Case Study: Crowley Maritime Implements GT Nexus
If you are a carrier-ocean, land or air-you know that competition in this market is intense. The pressure to contribute to cost containment and at the same time deliver on time performance is make or break! In less than a decade, the industry has seen more than one hundred fifty trucking companies die, plus significant consolidations in rail and ocean carriers. In spite of all the talk about deft process management and enhanced strategic capabilities, logistics services customers surveyed by ChainLink boiled their selection criteria down to three things: price, price and price. Well, price, process support (frequency of delivery) and equipment (you need cold, we got cold…). The largest providers have embraced the technology advantage and have won many deals because of the enhanced capabilities they now offer. But in spite of eroding market share, many other companies-especially in the mid market-have not embraced ROI proven technologies.
Adoption of the Internet in the transportation market has had some peaks and valleys, with the consortia game, followed by consolidation and many deaths. However, the concept of trading partner technology unification on the web was bound to succeed because of the fundamental alignment of business models. The transportation provider, by definition, has to deal with an inter-enterprise model. They are the ultimate collaborators. They are at the epicenter of supply chain networks. Aggressive players have not only built their own solutions, but also partnered-up with their competitors in industry consortia initiatives like the GTN Portal, operated by GT Nexus. Shipper migration to the web is evolving from simply checking the web for pricing and services to using web-based platforms as the total repository-the systems of record for transportation, international trade processes, etc. That’s a profound change, if you think about it. We wanted to talk to somebody at the epicenter of that adoption. We talked to Jorge Estevez, Vice President of Pricing and Yield Management at Crowley Maritime.
Crowley Maritime Corporation was founded over 100 years ago by Thomas Crowley, who started the business with a single 18-foot Whitehall boat to provide transportation of personnel and supplies to ships anchored on San Francisco Bay. Headed today by the founder’s grandson, Tom Crowley, Jr., the company has grown to over $1B in sales, employs 3,800 people and deploys a fleet of over 300 vessels. Crowley provides diversified transportation services in domestic and international markets through four lines of business: Liner Services; Ship Assist and Escort Services; Oil and Chemical Distribution and Transportation Services; and Energy and Marine Services. The company supports all of its business lines with a core infrastructure of corporate support services, such as Purchasing, Human Resources, Sales/Customer Service and Information Technology. It also supervises construction of new vessels and maintains ownership of vessels that are chartered for use in Crowley’s operating lines of business.
Jorge Estevez understands all too well the problems that carriers and their customers are having: too much paper work, shipment coordination frenzy and the squeezed margins for the carriers, (due to their customers’ need to wring every penny out of their supply chain).
ChainLink: How could technology help?
Jorge: We didn’t know we needed it, in the sense that our customers were not beating down the door for this e-commerce service. But we needed to constantly address our cost structures. And we did need a better, more efficient way to service our customers.
ChainLink: Global Logistics is a highly competitive business. What issues were at the top of your list to improve your position?
Jorge: Revenue per move is not going up, so every cost per unit must stay flat or go down. There are costs you can’t control in this industry-fuels costs, for example-and costs that you can. There’s a lot of administrative process work that’s still done today on paper. Where we can reduce that, and eliminate things like redundant data entry, we can drive down costs. We have to find ways to provide excellence, optimize our operations and processes, give customers a better service experience-and do it more efficiently. That-s where we thought technology could help.
And that is what Crowley did with GT Nexus. It implemented a network solution to provide its customers with e-commerce services over the web. In one instance, the company participates on an industry web “portal,” which is convenient for customers who use Crowley as well as other providers. But Crowley then took the network solution approach one step further. They used the same infrastructure and technology for a dedicated e-commerce center at the Crowley web site, where they could give more personal attention-and a distinct Crowley user experience-to customers who prefer to use Crowley directly.
Integrating their back-office systems to an intelligent web platform gives Crowley’s customers two engagement paths. They choose the one that’s best for their business. For Crowley, they leverage the IT investment in the network across a larger community of users and trading partners. It also allows for the deft management of business processes, since the e-commerce platform helps support better planning, scheduling and executing, and delivers customer-initiated transaction information faster and more accurately. The network solution becomes the backbone, a method to have ONE source of data so that every one has access to that one instance. This improves efficiency, eliminates redundancies, improves the quality of information etc. and reduces IT costs and implementation risks.
Ultimately, by replacing manual processes with electronic ones, it also gets to Estevez’s goal of reducing the costs you can-in this case, the transactional elements of managing the customer service experience: booking a reservation, creating the shipping documents, tendering the shipment, tracking its progress to delivery and settlement.
Implementing network solutions is different than a typical software project-no hardware, internal 7×24 programming support teams, etc. However, you do have to deal with significant business issues-integrating other business processes and their data. But that is managing the business-your business, rather than non-core IT expertise.
Users can engage the network as a single user, seeking access to services, as hub players driving integration and collaboration with their own network, or as a service provider enabling productivity improvements and seamless services to their customers (Crowley).
Activating the solutions required adoption by your ‘network’ to make the solutions successful. For a service provider, that can be problematic, since you can’t order your customers to adopt your system. What you can do is give them a choice and let them select the adoption path of least resistance (or most convenience) for their business. Which is exactly the strategy that Crowley has employed with its network approach.
Jorge: Initially, we offered capabilities such as visibility, reduced paper work, and consistent instant data availability without our customers having to put in the time and expense to manage it. We said, we can host it for you. In spite of that offer, users were reluctant to go on line, due to the upfront effort of ‘creating templates’, entering data and learning the system. We finally decided to eliminate these objections. So we decided to do the upfront work ourselves. We proactively went out to the customers, signed them up, got them on the system, trained them, did the work to build their templates-all of which made it easier for them. We realized that by investing a little bit on the front end, over the long haul this would create big efficiencies for us.
ChainLink: Doing that upfront initial work for their customers is a big step. It shows vision, creativity and customer empathy!
Jorge: Once the upfront work is complete, the benefits start rolling in. And for Crowley, the base keeps growing as more customers and more transactions are on-line, allowing ROI and seamless processes to grow.
ChainLink: So, can you tell about some customer experiences?
Jorge: One of our customers is a large global apparel manufacturer who has contract manufacturing in the Caribbean. They had noelectronic capabilities. Now, they insist that all interactions be conducted on line. Once we called them to complete a transaction, but they insisted on doing it all on-line. It provided them a strong audit trail. Think of it-from a manual business to all on-line! Users eventually get ‘hooked on the systems’ once they start using it. Our confidence in the value has grown. Many carriers wait to be pushed into technology, but Crowley now brings it to our customers. We tell them that they need it!
ChainLink: Having worked with a lot of trucking companies and 3PL’s, the smaller ones still seem to be technology adverse-those are the first signs of going out of business. How do you manage to keep up?
Jorge: We can’t afford to have a big IT staff like the multi-billion dollar worldwide carriers. For this project, we did not have to have that staff of programmers to have cutting edge technology. As a regional (mid tier) player, with the network solution and the GT Nexus technology, we are able to offer the same functionality and service as the big players-so we can compete against the big players for large accounts and win against the mid tier players in the mid market.
ChainLink: Now that is a powerful statement!
ChainLink: So, Jorge, what wisdom can you share with professional Supply Chain execs like yourself?
Wisdom From Jorge
Embracing the network model allows you to offer the same functionality and service as the big players without the huge IT investment.
You have to help your customers’ implementations. If you look at the returns, it is worth the work-both you and your customer have big savings on paperwork and other process obstacles: redundant data entry, inaccurate paperwork, poor communications with customers etc.
All my competitors should do this. It would be better for the whole industry. Carriers need to standardize on a common platform to support their customer bases. It will be better for the industry as well customers-rather than carriers offering multiple platform options.
Even though technology services are required on the RFP, it’s price that is critical in the deal. Winning customers is about price, and reducing administrative costs allows us to control the costs that are controllable in our business.
Once the customer gets used to communicating and using the network, they get addicted to it. We have found that these capabilities make the difference to keep the customer. They are less likely to consider other carriers once they integrate with us on the GT-Nexus platform.
You can contact Jorge at firstname.lastname@example.org
Jorge Estevez, Crowley Liner Services 904-727-2579