Supply Chain Convergence: Stitching Together Best-of-Breed Technologies
Transportation management, warehouse management, and yard management systems sew together high-velocity supply chains.
In today's marketplace, e-commerce-driven, omnichannel supply chains are the rule and not the exception. The entire ecosystem of technologies that do everything—take an order, find a rate, locate a truck, book a load, assign a route, manage inventory, identify which warehouse to pick from, or even decide in which dock door or yard space to park a trailer—is undergoing dramatic, disruptive change.
Pressures are increasing as today's supply chains cope with challenges new and old. Product velocity is faster. Order-to-cash cycles are compressed. End-customer demands for product variety, a convenient buying experience, and rapid delivery are more stringent and far less tolerant of failure. The need for up-to-the minute, accurate real-time visibility to products—whether on the production line, at the supplier, in a warehouse, or somewhere in transit on a truck—is more acute than ever. And you have to do all this for less than your budget was last year.
All these factors are driving a convergence of what were once "siloed" technologies to plan and execute transportation, optimize warehouses, allocate inventory and fulfill orders, and organize, stage and schedule trailers and power units at a carrier's terminal or customer's distribution center. And with this convergence has come the increasing need for supply chain technologies to meld together to support a multiplicity of processes while operating at higher velocities with less room for error.
Assessing the Landscape
In a recently published study, Jim Hendrickson, a professor of logistics and supply chain management at the Fisher School of Business, Ohio State University and his team set out to determine the value of supply chain execution (SCE) systems within the context of an Enterprise Resource Planning platform. The study examines how businesses define and evaluate SCE software, and the approaches companies take to develop and justify buying decisions.
His team surveyed a cross-section of industries, including transportation, supply chain consulting, supply chain services, manufacturing, and retail, all with revenues from $100 million to more than $1 billion. Among the findings of Hendrickson's study:
The top three systems respondents identify as critical/very important:
1. Enterprise Resource Planning (ERP): 92 percent
2. Warehouse Management Systems (WMS): 72 percent
3. Transportation Management Systems (TMS): 67 percent
Among the study's other findings:
- 86 percent of respondents don't believe that ERP is enough to manage the complex supply chain of today.
- 92 percent say that TMS is required to increase specialization of an ERP.
- 81 percent identify TMS as the system that offers the most business value.
How do businesses decide what to invest in and when the time is right to upgrade mission-critical supply chain technologies? How do these systems come together to adapt and support the nuances of ever-evolving e-commerce demands? Do you look for best of breed in each category, or one provider who can fulfill basic functional needs of all three activities on one platform? Can you realistically and reliably stitch together separate, functional systems already in place with new technologies that provide the necessary edge to compete?
The answer, as one might expect, depends on who you ask.
"Companies are still very much working in different silos, particularly in transportation," says Bart DeMuynck, research director, transportation technology in the supply chain practice at Gartner Inc. Many solutions in the past were vendor- and function-specific, and they didn't cross boundaries. "You would buy best of breed and then link them together as much as possible," he notes.
But that's changing. Convergence of distinct technologies in the supply chain execution space isn't entirely new; it has been building for some time. "People are starting to catch up and optimize processes and technologies for managing transportation," says DeMuynck.
It's a Process
More players are entering the market. Offerings have become broader and more robust, while implementations are faster, less complex, and quicker to deliver results. "You have to think first from a process perspective," he says. "Set your strategy and processes before looking at technology to enable it."
DeMuynck shares an old bromide: A poorly designed process is still a poorly designed process even with new technology.
Those who are already invested in an ERP—with SAP or Oracle, for example—may choose to use those providers' TMS, WMS, and YMS offerings, primarily to leverage the cost-of-ownership benefits of a single platform. The downside, however, is that these offerings may not be as robust, or offer the same level of specialized features and functionality as a best of breed.
Atlanta-based Manhattan Associates is one vendor that provides all three supply chain execution technologies—TMS, WMS, and YMS—on a single platform within a common database and architecture. The 27-year-old software company counts among its customers some of the nation's biggest retailers and manufacturers. Its heritage is in WMS, followed by growth into TMS and YMS.
"Modularity is a hallmark of our features," says Erin Lamphier, Manhattan's senior director of product management. "It's possible for customers to license and launch only the WMS, TMS, or subcomponents, including YMS. They can take what fits their needs to start, then grow from there." Like virtually all software providers, Manhattan has been adapting and migrating its legacy installed-software products into cloud-based offerings.
A Global Platform
C.H. Robinson (CHR), an Eden Prairie, Minnesota-based third-party logistics provider, offers the Navisphere platform, which provides a broad range of TMS capabilities that enable users to see and manage shipments—domestically and globally—across all services and modes. It's a single-instance, global platform built on a single, internally developed financial system.
"This is important to the customer because analytics, visibility, and financial processes such as invoicing all come from a common place," says Chad Lindbloom, CHR's chief information officer. "The customer can look in one place and see the total suite of business with us."
CHR's brokerage network has access to some 66,000 carriers (80 percent of the surface carriers are in the United States) including air and ocean providers.
Its TMS offerings for carriers mirror those for shippers. "Truckload is an industry with lots of small carriers," says Lindbloom, most with capacity of 100 trucks or fewer. For this segment, CHR's mobile and web apps are popular.
"At small fleets, the owner is often also dispatcher and driver," explains Lindbloom. "Through our mobile app, they can keep track of trucks, find loads, and even be alerted by our system when loads are available. We essentially become a fleet management tool for those operators."
CHR also offers a "managed TMS" product through its TMC division. A recent Gartner report described it as "leveraging the technology (CHR) uses for its own operations as well as TMS plus managed services." This offering "benefits from CHR's deep transportation domain expertise and applied transportation management technologies, as well as the ability to plug into its very large carrier network."
"Managed TMS benefits from the size, global reach, and breadth and depth of expertise of the overall CHR organization," the report says. "CHR uses the same TMS internally, which is functionally broad and deep. CHR has compelling capabilities to support global freight operations, with control towers in North America, Europe, Asia/Pacific, and the rest of the world."
As for supply chain technology convergence, and whether to go single platform or best of breed, views vary. "You have to meet customers where they want to buy," Lindbloom says. "The standard protocol of interfaces with APIs makes it easy to take best-of-breed platforms and sew them together to make one cohesive system."
The Case for Best of Breed
Even with trends pointing to convergence of supply chain planning and execution tools, a highly active market remains for best-of-breed solutions that focus on specific segments, and then interface with and support other applications through mapping tools, integration engines, and other software that enables timely and accurate data sharing. It can be over an FTP site, traditional EDI connections, or new application programming interfaces (APIs).
Sunset Transportation, a St. Louis-based family-owned 3PL, emphasizes TMS. It specializes in supply chain management, shipper technology, brokerage, and freight auditing and payment services. Its core markets are automotive, heavy industrial, manufacturing, agriculture, and chemicals.
"We are focused on the TMS space," says Tracy Meetre, Sunset's vice president of sales and marketing, who notes their technology stack combines a best-of-breed TMS suite with in-house-developed proprietary systems.
"However, we're capable of many services, cradle to grave—from analyzing a shipper's distribution footprint, cost, processes, systems, and analytics, then determining and creating a solution that's scalable for growth and continuous cost improvement."
While TMS is Sunset's primary technology backbone, the third-party provider supports WMS and YMS applications through various EDI integrations and APIs. "Our typical integration on the shipper side is with the customer's ERP," says Meetre. "We piggyback on an exit point of data the customer already has established."
Sunset doesn't offer order fulfillment services or solutions to run a warehouse. Over her 30 years in the business, "I have rarely seen an RFP requirement to incorporate a yard management tool," Meetre notes.
ELDs a Game Changer
Sunset customers want a core focus on TMS because the challenges and opportunities for improving transportation operations and reducing costs are so great. That need has become even more critical with the government-mandated rollout of electronic logging devices (ELDs) in trucks.
"We are consulting with customers on process flows and how they run their facilities," Meetre says regarding loading and unloading practices. "With ELDs, we'll start to see more instances of carriers turning down business from shippers who are notorious for making drivers wait in line for hours, burning time."
The Basics are Free
Kuebix entered the market in October 2017 offering a "free" TMS, that provides, at no cost to the shipper, a cloud-based system with basic functionality including unlimited rating, booking, tracking, and management of shipments across all modes.
Response to Kuebix's offering has been brisk—more than 3,000 users signed up as of late December 2017, according to Dan Clark, Kuebix founder and president. He believes the evolution in freight shipping mirrors that of the airline industry and how booking a ticket through travel agents was largely replaced by self-service online travel sites. "We're democratizing rating and tracking," he says. Revenue is generated as Kuebix upsells users into premium applications.
Particularly where a business has the need for specific experience, functional process expertise, and a deep portfolio of specialized tools and capabilities, best of breed remains the preferred option, notes Nathan Harris, president of YardView Inc., a yard management solution provider based in Denver. Typical clients include food and grocery, OEMs, large fleet operators, and retail distribution centers.
"Managed transportation, and even warehouse productivity, is affected by what happens in the yard," which can involve highly complex activities, he says. YardView's platform orchestrates traffic through a facility's gates, and directs staging of equipment, movement of trailers in the yard, and precise scheduling of equipment into dock doors for unloading, loading, and dispatch.
One key advantage of YardView is its robust analytics dashboard, which presents daily operating metrics and identifies yard and dock throughput and optimization improvements. "Our platform provides visibility," says Harris. "We let customers know what is most important to process next, and when they need to act to avoid problems or excess costs," such as demurrage or detention fees.
Customers would love to have one solution that does everything, says Greg Braun, senior vice president of sales and solutions for Montreal-based C3 Solutions, a large YMS provider. "The reality is that no solution can be best of breed at everything," he notes. "Customer needs are too diverse. We're best of breed in yard management, where customers have a serious need for in-depth functionality and process expertise. So that's our focus."
Most businesses still have a relatively diversified portfolio of supply chain planning and execution applications. "I see a large mix between companies that have multiple systems and those that have everything on one platform," says Gartner's DeMuynck. In many cases, companies already have one or two of the three principal supply chain execution applications deployed.
Supply chain executives, says DeMuynck, should ask themselves two questions: First, "If you have a best-of-breed solution in place now, and it's working, does it make sense to switch?" This is an important question particularly because current installs often represent a large, embedded investment.
The second question then becomes: "What is the best way to add or improve capability on top of what you already have?"