2014 Top 100 Logistics IT Providers

Tags: Logistics I.T.

Information is power. Inbound Logistics' annual logistics IT research survey uncovers the latest trends powering the supply chain, and reveals the Top 100 sector leaders.

Logistics technology has the power to transform organizations, supply chains, and commerce in remarkable ways. It's also demand driven—to the point where today's industry is undergoing its own radical metamorphosis.

The continuing maturation of e-commerce delivers a new set of expectations, and brick-and-mortar retailers and manufacturers are trying to keep pace. Consumer buying habits are increasingly sophisticated. With SKU selectivity more acute, and fulfillment speed accelerating, IT companies are challenged with helping shippers manage these new complexities.

Web-based solutions have created a much more robust and competitive technology ecosystem. Big data is diving deeper into granular-level analytics, which inevitably narrows IT focus. Software developers, in turn, are tailoring products to address specific functions—and even verticals. Gone are the days when shippers could simply latch on to the latest legacy ERP system and expect a silver-bullet solution that would satisfy all their needs.

To help make sense of this changing landscape, Inbound Logistics' annual logistics technology market research—culled from more than 200 IT vendor questionnaires—underscores industry trends. Our Top 100 Logistics IT Providers list serves as a capstone to this analysis, providing detailed information about best-in-class providers selected by IL editors.

Any Way You Like It

Cloud computing is shaping a new trajectory for logistics technology engineering. Software-as-a-Service (SaaS) and crowd-sourcing online platforms have quickly become new standards for deploying solutions. This lowers the barrier of entry for shippers of all sizes, while providing affordable, sustainable, and faster implementations—welcome news for shippers that are looking for ROI in a matter of months, not years.

Nearly 40 percent of technology companies surveyed in 2014 provide a Web-hosted solution. By contrast, only four percent offer local systems exclusively. The majority, 57 percent, can deliver both.

While the Internet has created a fertile incubator for solution development, a recessionary mindset has changed the way companies shop for technology. They are no longer willing to dump significant capital up front in uncompromising systems. Buyers want flexibility to adapt and change. They are more willing to build a technology architecture incrementally over time, rather than jump in all at once. The new wave of IT solutions supports this plug-and-play shift.

To that point, technology companies are very flexible with the way they price their offerings. In 2014, more survey respondents (72 percent) provide transactional, pay-as-you-go subscriptions than system-based pricing (61 percent)—a reversal from past years. It's indicative of SaaS popularity, where users lease applications on demand. Sixty-two percent of surveyed technology companies offer per seat/user pricing.

One notable trend is the growing number of companies (10 percent) that consider their solutions "free." The majority of these vendors are third-party logistics (3PL) providers offering managed technology services—where fees are determined by gainsharing and other variable cost structures. It's a telling indicator that shippers are increasingly sourcing bundled IT solutions indirectly through 3PLs.

Consequently, more IT companies are targeting intermediaries—exclusively, or in addition to shippers. Software developers recognize that service providers offer a ripe wholesale channel to deliver product to market. Some even allow third-party customers to private-label their solutions. 3PLs and carriers, in turn, understand that providing logistics technology capabilities—and often bundling services around these solutions—creates additional value beyond transactional transportation and warehousing.

This market shift is apparent among Top 100 survey respondents (see Figure 1). The majority of IT companies surveyed (90 percent) serve 3PLs, warehouses, and carriers, followed by manufacturing (83 percent), wholesale (76 percent), retail (75 percent), and e-business (57 percent). It's worth noting that retail traction has dropped noticeably over the past few years, while e-commerce has conversely appreciated. This suggests that e-commerce is likely cannibalizing some of that market share.

Fig. 1 Industries SERVED
Transportation (includes 3PLs, warehousing, carriers, int'l trade) 90%
Manufacturing 83%
Wholesale 76%
Retail 75%
e-Business 57%
Services/Government 44%

Moving forward, it will be interesting to see how the rapid emergence of omni-channel retail impacts the way IT companies serve virtual and brick-and-mortar supply chains inclusively.

One unique characteristic of the logistics IT market is the relative balance that exists in terms of what solutions vendors provide. As in previous years, no single technology dominates the space. This reflects growing competition and function specificity.

Supply chain management (69 percent), transportation management (68 percent), optimization (66 percent), and routing and scheduling (59 percent) round out the most popular service offerings (see Figure 2), according to this year's Top 100 respondents. Priorities remain focused on cost reduction—the top challenge for technology buyers, according to 87 percent of solutions providers (see Figure 3).

Fig. 2 Solutions Offered
Supply Chain Management 69%
Transportation/TMS 68%
Optimization 66%
Routing & Scheduling 59%
Inventory Management 52%
Load Planning 48%
Modeling/Forecasting/Predictive Analytics 46%
Supplier/Vendor Management 46%
Auditing/Claims/Freight Payment 45%
Warehousing/WMS/WCS 44%
Fig. 3 LIT Buyers' Top Challenges
Cost Reduction 87%
Integration 71%
Visibility 70%
Customer Service 67%
Transport Optimization 59%
Data Management (Big Data, Quality, Synchronization) 58%

More telling, integration (71 percent) now trumps visibility (70 percent) and customer service (67 percent) as top concerns among shippers. This is a marked change compared to 2013. But it speaks to the changing technology paradigm.

With so many affordable options on the market, and solutions developers growing "through niche functionality within verticals," as one survey respondent documents, buyers are challenged with how to integrate these systems. That has become a pivotal question when buyers court new IT vendors.

"Logistics technology that can be easily integrated (local and Web) and customized to the exact needs of the customer will continue to be a driving force in the market," shares another respondent.

Going Global

Integration also transcends geography. More shippers want solutions that can be purposed across global networks. Accordingly, 65 percent of surveyed software companies tailor their products to both U.S. and global users. The world marketplace is hungry for easily deployed Web-based solutions where existing IT architecture in some places is nebulous at best. The growth of global e-commerce, and increasing demand from global 3PLs, present new sales opportunities for logistics software companies looking to grow their customer base.

Closer to home, rapidly changing consumer trends are shaping how retailers and manufacturers leverage software to manage new complexities. The "death of the channel" and new retail formats are forcing some to reconsider how they position, then pull, inventory to demand.

"Anytime/anywhere consumers now demand a range of shopping formats catering to all their needs and wants," says one IT company.

Data management is one way industry can better understand consumer behavior, as well as benchmark performance. Fifty-eight percent of IT companies identify this as a challenge for their customers—up six percent over 2013 figures. Big data serves both the demand and supply sides. Consumers have access to more information, which informs how and where they buy product. Retailers, wholesalers, and manufacturers have access to similar business intelligence. In some instances, this allows them to shape demand. In effect, it becomes a cat-and-mouse game of trying to accurately forecast how the other will react.

This molecular-level market intelligence will dictate how consumers, retailers, and manufacturers approach omni-channel, e-commerce, mobility, and last-mile delivery.

Adds another survey respondent: "Technology that closes the loop between product availability and demand shaping activities—and can precisely align availability with channel demand—will be in high demand."