One of the key lessons learned from 2020 is that companies can no longer afford to stand on the sidelines when it comes to investing in technology and digital transformation. This is not only true for manufacturers and retailers, but for logistics service providers (LSPs) too. How is technology helping logistics service providers meet the needs of their clients? Which technologies are making the most difference today, and which ones are likely to deliver enhanced value in the near future? How do you decide which path to take: build, buy, or partner? Those are the key questions I discussed with Frank McGuigan, CEO at Transplace, during a recent episode of Talking Logistics.
Technologies’ Role with LSPs
I had the opportunity to attend Transplace’s Virtual Shipper Symposium last October, and based on the content presented, Transplace had a successful year in 2020 despite all of the challenges brought on by the pandemic. I asked Frank what role technology played in this success.
“As it relates to the shipper universe, it was an unbelievable year from our standpoint,” says Frank. “We’ve never seen this much volatility, not only in the freight markets but also in shipper networks, all encapsulated in a six month period. Even though we’re still dealing with the pandemic right now, things have stabilized and companies have a path forward that they understand. That stability is super important as companies invest in their networks and platforms.”
Speaking of platforms, Frank added, “all of our shipper clients are on our platform which enables their logistics network for them. It gives them instant scalability, network visibility, instant capacity, and real-time data insights into what’s happening not only within their network but also in the marketplace, which is very important in a highly volatile time.
“For example, one of our large CPG customers had order volumes of X per day on March 1 and 2X per day by March 15. Their business literally doubled almost overnight. We actually made it into their annual report because, according to them, if they had not been on our digital platform, responding to this lift in business would have been much more difficult.”
Of course, some industries saw a sharp decline in business due to the pandemic, and others were dealing with tariff issues that predated the pandemic. This led to a lot of process and network redesign engagements, including looking at near-shoring and on-shoring opportunities. “The combination of COVID and tariff issues have caused a lot of companies to review their supplier base and contingency plans so they can better serve their customers,” says Frank.
Build, Buy or Partner?
When addressing technology solutions, the first question is always whether to build, buy or partner to acquire the needed solutions. Frank turned that question around by saying, “We build, buy and partner. I don’t think any platform can do anything but that if they’re going to stay current and maximize the outcomes for their shippers.
“For example, we built our platform and control tower, but we have also partnered with third parties to support the information feed into the platform. We use the same approach for incorporating AI into our platform. This visibility and data science allows our customers to see what is happening today in their networks and what they can do proactively about it right now to affect the outcomes. We also bought several companies for their technologies and people, including ScanData, which enabled us to bring enhanced parcel capabilities and expertise to bear during the e-commerce surge. It takes all of the capabilities of build, buy, and partner to give shippers on the platform what they need to manage the best outcomes.”
Resilient Supply Chains
One of the key lessons of 2020 was the need for supply chain resiliency. I asked Frank what role technology plays in this. Franks states that, “The nimbleness and resiliency you need to drive capacity into your network or drive cost out of your network just aren’t possible without technology. These technologies and partnerships had to be in place before COVID happened and many companies admit they weren’t ready. It takes all of the technologies I mentioned earlier coming together with the right partner to create digital transformation and make resilience possible.”
The Convergence of Business Models
For years, I’ve been talking about the convergence of business models between logistics service providers, technology companies, and consultants. I asked Frank what has caused this convergence.
Frank says, “It’s everything we just talked about — the need for instant visibility, capacity, nimbleness, technology and expertise. This convergence is the basis of our business model. And it’s not driven just by the cracks that Covid exposed. It’s all the changes and volatility in the broader marketplace that have been going on since long before the pandemic. It requires a technology platform, but also all of the services, engineering, business analysis and subject matter expertise at scale that allows customers to analyze their marketplace and position their business for success.”
Questions to Ask
What questions should companies ask their logistics service providers today? And what questions should logistics service providers ask their customers today?
I encourage you to watch the full episode for Frank’s insights and advice on those questions and more. Then keep the conversation going by posting your own perspective on this topic!