Executives of any size of for-hire or private fleet need not be intimidated by information technology when strategizing on how to best tie into the supply chain to serve even the most demanding shipper.
What fleets should know is that there are more than a few ways to skin this particular cat. And above all, they should keep in mind this succinct but rich definition from BusinessDictionary.com of what exactly is supply chain management:
“The management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost.”
The key takeaway is there’s nothing in there about required technology. The definition only points to the results that will most definitely be required by shippers. Translation: Fleets aren’t judged by shippers for the specific technologies they implement, but as always by their continuous performance in helping to keep the supply chain moving efficiently and cost-effectively.
Certainly, information technology has a role to play in making that happen. And never before have there been so many electronic tools available, including solutions that may enable even the smallest fleets to land the largest shippers as customers. “What’s widely considered by shippers to be the minimum entry requirements for carriers is that they be capable of communicating via electronic data integration (EDI),” points out Brad Young, TMW System’s director of industry marketing—for-hire carriers.
EDI, in simple terms, is a means of moving data between different computer systems or networks. It’s routinely used by large firms to conduct e-commerce activities, such as sending or tracking orders. For example, a shipper may replace paper bills of lading and bank-account checks with EDI “messages.” “While being EDI-capable is the baseline,” points out Young, “there’s always some work involved in putting it into play. Some degree of mapping may be needed, as not every shipper uses the same purchase order numbers, etc.”
He says that’s where flexible order-import tools for an enterprise resource planning (ERP) system come into the picture. “These tools process order information, for example, by reading spreadsheets or emails. Different formats can then be turned into a standard TMW order. The carrier then uses that to communicate with the shipper.”
“Carriers have to transact business with the major shippers now through EDI. That’s just a fact of life,” contends Mark Cubine, McLeod Software’s vice president-marketing. “Carriers have to be good with EDI and have good EDI scores to stay with shippers. That means the fleet’s EDI transactions must be timely and accurate—and that the shippers’ responses are handled in a timely and accurate way.
“That is hard to do manually,” he continues, “so most of those who are successful at this have an EDI system tightly integrated with their order-entry and planning and operations systems. We do that with our LoadMaster Enterprise system; however, it is possible to do this with multiple systems.
The fleet has to have invested in tight integration and have the staff to keep up with the demands of EDI.” “We are always adjusting our [logistics] solutions, be they for fleets with 10 or 50 or 500 trucks,” advises Adam Kahn, director of fleet solutions for Qualcomm Enterprise Solutions (QES).
“We’ve actually gotten away from speaking in terms of product offerings and prefer to present solutions to specific fleets,” he continues. “The need to enhance customer service is, of course, addressed by these solutions.”
According to Kahn, the logistics environment fleets are increasingly expected to take part in has changed markedly in the last 15 years. “Things are much more complex for carriers now. It’s amazing the amount of information now being shared [by carriers and shippers] and then pushed out to the fleet’s mobile resources—its vehicles, its drivers and its customers.
“The keystone to what has changed,” he remarks, “is that conversations have been enhanced along the supply chain. Whether private or for-hire, carriers now have deeper conversations on what shipper and regulatory requirements must be met around each delivery.”
Kahn notes that, part and parcel with this trend, two of the industry’s largest providers of Transportation Management Systems (TMS) — TMW Systems and McLeod Software—“keep expanding their logistics-related service offerings.”
Regardless of whose software systems are deployed, Kahn advises fleets seeking to attract more business from sophisticated shippers to first look at optimizing routing.
“What’s happening now with routing is that ‘business rules,’ such as a ‘no tolls’ directive, are being infused into routing,” he continues. “Also being factored in is where fuel will be bought. This is being done on a more fractured basis via contracted networks to reduce the cost. For example, a fleet may direct the driver to get 50 gals. in Reno, then 40 more in Lake Tahoe and still more at another stop—all determined by fuel prices/taxes.
“Also being considered by carriers is wider use of predictive performance modeling,” says Kahn. “This helps fleets see the most efficient way to route their vehicles using actuaries to assign the correct equipment to loads.
“Predictive modeling is all based on historical data,” he continues. “It’s used to determine which exact vehicle and driver will be best-suited for an incident-free journey.” He notes that Qualcomm’s Fleet Risk Advisors business unit provides such modeling.
Routing will, of course, be impacted by the new hours-of-service (HOS) regs set to go into effect this year. “Fleets will have to pay attention to the confusing aspect of specified rest breaks in the revised rules,” points out Kahn.
He advises that TMS providers like McLeod and TMW will be “planning into route assignments safe locations for taking those HOS breaks.” As to how TMS solutions and mobile-communications ones, as provided by QES, fit in the current marketplace, Kahn says these systems can work together to benefit any fleet operation.
“Everyone is hustling to stay profitable,” he remarks. “The good news is now there’s a lot of data available to better manage everything from customer service to safety compliance to cost control to ensure profitability. For a fleet, deploying TMS plus a mobile-communications solution can make the whole process more effective, productive and cost-efficient.”
HERE TO STAY
Kahn also points out that while “fleets have historically brought on a TMS to manage operations and mobile communications to increase their visibility, now we are seeing some buying a mobile-communications solution first—to better manage HOS and Compliance, Safety, Accountability (CSA) compliance—and then adding the TMS/enterprise solution over time to run their total operation better.”
According to TMW’s Young, to play in the big leagues, fleets need EDI transaction sets plus the aforementioned flexible-order tool kits for importing and exporting data.
What may be specifically needed “really depends on how much data the carrier needs to process—and how many trading partners they will have,” Young continues. “They may find they have 10 customers that account for 90% of their business. And ERP tools can be set up to match a fleet’s volumes and customer profiles.”
He notes that there are also firms that “sit in the middle and handle [ERP tool] mapping on a price-per-transaction basis while we are able to support a hybrid of common methods.”
EDI is here to stay, Young stresses, so fleets “need to adopt it to ensure growth, as this capability is becoming more and more expected by shippers, especially the larger ones. The size of the operation is not the issue; customer demand is. Carriers also need to be as nimble as they can in their [electronic] processes.”
He suggests that fleets considering entering the EDI arena “start by ascertaining what its customers are demanding and how soon they expect it to be implemented. Once current customer demand is understood, it’s also important to consider what will be needed to react quickly to any changes as well as requirements of new customers.” Speaking of fleet customers, McLeod’s Cubine remarks that “every carrier is feeling the pressure to do more, react faster, become more efficient, find automation, etc. All to deal with these tightly integrated, heavily managed sophisticated supply-chain visions the shippers have.
“Aside from EDI, which is now a given, there are certainly other supply-chain pressures on carriers,” he continues. “For starters, many of the supply-chain optimization tools that shippers use create a lot of volatility and sometimes a lot of EDI ‘noise’ for carriers because of the flurry of changes sent over via EDI for a single load.” Cubine notes that McLeod has seen instances in which as many as 30 updates have been issued for a single load tender.
These are driven by the shipper’s supply-chain scheduling and optimization packages.
“While most of these updates are not significant for the carrier, it is important for the carrier to have EDI tightly integrated with its planning system,” he advises. “In fact, EDI should be integral to the planning process, so they can react when something important does actually change—like a pickup time or delivery appointment window—that they are only going to hear about through EDI. Fleets have to give their planners the ability to quickly distinguish or detect something coming in via EDI that requires a potential change within the flurry of EDI traffic from the shipper.”
HOURS OF WOE
Another issue, maintains Cubine, is that shipper systems as well as supply-chain optimization systems “really have no sense of one of the carriers’ greatest constraints these days—HOS.
“Only the carrier understands what the HOS implications are for a given load for their assigned driver,” he continues.
“The shippers generate their plan based on some assumptions about the time required and appointment windows, and their planning may make impossible demands on a carrier or a driver because of HOS restrictions or possibly because of the position the truck will be in prior to the shipper’s new load.
“Bear in mind that HOS considerations on the carrier side can cause them to change their plan about drivers or cause them to split a load or arrange a load swap that can be costly or less efficient,” Cubine adds.
TIME OUT Detention is yet another variable that carriers must deal with that shipper supply-chain systems make “broad, sweeping, sometimes unrealistic assumptions about,” he points out. “It’s another thing the carriers have to learn to manage in the context of real-world history.”
Cubine says a “standard assumption of two or three hours to unload at a particular location can be way out of whack based on the real detention history of that location. Even when the average unloading time for a location is known, it can still fall out of the norm for a given load. In the end, this is one more unknown variable that shippers make assumptions about in their plan. Then the carrier has to match what the shipper wants with reality.”
According to Cubine, as supply chain systems have “become more sophisticated and make tighter demands for a given load on carriers,” McLeod has added tools to help manage these issues within the firm’s primary ERP “Conversations have been enhanced along the supply chain [thanks to technological advances].”solution for carriers, LoadMaster Enterprise.
“Carriers can handle much of these issues manually with good processes and minimal systems,” he remarks. “But they will do it more efficiently with an integrated system that lets them focus their people on managing exceptions.
That way, they can do a better job with fewer people and still make fewer errors.” Indeed, as Cubine sees it, the pressure from sophisticated shippers that are “continuing to tune and sharpen their supply- chain management is not going to get easier for carriers.
“Rather,” he adds, “the best-run carriers with the best system capabilities will be the ones that get most of the business and succeed with shippers and their advanced supply-chain management plans.”
In the end, what will matter is not how individual carriers choose to approach supply-chain management, but whether or not they can satisfy the ever-increasing demands of shippers while ensuring they are running a safe, efficient and profitable operation.