Logistics in 2016: The Year for Online Supply Chain Optimization

We’re barely halfway through the year and there’s already a couple hot topics circulating around the logistics industry. 

For starters, there’s the uberization of freight. An idea that stemmed from the founding father of disruptive technology: Uber. Before we delve deeper into what a mobile app has to do with freight, I first want to introduce one more trending topic. That’s ecommerce giant, Amazon. 

Amazon is slowly joining the logistics party by creating the most powerful in-house supply chain management out there. Amazon just signed a contract with Atlas Air Worldwide which will allow the company to try its hand in air freight delivery. It’s also requiring seller-fulfilled Prime shipments to be shipped using only Amazon Logistics, further solidifying internal control over its supply chain. And, we can’t forget to mention the effect Amazon Prime has had on the logistics industry. 

There’s few ecommerce companies that have the resources it takes to manage their supply chain using in-house logistics as efficiently as Amazon. You would need a whole fleet of planes, trains and automobiles to get even close. So, how do online retailers optimize their supply chains when they don’t have the resources to do it in house? They turn to third-party logistics companies (3PLs). 

This year, 3PLs are paying closer attention to the needs of online retailers. Which is a smart move considering the fact that ecommerce sales made up 7.5% of retail sales in 2015 and are continually rising. 

3PLs offer many benefits: access to more carrier resources, and therefore better negotiated rates due to purchasing power; experts that understand the ebb and flow of the industry; logistics technology or transportation management software (TMS), and much more. But, most logistics providers, especially those who have been around for decades, are used to providing services for more “traditional” shippers like manufacturers and brick-and-mortar stores. That’s why many 3PLs are improving and expanding their services. 

For example, this year FreightCenter made several changes to its business strategy that would improve an area where they were previously lacking: repeatability. Up until recently, the business of outsourcing logistics has traditionally been transactional in nature. FreightCenter realized, like many other 3PLs, that transactional services aren’t enough to optimize the supply chains of ecommerce retailers. 

“As a logistics company, we must act like change agents within our customer’s business, whether it be a brick-and-mortar store or an online shop. We must be able to flex with the changing demands and challenges they have,” explains FreightCenter CEO, Matthew Brosious. 

That’s why ideas, such as the uberization of freight and the Amazon Prime effect on logistics are such hot topics. 

The uberization of freight would connect supply and demand in trucking with just a few taps on a mobile device. This concept is motivating logistics and trucking companies to explore mobile service options. 

FreightCenter, for example, is in the midst of testing a new mobile-friendly website and quote system that will allow customers to access FreightCenter.com and all of its features on their phones and tablets. This move brings the company one-step closer to creating a mobile app that could do the same. 

An Uber-like app might not be the answer for FreightCenter or other similar companies, though. Logistics companies and larger carriers develop established relationships that a mobile app can’t replace. This means the key audience for mobile trucking apps are more likely to be smaller carriers that lack the means to find freight and smaller businesses who don’t need long-term relationships to meet their shipping needs. 

Online retailers usually spend somewhere between 6-10% of their operating costs on logistics, and logistics has a direct impact on a customer’s experience. This means it’s important for online retailers to optimize their supply chains. With the direction logistics is headed this year, they’ll have more options than ever to make that happen. 

Do you think the uberization of freight is the answer to optimizing the supply chain? If not, what other types of disruptive technology options do you think would benefit the industry? Leave a comment below with your thoughts.

Adapt TMS Software to Any Industry

FreightCenter is a non-asset based third-party logistics provider so you'd think we'd use a TMS software differently when in actuality we require the very same features that most shippers, freight forwarders and asset-based carriers require as well.  

In order to truly manage high-volume freight operations as a 3PL or brokerage, most businesses like ours rely on TMS software to quote carrier rates, measure results, track billing and shipments, and to dispatch or EDI to the freight carrier. However, TMS software is not limited to how brokerages, forwarders, and 3PLs use it. There is a strong segment of the market - roughly 40-percent - that contains high-volume, frequent freight shippers. These shippers are from lots of different industries like food and beverage, agricultural, and consumer packaged goods.

Demographics: Prospective Buyers by Industry

courtesy of Software advice

The needs of a freight shipper varies slightly from a 3PL or brokerage. While they both require price quoting, dispatching, and tracking, freight shippers may also require route optimization and WMS/OMS integration.

According to a recent survey from Software Advice, a website that conducts research, "Nearly 80 percent of buyers seek basic functions, such as route optimization and shipment tracking."

Top-Requested TMS Software Features

courtesy of Software Advice

If you'd like to read this entire TMS buyers report, you may do so here. If you have any questions about this topic, feel free to join the conversation by commenting below.

TMS Software or FreightCenter: Why Not Have Both?

TMS software is quickly making a name for itself in the freight and transportation industry. Before the adoption of this technology by third-party logistics (3PL) providers, the term "TMS" was mainly defined as a Microsoft Virtual Basic control or transcranial magnetic stimulation (a treatment for depression). In as little as five years, our industry has redefined TMS as an acronym for transportation management system.

Cirrus TMS Software for shippers, brokerages & enterprises

What is a TMS and what does it do?

No TMS is exactly the same. Some are geared toward non-asset based 3PLs and some are built for managing asset-based companies. At the end of the day, a TMS simply helps any business manage all the facets of shipping freight - from rating carrier contracts to generating auto-completed shipping paperwork. There are other fringe benefits of a TMS like freight invoice auditing, customer account management, and shipment tracking that all contribute to what a TMS does.

What TMS is right for you?

It depends on your shipping frequency and business objectives. If you do not have carrier rates of your own, you may benefit more from TMS software that was developed by a 3PL. In some cases, you can use a free version of the 3PL's TMS in exchange for using its rates and services.

"Not surprisingly, third-party logistics specialists were among the early adopters of TMS. In fact, it was their knowledge of the software's capabilities that enabled 3PLs to capture new business by promising to cut their clients' freight costs—even offering to do so on a gain-sharing basis. After all, it's a daunting task for a human being to sift through long lists of carriers to select the best one for a given load. A TMS, however, boasts the "brain power" to do that in a flash," says James A. Cooke, "TMS or 3PL?" in DC Velocity.

If you are a frequent shipper, large business, small 3PL or other type of business that has negotiated contract rates from carriers, than you will probably benefit more from an enterprise-level TMS like Cirrus TMS.

Still unsure where to start? Tell us your business objectives, goals and challenges in the comments section. Chances are, we can find an affordable solution that meets or beats your expectations.