2014 Top 100 Logistics IT Providers

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.


The IT Factor
2014 Top 100 Logistics Technology Providers

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."

The IT Factor

Logistics technology is inherently demand sensitive. So IT vendors have an acute understanding of the challenges and opportunities shippers face as they go to market. Inbound Logistics asked IT companies responding to our Top 100 questionnaire to share their perspective—through the prism of their customers. Here’s what they have to say…

…On Efficiency
“Everybody is looking to do more with less money, fewer people, and fewer mistakes.”

“Customers want to reduce inventories and costs, while consuming fewer resources. There is strong demand from companies that experience hard-to-forecast intermittent demand for most of their products, especially in service/spare parts organizations, and the aerospace, automotive, and electronics industries.”

…On Big Data
“Companies are looking for more big data solutions that help them view every part of their supply chain at a granular level. They are seeking ways to glean intelligence from a combination of structured and unstructured data to stay ahead of shifts in customer demand.”

“There is growing need and ability to connect brands and suppliers to downstream consumer data. Manufacturers and consumer packaged goods companies can streamline supply chain operations by working directly with their trading partners to pull demand-driven data. Based on inventory and service level agreements, manufacturers can leverage this information to fulfill demand without producing excess.”

…On Visibility
“Customers want to track high-value items via advanced data capture mechanisms including RFID, bar codes, GPS, and image capture at point of origin.”

“Port strikes, weather disruptions, and expanding ocean carrier alliances that may cause schedule changes and impact service levels at ports are a few factors driving a need for greater shipment visibility to ensure smoother supply chains.”

…On Transportation
“A solution that can execute on all transportation activities, and collect data for advanced modeling, will provide the greatest long-term value for shippers.”

“The future is in next-generation continuous and incentive-centric route optimization that can handle complex scenarios in dynamic environments such as same-day home delivery. This will require integrated fleet routing and TMS to holistically manage transportation on a single platform.”

…On Omni-channel and E-commerce
“With the rise of different commerce channels, including mobile and Internet, the shopping experience is changing. Customers are more aware of prices and more informed of product information than ever before. At the same time, retailers are more influential in shaping demand with promotions and other events.”

“Back-end systems that connect to online shopping carts and manage inventory, shipping, and returns are in demand.”

…On Regulations
“Shippers and logistics service providers need systems to help them comply with increasing global security regulations. In 2014, Japan’s Advance Filing Rules went into effect for non-vessel-operating common carriers (NVOCCs) to submit advance manifest information for all Japan-bound ocean cargo NVOCCs. Canada is also scheduled to implement its eManifest requirement for forwarders in 2014. Logistics technology can help shippers and logistics service providers submit filings more efficiently, and integrate with their process flows to reduce data entry and monitor filings for compliance.”

“Companies today must contend with a host of new regulations, including the California Transparency in Supply Chains Act, the Consumer Product Safety Improvement Act, Conflict Minerals Reporting, the Maine Toxic Chemicals in Children’s Products Law, and the Washington Children’s Safe Product Act. Companies are looking at supply chain technology to maintain critical information such as factory safety records, vendor scorecards, compliance audits, performance and quality history, standards of vendor engagement, as well as to streamline and manage the complex regulatory compliance process.”

“Demand is growing in food and beverage because margins are getting tighter due to rising commodity costs, increased energy costs, and more regulation on the horizon with the Food Safety Modernization Act.”

2014 Top 100 Logistics Technology Providers

IL editors pored over more than 200 questionnaires and conducted extensive research online and over the phone to winnow down this year’s crop of Top 100 Logistics IT Providers. We value transportation, logistics, and supply chain technologies that are core. We also prize IT companies that document and celebrate retailer/manufacturer successes. From global trade platforms to last-mile routing and scheduling, on demand or out of the box, these solutions providers capture the rich diversity and robust functionality of today’s logistics IT landscape. View the 2014 Top 100 Logistics IT Providers now. For questions or comments about the list, email [email protected]

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