By Jim Alemany, Director, Logistics Execution Solutions at Descartes
Information is the hidden element that moves behind the scenes in parallel to the movement of freight. Although there has been much industry analysis on the cost of moving physical goods, the actual cost of moving freight-related data is unclear. What is clear, however, is that the more manual the processes and the more disparate systems involved, the more expensive the whole proposition is as a result of lost, inaccurate, inaccessible or unavailable data. In an industry with tight margins, freight rates may remain fixed or have little wiggle room. However, the methodology that a third-party logistics service provider (3PL) uses to aggregate, display and move this added component of data and in what format is often a key differentiator for success in today’s competitive marketplace.
Third-party logistics service providers frequently serve as the central communication conduit between shippers, carriers, regulatory agencies and other supply chain participants as cargo moves in-bond and from port-to-port. As a result of this pivotal role in the marketplace, the 3PL is uniquely positioned to view “big picture” scenarios that address the best methods to move goods as well as data. And what leading 3PLs are demonstrating is that moving information better—repurposing data, improving accessibility, enhancing visibility and supporting the latest data standards—means moving freight better.
From large to small, leading 3PLs are deriving benefits through the active reuse of data. Even today data is still manually entered multiple times across a number of internal, partner and client channels and into completely separate accounting systems. Given the sheer volume of shipping information and the complexities of things like duties, taxes and security, the cost of duplicate data entry is high regardless of business niche or geography. It affects receivables, drains productive time from employees across many departments and unmistakably funnels resources away from business growth.
Leading 3PLs are bringing shipment planning, execution, import and export document generation and back-office accounting functions together on a single platform. The ability to facilitate the collection of shipment information from multiple parties and to leverage shipment-related data to populate accounting systems helps significantly to improve accuracy and increase efficiencies. It also helps to minimize costs and effectively bill without data re-entry. Beyond this, shipment information can also be repurposed to satisfy any number of customs and security-filing related submissions. With global regulations on the rise, this is of key importance to 3PLs who operate across different divisions, geographies and borders.
Leading 3PLs are gaining business by offering a virtual data port that can be easily accessed by a shipper’s ERP system. 3PLs who have a connection at-the-ready are more likely to see proposals turn into contracts and invoices into receivables. In addition to receiving data from target ERP systems, success also lies in transmitting data back to leading ERP solutions. In order to extend command of their operations and truly streamline information exchange with logistics partners, 3PLs must leverage connectivity that is bi-directional.
Beyond this, successful 3PLs are choosing a proactive approach by adopting systems in anticipation of future business. Market leaders have effectively mapped common data elements and fields such as SKUs, kits, supply chain participants and others into frequently used data formats and schemas.
The Right Type of Visibility
With respect to visibility, many 3PLs already have cloud-based monitoring solutions in place out of necessity. However, the problem is that the majority display data statically and are not especially anticipatory or exception-driven. Systems may not offer meaningful data at the right time or in a format that is useful to the shipper. Customers may need to log in to multiple systems, or could be bombarded with too much or too little data without user- or role-dependent display options. In addition, what may appear as an advanced display may ultimately serve as only a basic reporting tool when true functionality is analyzed.
Successful 3PLs are enabling systems that actively anticipate scenarios and generate exception-based alerts or compliance notifications based on missed shipment milestones or quantity deviations with user-defined tolerance levels for resolution. They are also giving end customers role-based visibility into data and role-based access to documents, and proactively providing data in a way that is customizable.
The Right Format
Both industry change and technology evolution continue to drive new data standards, and many 3PLs are moving to updated data standards to make better use of information. Many of the newer formats are championed by industry modernization programs and associations that are now open to 3PLs. The air cargo industry is a clear example of this trend as the 3PL moves to adopt standards that were once only open to carriers. Tools such as e-Freight, the eAWB Multilateral Agreement and others bridge the gap between old data standards and new formats with little effort. 3PLs are also moving from Cargo-IMP to Cargo-XML enabled technology or other eAWB solutions to take advantage of the benefits of a paperless airway bill.
No discussion would be complete without addressing Electronic Data Interchange (EDI) and similar formats that have been refined over a number of years. Some larger businesses have made substantial IT investments to build and maintain their own EDI systems—and proprietary data standards—but can find they wrestle with too many IT challenges when their core competency is in moving freight. Successful 3PLs have embraced EDI and are continuing to make the transition to frequently used standards. Businesses have a number of options as to how to implement EDI and are leveraging a number of tools to enable connectivity including web to EDI forms, data extractions and many others.
Bringing it all Together
The task of the 3PL is two-fold: to move freight and to move data; however, it is not necessary to adopt a big data strategy to thrive in today’s marketplace. Market leaders are carefully analyzing current, past and potential future business and selecting operational segments where better data management makes sense and can speed the movement of freight. Given the central position they play in the supply chain, as the hub of bi-directional information exchange with multiple types of supply chain participants, 3PLs are prime candidates to derive benefits from technology, pass cost savings on to customers and realize the critical gains that are essential to success.
Jim Alemany, Director, Logistics Execution Solutions at Descartes
Jim guides the development of Descartes’ logistics execution solutions, including rate and contract management solutions for ocean carriers, Non-Vessel Operating Common Carriers (NVOCCs) and forwarders. Jim also oversees the Descartes Forwarder back office solutions as well as the Descartes air messaging products. A veteran of the high-tech world, Jim has held a variety of positions in marketing and product management over the years.