July 2002 | Commentary | Supply Chain Technology

Clicking Toward Dynamic Carrier Selection

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As supply chain technology evolves, service providers continually refine their offerings to deal with specific challenges. One difficulty many companies face is finding the optimal carrier for a shipment.

To address this, Clicklogistics, currently being acquired by Yellow Corporation's Meridian IQ division, recently launched version 3.0 of its web-native transportation management system (TMS) featuring a new Dynamic Carrier Selection (DCS) module. This module helps companies select an optimal carrier based on their range of contract rates and the service requirements of the load.

While DCS selects the primary carrier, it also can provide the optimal sequence of backup carriers in capacity-constrained cases such as truckload transportation. DCS answers questions such as:

  • Who should be the primary carrier for a lane?
  • What is the best tendering strategy when an initial tender is rejected?
  • What should the tendering sequence be?
  • How can core carrier usage be increased?
  • How much time should carriers have to respond to a tender?

The benefits of using DCS are many, according to Clicklogistics. First, users realize cost savings from the reduction of rogue buying and from optimal carrier selection. Secondly, cost savings accrue by reducing the amount of labor needed to find carriers. Thirdly, DCS improves carrier service by helping companies use a higher percentage of core carriers and reducing the use of brokers. Finally, the user's customers also benefit through quicker and more reliable access to high-quality carrier capacity.

Choosing A Carrier

The DCS system can be used for dynamic selection of primary carriers in any mode. Secondary carrier selection only applies in modes that have capacity constraints issues, such as truckload.

To what extent is the service global? "Global shipments, including calculation of landed costs, duties, and taxes, are handled through a partnership with NextLinx," a software solutions provider that deals exclusively in automated global trade management, says Tom Sanderson, CEO and president of Clicklogistics.

"The system also is capable of handling NAFTA shipments," Sanderson adds.

DCS puts significant control of the tender/re-tender process in the hands of users, giving them three options for re-tendering freight:

  • Mass tender. Mass tender lets users select a group of carriers to whom they will tender a given shipment. Clicklogistics Online tenders the shipment to the group, awards it to the "winning" carrier, and cancels all other tenders. The winning carrier is chosen by one of two methods that the customer determines in advance: either the "first to respond" or the "best to respond."
  • Priority tender. Users tender freight one carrier at a time in a sequence they describe. Tendering continues until a carrier accepts or the end of the sequence is reached.
  • Private trading exchange. Establishing a private trading exchange, or PTX, requires an agreement from the carriers the user wants to include because the PTX involves live price negotiations. PTX tenders include an offer price, which the user determines. Carriers have the option of accepting the tender at the offer price, or accepting conditionally at a higher price. Clicklogistics Online carriers can accept or reject using either of the two methods.

Clicklogistics does not contractually guarantee a payback to its customers "because of the complexity of benchmarking and gain sharing in transportation operations," says Sanderson. "We do not, however, have upfront license fees and do not require long-term contracts, which significantly reduces risk for our customers.

"Additionally, we offer pilot programs, which are paid engagements that give potential customers the opportunity to try our technology on a limited time and scope basis," he says.

Clicklogistics puts many security safeguards in place to protect re-tenders and customer information.

"Only carriers pre-approved by the shipper are allowed to participate in the DCS process," Sanderson notes. Rates are kept in a secure database that prohibits shippers and carriers from seeing any rates other than their own. Tenders include only the information necessary; most DCS processes involve rates that are on file and under contract, and thus don't need to be transmitted with the tender.

Looking to the Future

What does the future hold for Clicklogistics? "We see continued penetration of the mid-market, which we define as shippers who spend between $1 million and $100 million on transportation," says Sanderson. "We also have great success selling to larger organizations that need to fill gaps in their existing transportation technology."

The company continues to target new markets as well. "The mid-market for transportation management systems has been under-serviced since the initial development of the technology," Sanderson notes. "To that end, the market is new. While Clicklogistics has not historically targeted any specific vertical industry, recent success in the retail and food industries gives us reason to focus on these markets."

The company's outsourcing business also is doing very well, according to Sanderson. "We focus on traditional 3PL deals (where an entire load control operation is outsourced) and provide our outsourcing services as a premium feature of our Transportation Management System," he says. "We have several customers who selected us primarily for our TMS, but who also had a need for outsourced resources at a few of their facilities. This is where our outsourcing services provide the most value and where we've seen tremendous growth."

For more information on Clicklogistics: www.clicklogistics.com

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