We all know the David and Goliath story — how the much smaller David defeated the giant Goliath with just a stone and a slingshot. In the logistics realm today, you also have big players and small players competing against each other, but instead of slingshots, it’s digital technologies that are helping to level the playing field. How should small brokers prioritize their investments and efforts? How can they get over the change management hurdle? Those are the main questions I discussed with Prasad Gollapalli, Founder and CEO of Trucker Tools, during a recent episode of Talking Logistics.
Becoming a Preferred Broker
In today’s digitally-driven world, all companies must compete on delivering the best customer experience. More recently, that concept has been extended to include being a shipper of choice. Therefore, I began our discussion by asking Prasad how this concept may apply to smaller brokers as they compete with large brokers for carriers’ attention.
Prasad notes, “In high level discussions, it comes down to how a broker can become a broker of choice for carriers so that they can become part of the broker’s core carrier program. For example, if a broker can fill 80% or more of a small carrier’s capacity over time, the broker will be a broker of choice for them.
“In a survey of carriers we conducted, what carriers say they want most is consistently high volumes of freight at good rates. In other words, is this broker helping me with my asset utilization and good, non-fragmented routings to help me make money?”
Digital Technology – Threat or Opportunity
Given that large brokers typically have more funds to spend on the latest digital technologies, is this a threat or an opportunity for smaller brokers? Prasad says, “It’s definitely an opportunity. All brokers have a huge opportunity in front of them. The COVID-19 pandemic has put a bright spotlight on transportation and there is tremendous investment flowing into this space. Investors are looking at digital technology adoption as a basic qualifier for investments. That’s because brokers who take advantage of technology can grow much faster while containing costs. Those brokers who do not adopt technology will be left behind.”
The Starting Point for Digital Transformation
How should brokers prioritize their investments and get started on their digital transformation journey? Prasad points out that if brokers are wondering when to start this journey, the answer is yesterday. “In today’s marketplace, brokers who don’t have the technology can’t compete.”
Prasad comments that there are three areas where brokers should prioritize their technology investments. “First is freight matching—putting the right load on the right truck. The second is freight visibility because load visibility is a huge factor for shippers. If you can’t tell the shipper where their load is, they are not going to work with you. The third is the feedback loop—getting the PO and the invoice from the carrier to the broker and back to the shipper because that can reduce their days of operations.
“Most brokers start with visibility because that is the low-hanging fruit. You’re helping a carrier to adopt new technology and getting the shipper the visibility they require. Next is freight matching because that has the biggest value for the broker, especially with the current capacity crunch. The third step is then the feedback loop. The key to the three phases is that the technology needs to be connected. Otherwise there is a cost to connect them.”
Finding a Technology Partner
Many companies now think of their technology providers as partners rather than as vendors. Why is this happening? Prasad notes that the old way of thinking was that you buy software, install it and expect it to run untouched for 100 years. “But the marketplace is changing too rapidly today to stay static. At the same time, a broker’s customers and carriers are also changing and adopting new technologies. If a broker is not also adopting and upgrading their technology, they will be the one to drag their partners down. Therefore, the vendors providing the technology to brokers must be engaged in this process.”
Prasad says there are five areas to look for when evaluating technology partners. They should:
- Be constantly evolving their products
- Involve the brokers in this evolution to ensure they are meeting the broker’s changing requirements
- Leverage the ‘network effect’ of cloud technology
- Go beyond the software (look at the support and training they offer)
- Be accountable
Prasad provided a great deal of context around these five points, and he also presented a thorough overview of how to get over the change management hurdle in a way that makes it a no-brainer (e.g., he notes that if you say you’re waiting for the software to mature, you’ll never get started because it is always evolving.) Therefore, I recommend that you watch the full episode for all of Prasad’s insights and advice on this topic. Then keep the conversation going by posting your own thoughts and experiences.
