wife and kids, however, are a different story. The dentist always smiles when he sees them.)

Moving on, here’s the supply chain and logistics news that caught my attention this week:

C.H. Robinson Labs: Technology Becomes Larger Piece of 3PL Value Proposition

In my supply chain and logistics predictions for 2016, I predicted that the value proposition of third-party logistics providers (3PLs) will get flipped: instead of logistics services enabled by technology, it’s becoming outsourced IT and business intelligence services powered by logistics. In other words, I saw technology and business intelligence/analytics becoming larger pieces of the 3PL value proposition pie.

C.H. Robinson (a Talking Logistics sponsor) is among the best examples of this trend. Last September, the company announced that is “committed to investing $1 billion in technology over the next five years, doubling its previous $1 billion investment in technology over the last 10 years.” And this week the company introduced C.H. Robinson® Labs™, “an innovation incubator where the next big ideas in logistics and supply chain are created, tested, and scaled to drive smarter solutions for C.H. Robinson’s customers and carriers.” Here are some details from the press release:

Through Robinson Labs, C.H. Robinson’s logistics experts, innovation teams, and data scientists collaborate with customers and carriers to create personalized solutions for shippers’ challenges with the industry’s premier technology that is built by and for supply chain experts. Robinson Labs works hand in hand with the company’s technology team of more than 1,000 data scientists, engineers, and developers. Once solutions are proven, the teams work collaboratively to scale them across C.H. Robinson, benefiting its 124,000 customers and 76,000 contract carriers.
Robinson Labs leverages the company’s $1 billion tech investment. It is already delivering on C.H. Robinson’s customer-first promise through new digital connectivity and sophisticated analytics that improve shipping performance for customers and carriers alike.

On the digital connectivity front, C.H. Robinson is connecting the capabilities of its global transportation management system (Navisphere) to the systems used by its customers, such as Oracle Netsuite and Transportation Management. In terms of analytics, the company “is enhancing its online business intelligence software, Navisphere Insight, which is part of [Navisphere].” According to the press release:

Without the need for a separate log in, customers will be able to access Navisphere Insight where they will be served up the most important, actionable insights to improve their shipping performance. Using millions of data points, predictive analytics, and the company’s information advantage, Robinson Labs provides insights to customers on how to improve savings, reliability and visibility. For example, with the Robinson Labs benchmark tool, shippers can reduce costs by altering lead times and volumes, as well as improve dwell times and on-time performance.
Leading companies such as L’Oréal and Target have been part of the pilot phase of Navisphere Insight, providing valuable feedback to ensure that customer needs are being addressed.

In November 2015, Meg Whitman, the CEO of Hewlett Packard Enterprise at the time, wrote a post on LinkedIn that included the following excerpt:

Every Company is a Technology Company
As I’ve mentioned in earlier posts, we’re now living in an era of disruption, what we call the Idea Economy. Companies today can turn ideas into reality in a fraction of the time it took just five or 10 years ago. And it’s no secret that technology is fueling that speed.
Across every industry, IT strategy is now business strategy. Winners and losers are determined by how quickly they can adapt to take advantage of new opportunities or deal with competitive threats.

As I wrote in my commentary back then:

I agree with Ms. Whitman, especially with how she’s defined it — that across every industry, IT strategy is now business strategy, and that speed of execution will define winners and losers.
This is certainly true in the third-party logistics (3PL) industry, where we continue to see the convergence of business models, specifically the business models of service providers, technology companies, and consulting firms. Today, 3PLs are in the IT business as much as they’re in the freight-handling business.

Does “every company is a technology company” mean that you have to design, build, and support your own technology products and solutions?

The “build vs. buy” decision has been a longstanding debate in the 3PL industry. For C.H. Robinson and other leading providers that have gone down the build path, the decision is driven primarily by two factors that are inherently linked:

IT as a Competitive Differentiator: Having the ability to offer customers different and more targeted and enhanced functionality than their competitors, such as better visibility and business intelligence tools. Here is how one 3PL put it to me: If we and most of our competitors are using the same vendor’s transportation management system (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.

But there are valid arguments for taking the “buy” approach too. As I’ve said in the past, at the end of the day, there is no universal correct answer to the build vs. buy question, and in some cases, a hybrid of the two approaches is the best path forward. Regardless of which path a 3PL takes, the key is understanding upfront the critical factors for success — the pitfalls to avoid, the hurdles to overcome — and making the necessary investments in time and resources to make it work.

With a $1 billion checkbook and 1,000 data scientists, engineers, and developers on staff, it seems like C.H. Robinson is indeed making the necessary investments to make it work.

BluJay Solutions Partners with project44

There are a variety of technology solutions that are on the edge of transportation management systems (TMS) — meaning, they either extend or enhance the capabilities of TMS applications. Real-time freight visibility is one example, and one of the hottest segments of the TMS ecosystem. There have been several acquisitions in this space over the past couple of years, as well as multiple partnerships between TMS vendors and freight visibility solution providers. The latest was announced this week, with BluJay Solutions (a Talking Logistics sponsor) partnering with project44. According to the press release, “this partnership combines BluJay’s leading multitenant, cloud-based Transportation Management solution with project44’s global multimodal network, rigorous data security system, and unmatched data cleansing and normalization capabilities.”

What’s driving the demand for these solutions? There are several factors, but the biggest one is the need for more real-time and accurate visibility to orders, shipments, and trucks in response to more stringent customer service expectations, such as Walmart’s On-Time In-Full (OTIF) requirements.

And with that, have a happy weekend!

Song of the Week: “Might Be Right” by White Reaper