Introduction (Part 1)
In a complex industry with many unique businesses which often span complex trade routes, providing technology for transportation and logistics is a challenge. And understanding these various companies is also a challenge. New players emerge. Existing ones grow and change. Thus, it is worthwhile to continue to develop models of the solutions and how they fit into the user’s business model. Last year’s series, Transportation Systems Redefined, is thus dusted off for a fresh look at the market.
Strategic and Cross-Functional Capabilities
One of the most important emerging capabilities, which many supply chain executives have been craving, is cross-functional sharing and optimizing. A few examples of these capabilities and the companies who provide them are illustrated here:
Multi-tier, Multi-function, Social Execution:
A social execution solution including manufacturing demand, procurement, and transportation. MACROLYNK is one such provider.
Visualize this use case: As we know, most enterprises operate as lean as they can. However, doing so requires constant signals between manufacturers and suppliers. Our manufacturing user, JosÃ©, is alerted by the system to inventory status. One part is dangerously low. He places an order to the supplier, then his account executive from the supplier, Janet, is notified. Janet releases the order and her version of MACROLYNK files the proper trade documents so the order can flow smoothly through the supply chain to JosÃ©. JosÃ© can then track the order as it flows from the supplier through the 3PL to the point of use. Once an order is received, JosÃ© can inspect it. He notices there is a problem with some parts in the order. Now he videos the order and then pings Janet. They chat online and, together, view the paperwork and items, then Janet re-issues a shipment and alerts the 3PL, as well, to pick up the wrong product from José.
The above use case demonstrates an outstanding concept of enterprise workflow and collaboration — the ability to use location-based/GPS tracking and social execution, as well as blend the traditional applications of sourcing and procurement, global trade management, and transportation. MACROLYNK customers, who are some of the largest automotive manufacturing suppliers, have embraced this new way of working — social, real-time, and able to provide the depth of information required for real-time operational execution.
Sharing Demand Forecasts with Outbound Transportation Activities: Rather than calling carriers at the last minute, why not give them your best knowledge of what will need to be shipped and when, as soon as you know it so they, too, can optimize their processes? Terra Technology, who led the way in demand sensing near-term forecasting (their DS product), has released a new model called Transportation Forecasting (TF). DS focuses on fulfillment, allowing you to share the ‘fulfillment forecast’ with the transportation team — often your carriers — enabling them to plan better. This is especially helpful when specific labor is required for certain shipments. Often, suppliers do not share data such as promotions or changes in demand as events are unfolding. This lack of precision information puts the carriers in scramble mode. Not a good situation in any climate, but with ground transportation capacity issues, it is critical to share this information in a usable format. Terra’s customers, who are some of the largest CPG companies, are reporting the ‘real’ capacity constraints in the trucking industry. And this software allows them and their carriers to plan better schedules and manage transportation costs.
Inbound Transportation Optimization with Procurement: ArrowStream’s product, Crossbow, whose main goal is to optimize/consolidate inbound truck loads, is a brilliant approach to optimizing the inbound process and reducing transportation costs. To reduce transportation costs, simplify receiving, and so on, the optimization software may make recommendations such as shipping orders more frequently, splitting orders, or delaying certain deliveries. Obviously, it requires procurement to buy in. Procurement wants to know how these decisions affect the promised inventory levels or unit costs. So the software makes recommendations for inbound schedules and consolidations and shows the impact on the procurement team. Now transportation and procurement teams can decide together on the best strategy. ArrowStream honed their knowledge obtained from years of consulting and managed services, and a little over two years ago codified this knowledge into a modern SaaS application that can now be used by their customers.
Visibility with Accounts Payable: Another area, now called supply chain finance (covered in the lead article in this issue of the brief), allows a retailer’s procurement department to better time the release of funds to suppliers, either directly through their own accounts payable or through third parties (bank or factors) based on successful completion of milestones associated with an order (the receive/make/ship schedule). GT Nexus is the paradigm here. Read Reinventing Supply Chain Finance.
Warehouse Talking to Transportation: Both JDA and 3Gtms have foundational integration that is critical, yet often overlooked. Constraints emanating from either the warehouse side or the delivery side are not often shared between these two systems. This is the terrain the founder of 3Gtms, Mitch Weseley, told me he wanted to conquer with this new company. (Mitch is a serial transportation software entrepreneur with a successful history of founding and growing solutions.)1 Their constraint-based algorithm solves a myriad of planning parameters.
JDA has the combined Red Prairie WMS and the innovative i2 Trade Matrix as a foundation. But since these acquisitions, the innovators have been working on WMS/TMS integration methods that allow for a much more synchronized, nuanced, and optimized process between these two functions. One of JDA’s principles is that their transportation solutions will work with other WMSs, not just their own.
Integration, as these companies see it, is not sending files back and forth between modules, but rather inclusion — mutual optimization — taking into consideration the often unique goals of the other process or enterprise and then harmonizing and creating a smarter foundation for execution.
Many of these companies have crafted solutions that use their years of experience in seeing the problems in logistics to create rich analytics, and they have taken advantage of fresh new technologies that allow for rich visuals, touch UI, and open source. This combination of skills and perspective makes it easier for the operations teams, executives, and cross-functional stakeholders to grasp the critical issues and participate in better decisions.
In the Part 2 of this Transportation series we will continue to explore the implications and applications in the global supply chain market.
1 Weseley was one of the founders of G-Log, which was later sold to Oracle, and is the foundation of Oracle’s OTM solution. He ran transportation for Manugistics and before that, founded Weseley Software which was sold to Red Prairie and is the foundation of their TMS. — Return to article text above
To view other articles from this issue of the brief, click here.