transportation management strategies & tactics of top ... · • the lowest was inbound...

P r o p r i e t a r y a n d C o p y r i g h t o f T h e D e s c a r t e s S y s t e m s G r o u p I n c . A l l r i g h t s r e s e r v e d .

Chris Jones, EVP Marketing and Services, Descartes

Mark Solomon, Executive Editor, News, DC Velocity

Transportation Management Strategies & Tactics of Top Performers

Thank you to the Georgia Center of Innovation for Logistics

A link to the web seminar and a PDF of the presentation will be provided

Agenda

Who We Surveyed

Key Trends & Practices

Strategies and Tactics

Technology Implications

• There is a wide array of industries for the 220 respondents that participated in the survey

• 29% from logistics services community

• 37% from discrete products/wholesale/distribution business

Industry

0%

5%

10%

15%

20%

25%

All Respondents

U.S. 91.4%

Canada34.5% Europe

25.4%

Asia 22.4%

R.O.W. 15.1%

Latin America 19.8%

• Overall, the majority of the respondents were US-only based (57%)

• For >$100M transportation spend operation were 2x to 8x greater non-US operations

Location

Where are your operations?

(Respondents selected all locations that applied)

• No surprise that over-the-road transportation is the largest

• Given the large percentage of respondents were US-only based operations, it is largely

domestic transportation

Transportation Modes Used

0%

5%

10%

15%

20%

25%

30%

35%

40%

Truck Load LTL Truck Parcel Private/DedicatedTruck Fleet

Ocean Air Rail Other

All Respondents

0%

10%

20%

30%

40%

50%

Industryleading

Better thanaverage

Middle ofthe pack

Belowaverage

Bottomperformer

Relative Financial Performance

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Competitiveweapon

Customer servicedifferentiator

Basic service Necessary evil

Management Strategic View of Transportation

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

<$5M $5M – 10M $11M – $25M

$26M – $100M

$101M – $1B

>$1B

Annual Transportation Spend

We Analyzed the Results in 3 Dimensions

Leading Mid & Below

Basic/Necessary Competitive

>$100m <$10m

• There is a compelling tie between financial performance and the

strategic importance of transportation

Financial Performance & Strategic Importance Correlation

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Competitiveweapon

Customer servicedifferentiator

Basic service Necessary evil

Leading Mid. & Below

0%

10%

20%

30%

40%

50%

60%

Industryleading

Better thanaverage

Middle of thepack

Below average Bottomperformer

Competitive Basic/Nec.

Strategic Importance Financial Performance

• For companies growing faster,

management view of

transportation importance is

significantly more prevalent

• The same is true for financial

performance

• Poorer performing and lower

view of transportation

importance expect to grow

much slower

• Size of transportation spend

had little impact on growth

Company Growth Over Next 2-3 Years

0%

10%

20%

30%

40%

50%

60%

Greater than15%

5-15% Less than 5% Limited or nogrowth

Shrink

Management Strategic Importance Competitive Basic/Nec.

0%

10%

20%

30%

40%

50%

60%

70%

Greater than 15% 5-15% Less than 5% Limited or no growth Shrink

Financial Performance Leading Mid. & Below

Agenda

Who We Surveyed




• Overall, and across the 3 comparative views, driver capacity (driver shortage and HOS)

are top of mind

• Ecommerce (Ecommerce/Home Delivery) are second followed by carrier financial health

• Few people were counting on future transportation technology – crowd-sourced logistics

and driverless vehicles, to make an impact in the near future

Regulatory/Industry Change with Greatest Impact Next 5 years

Critical

Key importance

0%

10%

20%

30%

40%

50%

60%

Driver shortage HOS Ecommerce Home delivery

growth

Carrier financial

health/capacity

Cross border

security

requirements

Crowd sourced

logistics

Driverless

vehicles

Denied party

screening

Secondary importance

Lower impact

Business Drivers Resulting in Expanded Transportation Management System Use

• For all respondents, business growth and improved customer service were tied

(63%) for the highest rated driver closely followed by cost reduction pressure (62%)

• However, for competitive and leading financial performers, their business drivers

were much more influenced by growth, while non-competitive and poorer financial

performers are driven to focus more on cost reduction

Answer Options Competitive Leading Basic/Nec. Mid. & Below <$10M >$100M

Business growth 76% 73% 53% 51% 65% 62%

Improved customer service

64% 69% 61% 56% 59% 70%

Cost reduction pressure

61% 69% 67% 69% 56% 67%

• For all respondents, meeting customer service targets came in as the highest rated

measure (71%) followed by cost per delivery (63%)

• More aggressive measures like contribution to revenue growth (36%) and competitive

differentiation (31%) were not deemed nearly as important

• The difference in the more aggressive measures was further accentuated when evaluating

competitive against non competitive management views

How is Transportation Value Measured?

0%

10%

20%

30%

40%

50%

60%

70%

80%

Cost per delivery Meeting customer service targets Contribution to revenue growth Contribution to competitivedifferentiation


Largest Difference Between Groups

• Transportation management is a multi-party process and transportation information is

valuable to many internal organizations, trading partners and carriers but too many

companies still don’t use it widely

• For all respondents, the best information sharing gets overall is 67% for internal

organizations and 52% for external organizations

• Competitive differentiators and better financial performers do a much better job sharing it

with the revenue side of the business (sales and customers) by as much as 2x

Where is Transportation Management Information Used

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Within the

transportation

department

Warehousing and

distribution

operations

Supply chain

operations (e.g.

purchasing and

planning)

Customer service Sales Customers Suppliers Carriers

Management Strategic Importance & Financial Performance

Competitive Leading Basic/Nec. Mid. & Below

Largest Difference Between Groups

• Across all respondents and transportation modes, the general split between centralized

and distributed management of transportation was 68%/32% respectively

• Centralization of transportation leads to lower costs and better/more consistent service

due to economy of scale

• With one exception (international inbound), competitive and leading financial performers

had higher percentages of centralized transportation by as much as 14%

Transportation Management Approach

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Domestic inboundcommon carrier

Domesticoutbound common

carrier

Private/dedicatedfleet

Parcel Internationalinbound

Internationaloutbound

All Respondents Centralized Distributed

Agenda

Who We Surveyed




• Overall, respondents were worried about the competition providing better transportation-

related services (speed #1, value-add #2 and visibility #4)

• Free was just the 5th choice

• 1/3 of the respondents had limited view of what their competitors were doing

• Only a small number of respondents (16%) were concerned about competitors’ use of

disruptive technologies

Transportation Strategies and Tactics That the Competition is Using of Greatest Concern

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Faster deliveries (e.g.same day delivery)

Provide value-addedservices

Don’t know Providing shipmentvisibility

Free shipping Disruptivetechnologies (e.g.drones, driverless

vehicles)

All Respondents

• For all respondents, leading edge practices and following trends were dominant and

virtually the same at 41%

• However, when considering transportation strategical importance, leading edge practices

outpace those that view transportation as a competitive differentiator (68%) versus those

that see no little to no value in transportation (25%)

Organizational Approach to Transportation Strategies

0%

10%

20%

30%

40%

50%

60%

70%

Create or adopt leading edgestrategies to stay ahead of

competition

Follow and adopt industrytrends to keep pace with

competition

Only adopt widely provenstrategies that have been

around for years

Keep doing what we havealways been doing


Largest Difference

• Invest in technology was the clear winner (63%) for overall respondents followed by

change transportation strategy (42%)

• Cut costs was third (32%) and more important to those who thought transportation was a

necessary evil (35%) or were a poorer financial performer (57%)

• Those competitive weapon/leading performers were 2x or more likely to value technology

investment over cutting costs

Preparation for Upcoming Change

0%

10%

20%

30%

40%

50%

60%

70%

80%

Stay the course Invest in technology Cut costs Changetransportation

strategy

Look for newtransportation

services providers

Outsourcetransportation to a

3PL/4PL


Largest Difference

• Overall, automation for better customer service slightly beat cutting costs (44% to 41%,

respectively)

• The message from competitive and leading financial performers was that they were

focused on the customer, while the non-competitive and poor financial performers are

more focused on strategies and tactics to reduce their costs

• The lowest was inbound transportation (combining inbound and outbound and convert

from prepaid to collect) with a limited focus (23%)

Strategies and Tactics for Improving Transportation Value

0%

10%

20%

30%

40%

50%

60%

70%

Automate transportation processes to react faster tocustomer needs

Cut costs (rates)

Transportation Strategic Importance & Financial Performence


• Visibility was top capability by all

respondents (60%) and but not those

with a smaller transportation spend

• The overall emphasis on improved

customer service is most likely driving

visibility importance

• Core TMS were the next 6 most

important and relatively equal (49% -

43%) followed by BI dashboards

(41%) and not surprising as cost

reduction is still one of the top issues

• Overall, those with large

transportation spend had greater need

across the board (average 17%

greater) for all of the capabilities

Capabilities Needed to Run Transportation Effectively

0% 10% 20% 30% 40% 50% 60% 70% 80%

Yard management

Logistics Messaging network

Fleet routing

Parcel

Dock appointment scheduling

Audit

BI dashboards

Contract management

Order management

Execution (tendering/booking)

Carrier bid management

Consolidation/load building

Rating/carrier selection

Visibility (tracking/proof of delivery)

All Respondents & Largest Spend

>$100M All Respondents

• While Visibility was the leading

improvement area for overall

respondents, there were a diverse

set of capabilities cited for effective

transportation management

• Areas that are typically cost

reduction focused (rating/carrier

selection, consolidation,

procurement and contract

management) were are also

predominant, again driven by cost

reduction pressure

• Specialty transportation areas (fleet,

parcel, dock and yard management)

have minimal focus and may

represent lost opportunity

Transportation Management Improvement Focus Today

0% 5% 10% 15% 20% 25% 30% 35%

Yard management

Audit

Dock appointment scheduling

Parcel

Fleet routing

Order management

Execution (tendering/booking)

Contract management

Procurement

Rating/Carrier Selection

Consolidation/Load Building

Visibility (tracking, proof of delivery)

All Respondents

Agenda

Who We Surveyed




• The most technologically aggressive companies are those that see the strategic

importance of transportation and have leading financial performers

• Not surprisingly, companies that do not believe transportation management is important

or poorer financial performers adopt new technology much more slowly

Company Technology Adoption Strategy

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Early adopter Fast follower Middle of the pack Laggard

All Respondents, Transportation Strategic Importance & Financial Performance


• In general, transportation spend will increase but it will be driven by companies who view

transportation management as a competitive weapon and have better financial

performance

• Those not focused on transportation and poorer financial performers run the risk of

creating a transportation capability gap that could impact their competitiveness

IT Spend Change in Next 2 Years

0%

10%

20%

30%

40%

50%

60%

Up >5% Up 1 - 5% Same as today Down <5% Down >5%

Management Strategic View & Financial Performance


• 1 in 4 respondents reported no obstacles. Of those that did;

• Payback not clear was the top issue (35%)

• Not a priority to executive team received the second highest response (32%) and is a

proxy for lack of understanding of TMS value

• Only larger organizations seem to be less immune to these issues (27% unclear

payback/19% not an executive priority) as they may be better resourced/educated

• The industry needs to do a better job at education (especially for management) on how to

determine transportation management value, including looking for value more broadly

Primary Obstacle to TMS Investment

0%

5%

10%

15%

20%

25%

30%

35%

Payback not clear Not a priority to executiveteam

Lack organizational readiness Considering a 3PL as analternative

All Respondents Except Other

• For all respondents rating and optimized planning (40%) was cited for the greatest value

gain from transportation management

• Execution oriented capabilities (visibility (38%) and execution (34%)) followed closely

• Performance analysis (28%) was considered important

• The top 3 are pretty consistent with “todays” improvement focus with performance

analysis becoming a new focus area

Where Will Your Organization Gain the Greatest Value from TMS in the Next 2 Years?

0%

10%

20%

30%

40%

50%

60%

Rating/optimized planning Visibility Execution Performance analysis

All Respondents, Management Strategic View, Financial Performance & Transportation Spend Sorted by Overall Respondent Priority

Competitive Leading Basic/Nec. Mid. & Below <$10M >$100M

• Overall respondents, competitive and leading financial performers will place more IT

investment in execution oriented capabilities (visibility and execution) that improve

customer service

• Non strategic and poorer financial performers will focus on cost reduction oriented

capability (rating/optimized planning)

• There is a high degree of alignment transportation management focus and IT investment

for the next 2 years

Greatest Transportation Investment in Next 2 Years

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Visibility Execution Rating/optimized planning Performance analysis

Management Strategic View & Financial Performance Sorted by Overall Respondent Priority


• There is a tight relationship between management strategic value of

transportation and performance – higher strategic value results in better

financial performance and faster growth

• Cost control is important, but not as much as supporting growth and services

initiatives – better/strategic performers get this even more

• The same goes for tactics to improve performance where technology and

strategy were more important than cost

• Today’s transportation management focus still too internal and cost driven, not

necessarily supporting growth, service and competitive threats

• Understanding transportation value is still a huge issue and key inhibitor to

increased TMS adoption

• Transportation spend will go up over the next 2 years and it will be more

service and speed focused

Conclusions

P r o p r i e t a r y a n d C o p y r i g h t o f T h e D e s c a r t e s S y s t e m s G r o u p I n c . A l l r i g h t s r e s e r v e d .

Transportation Management Strategies & Tactics of Top Performers

Thank you to the Georgia Center of Innovation for Logistics

A link to the web seminar and a PDF of the presentation will be provided

transportation management strategies & tactics of top ... · • the lowest was inbound...

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