To delve into the issues and considerations of how transportation management software integrates with cloud and mobility, we spoke with David Landau, executive vice president at Cloud Logistics. His responsibilities include sales and marketing leadership and business development strategy. Prior to joining Cloud Logistics, David spent 19 years at Manhattan Associates including in leadership positions in product management, marketing, sales, and research and development. He is a frequent speaker at supply chain events and is regularly quoted on industry-specific topics. David holds a Bachelor’s degree in mechanical engineering and materials science from Duke University.
The limitations and constraints companies have faced in shipping and logistics have presented management and technical challenges, as well as enormous problems in the area of cost. Transportation management software addresses some of these problems, and these tools have been around for more than 30 years. “The challenge, historically, is that there have been a number of limitations and constraints in the marketplace and to the solutions that were offered,” said David Landau, Executive Vice President at Cloud Logistics, a leading innovator in SaaS logistics and provider of next-generation transportation management systems (TMS).
The largest shippers spending $75 million a year or more on transportation tend to have vast, sophisticated, and often very complicated supply chain networks. “You see a lot of on-premise solutions targeted at that market,” said Landau. “These are very complicated solutions, and significant investment and optimization is required to help identify freight savings.” The largest shippers are typically making multi-million dollar investments with six- to 18-month project implementation times.
Landau also characterizes the mid-sized shippers as spending between $25 and $75 million a year on freight, and the first generation of SaaS and cloud solutions were designed to address that market with projects with implementation times of between three to five months. “While there are still some optimization requirements, they do tend to be more straightforward in terms of project requirements with simpler optimization,” said Landau.
The smallest shippers, spending less than $25 million a year, mostly have no TMS at all, and resort to manual processes. “They can’t justify it,” said Landau. “The freight savings don’t justify a relatively costly project with a long implementation time. At the end of the day, for both smaller and mid-sized shippers, process automation is just as important as freight savings derived from optimization.”
Smaller shippers get a seat at the table
The smaller shippers represent an opportunity that has not yet been addressed in the marketplace. A freight spend of $25 million a year or less can still be significant – but TMS providers have until now neglected this market, leaving smaller shippers left with little more than a room full of rate clerks with index cards. The only alternative was using a broker – which is easy, but brokers make a fat margin on top of a small company’s freight spend. “And that’s money that could be yours,” said Landau.
Smaller shippers simply cannot bear a multi-million dollar system with a rollout time of a year or more, but until now, that’s all that was available. They need a system that can be rolled out in a matter of a few weeks, is inexpensive, and for which staff can be trained in a matter of hours (as opposed to weeks of training typically required for the the largest solutions).
A new level of usability
The TMS’ used by the largest shippers are often supported by data scientists and analysts, with each end user requiring up to two weeks of classroom training to become efficient with the system. More modern interface design and as-a-service models are quickly rendering this type of training requirement obsolete, and Cloud Logistics’ own offering, as described by Landau, looks more like a social media interface than a TMS. What is most important, for a TMS or any other type of business software, is that it should look like something the user touches every day, and that is the response Cloud Logistics gets when they deploy their solution.
Benefits of a cloud based TMS
Besides usability and lower cost, a major benefit of a cloud based TMS is that IT involvement is kept to a minimum. Another benefit, according to Landau, is that most vendors of cloud systems upgrade multiple times a year. “Four times a year, a customer will walk in and they have brand new features,” he notes, and without having to involve their own IT people in the upgrade. Because it is delivered on an as-a-service basis, those upgrades become available instantly and automatically, with no intervention required.
Perhaps one of the most overlooked benefits of a cloud based TMS however, is the fact that a supply chain is by definition, a collaborative and networked space, with the shipper, suppliers and vendors, and a network of carriers. “Cloud, by definition, lends itself very well to a collaborative environment. With an on premise system, I have to maintain all those connections, and it takes a lot of time,” said Landau. “A customer obviously has the benefit of our network that’s already in place, with hundreds of carriers who are already on board.”
The cloud based TMS provides improved visibility, especially when considering the many variables that come into play in managing service. You could for example, look at the interface and easily compare one shipper that takes five days at one cost, against a shipper that takes three days with a different cost. Or, for example, the user can see shippers and compare them by performance to help better manage shipping.
Finally, connectivity figures highly into the early benefits of a cloud based TMS. How well are you plugged into your supplier network? If you are a typical small shipper with a manual system (or a larger shipper for that matter), the most common answer is “not very well.” Cloud Logistics’ vendor portal allows a shipper to push a PO through the portal to the factory, regardless of location. Then the factory provides information on where they are shipping and when.
That connectivity leads to increased visibility. The truckload market is highly fragmented. The top 25 carriers only account for barely eight percent of all freight spend. Those smaller carriers likely don’t have the same level of investment in systems. “Our mobile solution is designed for the smaller carrier or owner operator, which gives them the same level of connectivity that larger carriers with EDI and onboard computers get,” said Landau. “You can put it on your phone. We’ll send you a message when there is a tender available, we’ll provide you with shipping instructions, documentation, tie into the GPS, and every 15 minutes fire a GPS update that gives you near real time visibility.”
IT involvement, or not
Smaller shippers may have a limited IT department, which is often overworked and not able to handle the rigors of a traditional TMS. With a cloud based TMS, there is reduced cost of IT. Integration tends to be simple with fewer IT requirements, and IT staff are not required to maintain the touch points of all the different carriers, they don’t have to maintain the hardware or upgrade software – “all that is taken care of with a relatively modest superstructure. It’s upgraded every quarter, versus the on premise system which tends to require a very big effort to upgrade only once every three or four years,” added Landau. Once the interface is built, IT will have almost no involvement, with line-of-business managers running the TMS themselves through a simple, user-friendly portal.
The bottom-line benefits are measurable and immediate. Landau notes that in general, smaller shippers can see a savings of between five and 15 percent in freight costs, as well as a 50 to 75 percent improvement in employee productivity as they move from index cards and spreadsheets to a more automated, cloud based system.