Logistics Technology: 3PLs Span the Gamut
The road to business growth is paved with data. Providing both software and expertise, third-party logistics partners keep small shippers in the fast lane.
Third-party logistics (3PL) providers and logistics software vendors once played distinct roles in the lives of shippers. Today, the difference is less clear cut. Besides using software to manage logistics operations for their customers, many 3PLs now offer software solutions that shippers use themselves.
Often, a 3PL provides information technology (IT) as an adjunct to its services. The 3PL still manages transportation, warehousing, or other functions for its clients, but also gives shippers tools for extracting extra value from its data systems. Shippers use those tools, for example, to track shipment status, evaluate supplier and carrier performance, or analyze their operations to support future business decisions.
Some 3PLs also sell software that shippers use to manage their own activities—whether or not the shipper outsources to the 3PL. And some 3PLs provide consulting services, helping shippers choose and implement solutions from third-party software vendors.
Small and midsize businesses (SMBs) often lack the resources and expertise to implement sophisticated IT solutions on their own. But they need the advantages—efficiency, visibility, and business intelligence—that IT solutions provide.
"Small companies are coming to understand that technology is the path to growth," says John Riske, vice president of business development at Next Generation Logistics (NGL), a non-asset-based 3PL based in Inverness, Ill.
Businesses that depend on spreadsheets, paper documents, and emails are waking up to the advantages of more advanced tools. "They realize they can no longer survive in a manual world," Riske says. "They need more structure and more visibility into the data."
Many SMBs today look to 3PLs to lead them on their journey from a manual world to a data-driven world. "In effect, the 3PL becomes a small company’s IT department," says Dan Sellers, chief information officer at WSI, a 3PL based in Appleton, Wis.
Many 3PLs provide IT solutions mainly to supplement their own logistics services. One example is LynnCo Supply Chain Solutions of Tulsa, Okla., which offers SuiteEdge, a collection of cloud-based tools that includes a proprietary supplier accountability module, a transportation management system (TMS) from IT vendor MercuryGate, a reporting system, a freight claim tracking tool, and a proprietary analytics engine. The system integrates with a variety of warehouse management systems (WMS).
"We like to call it a mini-supply chain ERP [enterprise resource planning system]," says Wendy Buxton, LynnCo’s president. "The system is designed to implement and automate best practices, with the intent of doing more than just pushing buttons to order or ship a product."
A customer obtains SuiteEdge as part of an overall program of services from LynnCo. When the relationship starts, LynnCo uses a proprietary data mapping procedure to integrate its tools with the shipper’s ERP or other operating systems.
"We don’t want shippers to have to allocate IT resources to make this work," Buxton says. "They’re already strapped with implementing ERP systems or operational systems to run their business." With an IT partner to take on the heavy lifting, the shipper needn’t devote a great deal of time, money, or staff to implementation, or to learning how to benefit from the system.
Triumph Revs Up logistics
For Triumph Motorcycles America, based in Atlanta, much of the value that SuiteEdge delivers boils down to visibility and analytics.
Triumph Motorcycles America is a wholly owned subsidiary of Bloor Holdings, which also owns the global business, Triumph Motorcycles Ltd. The North America business employs about 60 people, selling motorcycles, parts, accessories, and clothing through 200 dealerships.
"In a small business, head count is always a challenge," says Matt Sheahan, the company’s chief operating officer. "So it’s great to have tools that make a small staff more productive."
Triumph uses SuiteEdge to monitor day-to-day logistics performance and to dig into historical data for insights on how to improve operations.
"I can quickly look at the dashboards to see on-time deliveries, damages, pickup times—all the activity—and any kind of exceptions," says Brandon Keller, Triumph’s operations manager. "Then I can get into specific data mining to find out details I need to make informed business decisions."
LynnCo helped Triumph America both redesign its supply chain and implement the new technology. The two companies started by outlining Triumph’s vision for its future supply chain operations in North America.
Mapping that vision on whiteboards, the partners discussed which data elements were currently available for use, which elements Triumph wanted to capture in the future, and how to obtain that new data.
Because SuiteEdge makes shipments visible, Triumph can keep dealers up to date on incoming product, and dealers can share that information with consumers. That visibility and the reliable data behind it are two big benefits SuiteEdge offers. "Being able to use that data to provide good service to our dealers is a stepping stone to providing the next level of customer service," Keller says.
SuiteEdge also helps Triumph understand the factors that drive its shipping costs. "That leads to discussions on how to manage allocations, order releases, shipping times, and customers’ shipping expectations, to make sure we’re making the right decisions to improve our business and our dealers’ business," Sheahan says.
Tactical and Strategic Tools
One major technology offering from APL Logistics is its Visual Technology Suite, a series of cloud-based modules that give shippers both tactical and strategic insights into their operations.
APL Logistics offers two of the suite’s modules—Visual Operations and Visual Analytics—to companies that outsource some or all of their logistics activities to the 3PL.
Visual Operations lets shippers monitor the progress of their freight, based on data that APL gets from electronic data interchange (EDI) feeds. "It involves blending the data from ocean carriers, and maybe truck and air carriers, into a view, and configuring it for the customer’s needs," says Thad Bedard, head of North America retail at APL Logistics in Scottsdale, Ariz.
Visual Analytics examines carrier performance, using data from shipment transactions to calculate key performance indicators (KPIs).
Getting to the Root of the Problem
The third module, Visual Intelligence, is available to any shipper, whether or not it outsources to APL Logistics. Visual Intelligence blends data from multiple sources—including APL Logistics, other 3PLs or carriers, and the shipper’s internal IT systems—to gain new insights into the shipper’s operations.
"That could mean getting to the root cause of why product is late, figuring the best frequency for manufacturing product to align with sailing schedules, or a host of other information," Bedard says.
When a customer implements Visual Intelligence, the shipper and APL Logistics first talk about current supply chain challenges and goals. Then APL Logistics and the shipper mine the data for causes and opportunities.
"Many supply chain questions or problems that customers have are not about technology," Bedard says. "They’re about embedded processes and systems that are governing a logistics flow."
At one customer, for example, 20 percent of the line items in its purchase orders (POs) were arriving late. Tracing the problem back to the company’s ERP system, APL Logistics discovered that when the shipper created POs, the software often miscalculated the lead time for delivery.
"The shipper was actually planning to fail, because it did not use correct integer values in each of the tables to construct the lead time," Bedard explains.
Transplace, in Frisco, Texas, offers two kinds of assistance to shippers that don’t outsource their logistics management. The client can license the Transplace TMS, a Software-as-a-Service (SaaS) solution, or Transplace can help the shipper choose a solution from a third party.
The SaaS option gets the shipper up and running quickly, without any large capital expense up front.
This cloud-based strategy also has drawbacks. "A company does not get the complete custom application that it might want in a perfect world," notes Brooks Bentz, president of supply chain consulting at Transplace.
But Transplace’s TMS will probably meet most SMB needs. "The system’s speed and economics outweigh any difficulties," he adds.
For most shippers who choose the SaaS option, implementation takes between 10 and 16 weeks. Transplace employs certified project managers to lead shippers through the process, including initiation, planning, execution, monitoring and control, and closeout.
When Transplace serves as a neutral partner in choosing a technology solution, it first assesses how the shipper is using its current systems. It’s also important to examine current freight volumes and transportation modes. "For example, most standard TMS solutions don’t do well with rail," Bentz explains.
The geographic scope of the company’s shipments is another important factor. Finally, what problems does the company hope to solve with new software?
Once the shipper chooses a TMS, Transplace helps to build a business case to present to upper management. That’s a point where roadblocks often appear. "People have a difficult time substantiating a powerful business case promising a 30 percent return on investment or a one-year payback," Bentz says. "Many benefits are difficult to quantify."
Whichever technology option the shipper chooses, Transplace provides extensive support. "Our focus is on doing as much of the legwork as possible for the shippers, so that the impact on IT and on the business is minimized," says Steve Barber, Transplace’s vice president of operations and solutions design.
At NGL, the flagship software product is FreightMaster, a TMS that shippers can license or lease to install on their own servers, or implement in the cloud. NGL can integrate this system with a variety of ERP systems. The 3PL also offers Dynamics TMS, a version of FreightMaster specifically designed to integrate with Microsoft Dynamics ERP solutions.
A supplementary offering, NexTrack, provides access to the TMS through a web portal, for use by customer service representatives, high-level managers, and others who need just a few components of the larger system. "They don’t need day-to-day execution functions; they just need functions such as reporting, rate shopping, or dock scheduling," Riske says.
Most companies that implement these solutions have internal IT staff or contractors who work with NGL on the implementation. NGL can provide assistance to the rest. "We have some internal resources who write code to allow connectivity to various ERP systems," Riske says.
Although leaders at smaller businesses understand that they need to embrace IT, some fear the potential costs. Resistance to change may also pose an obstacle: End users don’t want to alter the business processes they’ve followed for years.
"But users are touching technology daily with their cellphones," Riske points out. "So the learning curve for migrating into technology within the business shouldn’t be that difficult. The applications available now are a lot easier to work with than they were in the past."
WSI has created a separate brand, 360data, for its collection of IT applications. Although the company calls the product a suite, shippers can buy the modules individually. They include:
- B2B collaboration/EDI integration, which allows the exchange of data within a company, among corporate divisions, or between a company and its trading partners. "The shipper can use everything from standard EDI transactions to Excel spreadsheets," says Sellers. "We can even translate paper documents or PDFs into an electronic format that we can help integrate with a shipper’s community."
- A TMS.
- An entry-level WMS.
- An order management system (OMS). Companies that are not EDI-capable use this web portal to send electronic orders to suppliers, or receive them from customers.
A shipper that uses any of the 360data modules might manage all logistics operations in-house, or might outsource some activities to WSI. For example, a company that used WSI for transportation management would not need the TMS, but it might choose one or more of the other systems.
When a company implements 360data, WSI manages the project and often provides custom IT services. "I haven’t seen an implementation yet where we didn’t have to write some sort of code because the shipper wanted something a little different," Sellers says.
If the shipper integrates the software with its ERP or another internal system, WSI collaborates with IT staff on that part of the project. "Then we manage the whole process for them, from training to implementation and follow-up afterward," Sellers says.
After the shipper has been using the system for a while, WSI returns to do some retraining and to make sure users are taking maximum advantage of the solution’s features.
For an SMB, bringing new technology into the business can create a competitive advantage. For example, many large customers—the Walmarts of the world—won’t do business with vendors that can’t exchange data electronically. "When small companies can do EDI, all of a sudden they are on the same footing as the large providers," notes Sellers.
Everything Is Collaborative
At Trinity Logistics in Seaford, Del., the flagship technology product is a cloud-based TMS, which shippers can use in conjunction with Trinity’s logistics services or on its own. This solution is highly customizable.
"We don’t tell clients, ‘Here’s the solution set that works in every instance,’" says Sarah Ruffcorn, Trinity’s senior vice president of strategic development. "The process is collaborative. We spend a lot of time identifying pain points, business needs, and desired outcomes."
A second IT solution, ShipDirect, is a portal for accessing less-than-truckload (LTL) freight rates that Trinity Logistics, as a 3PL, can offer. Optionally, Trinity can also load in the shipper’s own LTL rates.
In addition, Trinity can help integrate a shipper’s IT systems with a variety of WMS products, and with a material requirements planning (MRP) and cloud-based parcel freight management system, provided by third-party partners.
Many of Trinity’s smaller customers have been using manual processes to run their operations. They gain a big boost when they start using software to analyze transaction data, and dashboards to display the results.
"That helps them develop better budgets and better optimize their shipments," Ruffcorn says. "For example, should a shipment go LTL, or is it on the breakpoint for parcel, or for truckload?" Such calculations are hard to do on paper or with spreadsheets, she adds.
A Chemical Reaction
Harcros Chemicals in Kansas City, Kansas, has been using Trinity’s TMS for about three years. Harcros also uses Trinity’s truckload transportation services.
The manufacturer produces chemicals—mainly surfactants used by industrial customers—from facilities in Kansas City and Dalton, Ga. It receives raw materials at those sites mainly by rail. For finished product, Harcros uses its own fleet and common carriers to ship product through 29 distribution centers (DCs) to its customers.
Harcros uses the TMS in house to manage all its common carrier freight except for liquid bulk. Before it implemented the Trinity solution, Harcros used a proprietary system that looked up rates but couldn’t tender the shipments to carriers or track shipment status.
The TMS gives Harcros much-needed visibility into the distribution network. "Say our Tampa location has a new customer, and Powder Springs, Ga., stocks the materials the customer needs, but Tampa doesn’t," says Rebecca Daly, the company’s global traffic manager. "We will order the materials from Powder Springs." The TMS lets staff at each location keep track of what products are moving from other locations.
Harcros also gains a great deal from the quoting features in the TMS—important features in a competitive and price-sensitive industry. "The price point we give to customers has to include freight," Daly says. "Trinity gives us a way to send quote requests to all our carriers, so we can obtain those rates prior to a sale—which we absolutely have to do. Before, we were managing that information via email."
Now, a user shoots off a price request to many carriers at once. When the quotes come back, the system retains them for quick retrieval.
Trinity performed the programming needed to get the system up and running for Harcros. The 3PL continually helps the shipper understand how to extract valuable insights from its data. "Trinity excels at knowing what we need from a reporting structure," Daly says.
As SMB shippers continue to look to 3PLs for technology leadership, expect an even greater emphasis on data mining.
"Big data is key here," says Riske. And in the future, big data will reveal not only what has been happening in the supply chain, but also what’s going to happen in the future.
"The strategy will be the use of more predictive analytics to help transportation providers understand patterns, and situational ideas and concepts, coming from the data they have access to," Riske says. For example, that strategy could help a consumer goods company predict how much trucking capacity it will need to handle surging demand when a retailer runs a big promotion.
"I foresee smarter systems, almost smart enough that people can head off supply chain disruptions before they happen," says Buxton.
Smart as those systems may be, they’ll have to grow even smarter. Sources of raw data—including tiny GPS "buttons" that shippers can install on pallets, cartons, or individual items—are proliferating at an astonishing rate. These sources are inundating the world with an unprecedented volume of information, which small shippers must figure out how to put to work.
"The biggest challenge coming down the pike is not that we can access where things are and what they’re doing, but how to make business intelligence out of that information," says Bentz.
As shippers contend not only with managing floods of information, but with myriad challenges and opportunities arising from today’s interconnected technology systems, 3PLs stand ready to help bridge any knowledge gaps.