The transportation market, and its supporting technology, have changed dramatically over the 20+ years that I’ve been an industry analyst. The challenges transportation executives face today, as well as their needs and requirements, are very different than they were 20 years ago — and they will undoubtedly continue to change in the years ahead.
The same is true with technology, especially transportation management systems (TMS). As we’ve moved away from in-house, client/server applications to cloud solutions and the emergence of network-based platforms, there is always something new to talk about. The innovation never stops in response to changing customer requirements and market conditions.
Is it time for companies to invest in a new TMS? Or for many companies out there, is it time to invest in a TMS for the first time? Those are some of the key questions I discussed with Pervinder Johar, Chief Executive Officer at Blume Global, in a session during the virtual CSCMP EGDE 2020 conference.
To begin our session, I asked Pervinder to provide a brief overview of how we got to where we are today with transportation management. Pervinder compared transportation management’s evolution to the Winchester Mystery House in San Jose, CA where a widow continuously added onto her house for 30 years in a very haphazard and disconnected way. He related how it began primarily with managing outbound transportation, then adding inbound, parcel and international over time. These pieces were often disconnected processes managed by separate groups within the organization. The technologies supporting these processes were disconnected as well.
In today’s highly interconnected world, however, these transportation processes and technologies must be integrated in order to handle the speed and volatility of today’s ecommerce-driven environment. In fact, the companies that have been most successful adapting to the surge in e-commerce due to the pandemic are those that have broken out of their organizational silos and integrated their transportation processes and technologies.
The Transportation Platform
Pervinder points out that with Covid-19, in effect, every company is now an e-commerce company, and this will play out even more strongly in the upcoming holiday season. You may have gifts ordered online that are produced in China, are shipped by ocean or air freight to a distribution hub and then may be handled by multiple carriers (truckload, LTL, parcel) until they arrive at the customer’s doorstep. Virtually all modes of transportation are involved so you have to get rid of the siloes to ensure the gifts arrive efficiently, correctly and on time. Therefore, what is needed is an integrated transportation platform.
Pervinder goes on to note that beyond the value of the platform operating seamlessly in the cloud, “The true power is using the network effect of the cloud so that everyone has a shared understanding and a single version of the truth between the partners in the ecosystem. And with the common, shared master data a cloud platform provides, you can now roll out these systems in two-to-three months that may have taken six months to two years previously.”
He also points out that unlike the core carrier programs of the past, it is important to communicate and collaborate with small carriers because this “long tail” of the supply chain comprises the majority of the assets and capacity in the market. A networked approach enables the digitization of those carriers to efficiently leverage those assets.
Supply Chain Integration
Since transportation and logistics doesn’t operate in a vacuum, I asked Pervinder what other systems/functions transportation must integrate with for a smooth functioning supply chain. He says the biggest need is for integration with supply chain planning.
Pervinder notes that companies spend a great deal of time and effort creating efficient supply chain plans that are often not visible to transportation planners. “One of the biggest benefits of merging planning functions concerns lead times,” he says. “All planning systems treat lead times as a fixed number. But on the transportation side, we know that lead times are variable based on the trade-offs between cost and speed. Supply chain planners can use that information to create more realistic and executable order fulfillment plan. That then impacts all other functions and systems.”
Emerging Technologies in Transportation
There is so much buzz in the market about emerging technologies, such as machine learning and artificial intelligence, that I had to ask Pervinder how they are impacting transportation management. He makes the insightful comparison that all of our systems in the past were decision-support systems — giving humans the information they need to make better decisions. Now, with machine learning and AI, we have decision-making systems. Machine learning systems examine data to understand patterns and AI systems learn from these patterns over time to make educated decisions similar to how the human brain works, but faster and more efficiently. This kind of integrated planning and automated decision-making wasn’t possible previously due to the limits of computing power, but now with the Cloud, computing power is effectively infinite.
$1 Trillion in Waste
When I moved on to ask Pervinder how companies could build a business case for investing in transportation management solutions, he noted that global logistics spend is about $14 trillion annually, but approximately $1 trillion of that is wasted through empty miles, using inefficient modes, etc. So, he says cost justifying transportation management systems is very doable and he gave several examples of cost reduction areas to consider. He also notes that in today’s marketplace, maximizing the customer experience is so critical, so there are other factors that should be considered. Pervinder shared additional insights and advice on building the business case for a holistic TMS, as well as how companies can evaluate where they are on the transportation management capabilities curve. He and I also addressed some questions submitted by the audience. Therefore, I recommend that you watch the full conference session for all of the details. Then keep the conversation going by posting your own thoughts or questions.