3PL Perspectives
Andy Moses | PENSKE LOGISTICS
The supply chain is rapidly changing and becoming more complex, particularly as emergent companies deploy new technologies. As the amount of freight visibility technology increases, shippers and their logistics partners will need the ability to identify the right technology partner and make the information provided relevant for their business.
Gaining Consumers’ Confidence with Data
Consumer demands continue to change as e-commerce grows. As noted in the 2018 Council of Supply Chain Management Professionals (CSCMP) State of Logistics Report, the estimated total retail sales for 2017 in the United States was $5.1 trillion, of which $448.3 billion was e-commerce.
Younger generations are purchasing the majority of their goods online and their expectations of data transparency and visibility extends into the commercial arena. The millennial group is tech savvy, and they expect the same access to freight status visibility in the boardroom as they do at home.
Knowing where products are in the supply chain allows both shippers and logistics providers to quickly locate products in the event of a recall, unexpected event or sudden customer demand. This is especially important in the food and beverage industry. For example, the continued ability to track from farm-to-fork can improve the supply chain and establish trust.
Increasing Efficiency with Data
Shippers will have to provide freight visibility technology to earn the consumers’ trust, but they can also gain incredible efficiencies by reviewing the data the technology collects. Having the data, visibility and transparency creates opportunities to identify synergies within the supply chain. That could drive down costs for transportation and inventory levels while also creating a much more efficient, effective supply chain.
According to the 2018 Third-Party Logistics Study, the importance of data continues to increase. Among 3PLs, 41 percent said they currently use big data analytics compared to 25.4 percent of shippers. However, 67 percent of 3PLs and 69 percent of shippers said they will invest in big data analytics in the future.
Increased visibility and transparency ultimately will be a requirement. Consumers are going to demand it, so how do you find the right technology and provider?
The Technology Providers of Today
The overall size of the trucking market and well-publicized capacity shortage is attracting investments in trucking. Opportunities to improve upon antiquated industry processes are targets for investment capital, and today there are more trucking startups than ever before – bringing a number of new ideas and technologies into the industry.
We’re seeing many startups entering the trucking space with potentially useful technology. They are searching for the right business model for their technology, and it is not uncommon to see these fledgling companies shift course a few times over an initial one or two-year period.
Larger and more established transportation technology providers are acquiring smaller, viable startups which should bring some startups more stability. Established providers will perform more rigorous testing, possess mature platforms around security, and have greater depth to navigate potential surges in business.
Evaluating Technology Providers
Assessing both small and large freight visibility technology providers should be a rigorous process. First, consider these factors when analyzing the companies you’re considering:
- Most 3PLs are good at evaluating potential customers from a credit perspective, and the same principles should be applied to financially evaluating potential technology providers.
- Study the management team and get to know their background and experience levels.
- Talk to the provider’s current customers to learn about the business and how it’s managed.
- Determine how you will implement the technology. Ask yourself if you will have to make upfront investments to deploy this new platform?
- Find out how easy it is to initiate the technology and how easy it is to exit.
Since most of the freight visibility technology is still in its infancy, changes are constant, and some tools are not offering companies an all-encompassing solution. Think through what your visibility platform is as a 3PL, which by necessity might require multiple aspects or technologies to cobble together the solution that your customers really need. Consider:
- Will the technology lend itself well across different modes of transportation: truckload, intermodal, domestic, international, etc.?
- Are there limitations to the technology in terms of the type of carrier?
- Is geography an issue? When I cross into Canada does my solution fall apart?
- Are there any timing issues associated with the availability of data that wouldn’t meet the window of a specific customer?
These are all questions one must ask to find the right solution and determine if one tool or various tools are required.
Conclusion
Today, it will likely serve 3PLs well to remain open to change. Don’t overcommit to one technology and limit yourself. It’s still a changing market and there are ways to consume these technologies that are less of a commitment and still allow for a skillful approach.
Andy Moses is Senior Vice President, Global Products with Penske Transportation Management in Reading, PA. He can be reached at [email protected]
Photo Credit: Travel mania/Shutterstock.com
