Every day, on calls with Cleo customers, I am learning first-hand how leading supply chain-driven businesses are adjusting to the COVID-19 pandemic. In this blog series I share insights about how companies in various industries are responding. Their agility is remarkable, and something we can all learn from. Hope this helps everyone think differently.
Blog #10 – Transformation of a Trucking Company into a Software Business
During my recent conversations with the executive leadership of one of our third-party logistics (3PL) customers, I was amazed to learn how this company that has been traditionally focused on cross-border less-than-truckload (LTL) across the U.S. and Canada, is transforming itself into a software business for the trucking industry.
The company has realized that while moving freight is important and drives its cashflow, genuine digital transformation requires it to become a new information-based business that can serve the entire trucking industry. To that end it has deliberately been adding more and more cloud technology capabilities in planned, sequential phases with an eye towards the future while enhancing its market position in the present.
Our customer had traditionally been a cross-border carrier for LTL freight. It moves a lot of goods across the borders through a wide variety of industries spanning dry foods, industrial chemical, paper products, and medical devices. It has a thriving business across three business lines (warehousing, 3PL, and freight forwarder), and solid relationships with a wide group of ecosystem partners consisting of numerous freight brokers, express package delivery companies such as FedEx and UPS, and many customers.
Despite the vibrant growth in its core businesses, the company’s executive leadership recognized that with the advent of digital transformation, the focus can no longer be only on trucks, but on relationships. Specifically, the connectivity and visibility aspects of those relationships. And that means technology. It found that the rest of its competitors were solely focusing on trucks, and were entirely missing the importance of moving, connecting, integrating, and delivering the promise of improved visibility to its network of customers it provides services.
This strategic thinking led the company to elevate its core vision to “become a software company that has trucks” instead of a trucking company that uses software to conduct business.
It’s about building a framework for digital connectivity as part of its business model transformation into a software company. And our customer has pursued this transformation vigorously with the strategic intent to become a technology-first company that is proactive in identifying areas to apply digital technologies and aggressively embrace digital transformation.
Three Phases of Evolution
With their vision to build a software business leveraging their deep track record in LTL business, they went about a three-phased approach to build a framework for digital connectivity and transform from being just a trucking business into a software company.
- Automation in order processing and customs documentation
- Visibility platform for supply chain data and smart contracts
- Ecosystem integration platform for creating a trucking marketplace
The Impact of Automation
In Phase One of the transformation, the company went about adding a rich set of EDI capabilities for order processing and a rules engine for validating load tenders, invoices, and shipment status messages. In addition to automating EDI, it pursued API integration into the transportation management systems (TMS) of its customers and freight brokerages to enable more accurate load tender processing eliminating errors.
The company also focused on automating the flow of customs documents for its freight forwarder business leveraging robotic process automation (RPA) for eliminating manual steps in document processing and routing. Further, by introducing machine learning, artificial intelligence, and Internet of Things (IoT) management technologies, it has dramatically consolidated and automated workflows between its customers, partners, and internal systems. Such a high level of automation has allowed it to deliver significant internal efficiencies as well as exceptional insights on inventory statuses to its customers to effectively operate their supply chains.
Visibility Platform for Supply Chain Data and More
The company leveraged blockchain technology by building a distributed hyper ledger on a centralized hosted platform for connecting partners to smart contracts. Its distributed ledger provides a common platform to deliver insights and visibility to its customers and partners. Today there are a lot of middle players such as FourKites, project44, and others, who are trying to provide visibility as an external technology source.
Instead, this company is focused on providing a digital platform with predictive and prescriptive insights that can serve as a marketplace for the trucking industry. In addition, by the strategic use of IoT, it can provide route optimization insights as well as dynamic track and trace of freight to enable real-time decision making,
Ecosystem Integration Creates Trucking Marketplace
To fulfill its vision to become the trucking industry marketplace similar to what Maersk has done for the shipping industry, this company is now focused on deploying an ecosystem integration platform that can consolidate all the integration flows centrally in the cloud. This involves all the inbound and outbound EDI for load tenders, invoices, and ship status messages, APIs for dynamic shipment status notifications and integration to freight brokerage TMS systems.
With an ecosystem integration platform, it can rapidly onboard new shippers, freight brokerages, partners, and carriers. Its intended value proposition is to cut the time to market for trucking businesses by gaining access to shippers’ transportation needs. Further, the ecosystem integration platform also provides unparalleled visibility across the entire network including delegated visibility to freight brokerages and shippers.
All in all, this use case is a prime example of deliberate digital transformation strategy at work, and the sequential, steady approach it takes to make digitalization successful.
As always, please reach out to me here on LinkedIn with any questions or comments that you might have. And refer to Cleo’s COVID-19 FAQ guide for more suggestions to help you navigate these difficult times.