3PL Perspectives
Noam Frankel | FreightFriend
It’s no secret that technology is changing the landscape of the freight industry. But with so many software solutions flooding into the market, how do you navigate through the sea of options, especially when it comes to freight procurement? Why do you even need specialized software?
Is a Procurement Solution Worth It?
When my colleagues and I started American Backhaulers in the early ’80s, it was clear that freight brokerage was a big matching game—identifying the right truck or carrier for any shipment you were trying to cover. I incorporated preferred lane entry and freight matching into the first brokerage software I designed back in 1985, but the true potential for freight matching was unlocked when MapQuest released their first web service that allowed searching by radius.
Fast forward to today, and the TMS has now become the heart of a 3PLs software stack, simplifying the complex process of load execution. However, no off-the-shelf solutions provide an encompassing or effective way to properly manage carriers and the carrier sourcing process. It’s why procurement solutions were created to fill the gap.
Although integrating additional compliance, pricing, sourcing, visibility, and back office software with a TMS seems cumbersome and expensive at first glance, specialized technology is significantly more comprehensive and advanced than what your TMS can offer. After all, you wouldn’t want your general practitioner to perform neurosurgery.
In fact, if you look under the hood of most any 3PL with Chicago roots, you’ll find that their proprietary software includes freight matching and a carrier relationship management (CRM) system. This technology, once out of reach for companies without huge capital and development resources, is now accessible to most any 3PL in today’s digital age via monthly subscription software.
So how do you pick the right procurement solution? What’s the best way to evaluate the many available options?
Choosing the Right Freight Procurement Software
Avoid decision paralysis. The key to wading through the options is to first establish your business goals and needs. Ask yourself the following questions:
• Do the software company’s values align with your long-term goals?
• What functionality do you actually need from your technology?
• How do you want to handle your data and privacy?
• When is the right time to implement a solution?
• What other technologies do you need to integrate with?
Do the Values Align with Your Long-Term Goals?
In other words: Is the way the software approaches the procurement problem how you envision improving your business?
People and service are still an incredibly important part of moving freight, despite the emphasis and investment the industry has placed on digital automation in recent years. For some procurement software, these relationships are a central tenet of their core values and they believe that technology should augment and amplify existing processes—not up-end them. So, if a potential client is looking to completely digitize carrier interaction, and a hands-off way to book loads, perhaps this solution isn’t the best fit for them. And that’s OK. Software isn’t one-size-fits-all.
The values will also impact and determine the way the development team rolls out future features and updates to the software. By choosing software that aligns with your business goals, you can better ensure that these updates continue to meet your needs and be of value to your organization.
People and service are still an incredibly important part of moving freight, despite the emphasis and investment the industry has placed on digital automation in recent years.
What Functionality Does Your Team Need?
Evaluate the way your team works and communicates. Procurement software should complement your processes and solve your top priority pain points. You can narrow down the features to look for based on your existing business problems.
Does your team have great relationships with core carriers, but lack organization and knowledge share? A CRM system will let them gather proprietary information on each carrier with every phone call or interaction. Or maybe your reps prefer a more hands-off approach and rely on inbound calls to book freight. An automated freight matching service that communicates with carriers will take up that task. If auto-tendering is an important element of your operation, look for technology that incorporates machine learning to make your routing guides intelligent and dynamic.
Whatever your roadblocks or aspirations might be, make sure your software decision solves the problem. If your team ends up creating workarounds for their new technology, chances are the solution isn’t a good fit.
How Do You Want to Handle Your Data and Privacy?
All software handles data and privacy differently, and every client has different expectations.
Some 3PLs prefer a “more the merrier” approach: they like to use public load boards and identify success around the volume of inbound calls. They value seeing data from other companies’ operations and are willing to share their data in return.
On the opposite end of the spectrum, clients are concerned about sharing data with competitors. They prefer to work only with trusted carriers using a mutual friendship-based marketplace. These companies also typically want to access, use, and share their own data (load or truck history, preferred lanes, big data, past and current matching loads, etc.) at any given time—another factor you might want to consider that differs across sourcing software.
Wherever your priorities fall, be selective when it comes to handling your data and privacy.
Is It the Right Time to Implement a Solution?
If you’re having trouble sourcing the right capacity, finding quality carriers, driving freight to your core network, managing data or proprietary knowledge, or anything in between, procurement software could be an important and timely addition to your TMS in order to improve the strength and efficiency of your team.
Depending on your company’s maturity or size, you might be able to implement a solution quickly and avoid further stopgaps, especially as margins get thinner.
If your 3PL is smaller, or in an early growth stage, it’s significantly easier to implement new tech and processes early, when the team and needs are more manageable or less demanding. You’ll require less buy-in from existing employees, and training and setup will be significantly less daunting. Also, for many software options, pricing is scalable, based on number of loads, users, or other similar factors.
Although a procurement solution might be a big part of your tech budget, the immediate AND long-term benefits should make the investment worth it. A good solution will help you grow your revenue by increasing booked volume, make you more efficient, and/or remove existing roadblocks your team faces every day.
Who Do You Need to Integrate With?
Consider your existing tech stack—who is your TMS provider? Do you have other software you use that impacts your procurement process?
Many sourcing solutions are already integrated with popular TMS options, from MercuryGate to McLeod, Revenova to TMW and more. Existing integrations can significantly speed up onboarding, but if you favor a particular procurement software, don’t be afraid to ask if they’ll create an integration for you. It’s a common request that they might be willing to take.
Have your own proprietary software? You still might be able to take advantage of available solutions. For example, many providers have built their latest software on microservice API architecture, so that any of the tools—from new capacity search to the privatized load board—can be accessed in any UI. So before embarking on the arduous task of creating freight matching or marketplace functionality from scratch, ask potential software providers about custom integrations or API flexibility.
Know Where You’re Headed
After considering the questions above, you should have a better idea of what your individual business needs are and how to shape your procurement process to improve your bottom line. As you research and demo different procurement software, evaluate how well each one will help you meet your goals while aligning to your vision.
Noam Frankel is the founder and CEO of FreightFriend. FreightFriend’s truckload sourcing and procurement software solutions include a carrier relationship management platform, mutual friendship-based marketplace, and intelligent data warehouse with next generation freight matching. Noam can be reached at [email protected] or 773-240-3322.
Photo credit: Travel mania/Shutterstock.com, Yeexin Richelle/Shutterstock.com
