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State of Transportation: Where Are We on the Vision of Automation? - 7 NOV 2012
 

State of Transportation: Where Are We on the Vision of Automation? - 7 NOV 2012

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For the purpose of this report, transportation management is defined as technologies that automate and improve decision making in domestic and international logistics. ...

For the purpose of this report, transportation management is defined as technologies that automate and improve decision making in domestic and international logistics.
This report is based on a quantitative study conducted between August 16th, 2012 and October 9th, 2012. The summary reflects responses from 75 respondents from 55 companies active in transportation freight decisions. The goal of the study was to understand how business complexity and maturity have affected the deployment and development of supply chain technologies to improve transportation management. The study contrasts the views of line-of-business transportation solution users and providers of the technologies.
The quantitative study results are enriched with insights from Supply Chain Insights’ work on supply chain ratios and interviews with business leaders to validate and clarify the results.

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    State of Transportation: Where Are We on the Vision of Automation? - 7 NOV 2012 State of Transportation: Where Are We on the Vision of Automation? - 7 NOV 2012 Document Transcript

    • State of Transportation: Where Are We on the Vision of Automation? 11/7/2012 By Lora Cecere Founder and CEO Supply Chain Insights LLC
    • ContentsResearch ................................................................................................................................... 2Disclosure .................................................................................................................................. 2Research Methodology and Overview ........................................................................................ 2Executive Overview ................................................................................................................... 3Current State ............................................................................................................................. 4Gaps Between What the Business Wants to Buy and What Transportation Providers Sell ......... 7Corporate Social Responsibility: The New Horizon. ................................................................... 9Recommendations ..................................................................................................................... 9Conclusion ................................................................................................................................12Appendix ...................................................................................................................................13About Supply Chain Insights LLC ..............................................................................................15About Lora Cecere ....................................................................................................................15Copyright © 2012 Supply Chain Insights LLC Page 1
    • ResearchThis research was developed with input from JBF Consulting. The development of the finalreport is based on quantitative and qualitative research from the team at Supply Chain Insights.This report is intended for you to read, share and use to improve your supply chain decisions.All we ask for in return is attribution when you use the materials in this report. We publish underthe Creative Commons License Attribution-Noncommercial-Share Alike 3.0 United States andyou will find our citation policy here.DisclosureYour trust is important to us. As such, we are open and transparent about our financialrelationships and our research processes.Research Methodology and OverviewFor the purpose of this report, transportation management is defined as technologies thatautomate and improve decision making in domestic and international logistics.This report is based on a quantitative study conducted between August 16th, 2012 and October9th, 2012. The summary reflects responses from 75 respondents from 55 companies active intransportation freight decisions. The goal of the study was to understand how businesscomplexity and maturity have affected the deployment and development of supply chaintechnologies to improve transportation management. The study contrasts the views of line-of-business transportation solution users and providers of the technologies.The quantitative study results are enriched with insights from Supply Chain Insights’ work onsupply chain ratios and interviews with business leaders to validate and clarify the results.Copyright © 2012 Supply Chain Insights LLC Page 2
    • Executive OverviewFuel prices are rising. Customer service levels are escalating and data abounds. The goodnews is that users of transportation planning systems feel that their solutions are aligned withthe mission. They have a higher satisfaction with their solutions than other application areas.The primary areas of opportunity are in data analytics, business-to-business (B2B) connectivityand supply chain visibility.The disconnect is in solution selling. What line-of-business buyers want and what solutionssellers are marketing is vastly different. Providers are driving a message of deeper optimizationwhile line-of-business users are asking for better analytics. The great news is the advancementof in-memory analytics makes this an easy gap to close.Copyright © 2012 Supply Chain Insights LLC Page 3
    • Current StateSupply chain management is three decades old. As shown in figure 1, the first two decadesexperienced little volatility in the price of oil. The last decade has seen both rising prices andextreme volatility. Therefore, it should be no surprise that the overwhelming issue for logisticsmanagers is the rising cost of fuel.Figure 1. Rising Cost of West Texas Intermediate Crude OilTransportation leaders are feeling the squeeze. Costs are increasing to run trucks. Fuel pricesare uncertain and customer expectations for on-time delivery have increased at about the samerate as fuel prices. Most companies are also straddling increasing expectations for corporatesocial responsibility and rising governmental compliance. Post-recession companies areexperiencing increased issues with equipment and driver availability. The severity of theseissues is shown in figure 2:When compared to parallel studies, there is a distinctive difference in business pain betweentransportation management users and supply chain planners. While the supply chain planningteams struggle with management understanding of supply chain fundamentals, this is not thecase for the transportation management team. For this team, the mission is clear. The data isnot.Copyright © 2012 Supply Chain Insights LLC Page 4
    • Figure 2. Top Three Concerns of Users of Solutions for Domestic FreightIn the face of rising costs and increasing expectations, logistics managers cannot translate datainto action. Despite the myriad of project implementations, and twenty years of systemimplementations, data is everywhere, but it is not actionable.Figure 3. Individual Business Pain of Transportation Management Line-of-Business UsersCopyright © 2012 Supply Chain Insights LLC Page 5
    • The self-ratings of users of transportation management solutions are outlined in figure 4. Thematurity of teams on the use of systems for transportation optimization is much more maturethan the use of the data in supply chain financials, supply chain visibility or cost-to-serveanalysis. The traditional definition of transportation management has focused on optimizationwithout a tighter connection of transportation optimization to total costs. The promise of anintegrated planning system is not today’s reality for most companies. Instead, transportationmanagement has been implemented as a focused project for the transportation team withoutprocess integration to trade-off transportation costs and constraints with those in manufacturing,warehousing and procurement.The limited scope of these deployments to not include transportation decision making into moreholistic supply chain decision making is the Achilles’ heel for most companies. As a result, theself-ratings on total costs and cost-to-serve analysis are much lower.Figure 4. Self-assessment of Users of Transportation Management SolutionsIn general, transportation planning users are happy. As shown in figure 5, the gaps in the designof transportation solutions and the actual performance are small. While line-of-business userswould like to see enhanced capabilities for benchmarking, supply chain visibility, inbound freightand B2B connectivity, the users of transportation management solutions are much happier withthese solutions than their cohorts are in the areas of supply chain planning.Copyright © 2012 Supply Chain Insights LLC Page 6
    • Figure 5. Performance versus Satisfaction with Transportation SolutionsGaps Between What the Business Wants to Buyand What Transportation Providers SellThe traditional provider of transportation solutions is pushing an optimization message andbelieves that the market has more opportunity to sell new solutions than is market reality. Tounderstand this, consider figures 6 and 7 below that contrast the views of technology providersand line-of-business users.In general, the technology’s user is satisfied with current solutions. They feel that there are smallgaps to fill in technology solutions. They are seeking advancements in the areas of supplychain visibility, B2B connectivity, and supply chain benchmarking. In contrast, in figure 7, theproviders of solutions are focused on an integrated optimization message with a belief that thereis a larger gap in the solution capabilities than the user of technology sees. This gap has stalledmarket momentum for transportation solutions.It is time for solution providers to rethink their approach.Copyright © 2012 Supply Chain Insights LLC Page 7
    • Figure 6. Relative Importance vs. Performance of Solutions: Perspective of Line-of-BusinessUsersFigure 7. Relative Importance versus Performance of Solutions: Perspective of TransportationService ProvidersCopyright © 2012 Supply Chain Insights LLC Page 8
    • Corporate Social Responsibility: The NewHorizon.The introduction of corporate social responsibility as a corporate mandate has slowlytransformed transportation planning over the past five years. In our study, 79% ofmanufacturers have a CSR policy, and 50% of them are clear on the connection of the CSRstrategy and the impact on transportation planning. This linkage is clearer for line-of-businessusers than providers of transportation solutions. The primary opportunity for solutiondevelopment is better calculation of the carbon footprint impact in transportation optimization.This gap is shown in figure 8.Figure 8. Tactics to Improve Performance against Corporate Social Responsibility InitiativesRecommendationsOverall, the user of transportation solutions has a high satisfaction level. This is both at anenterprise and a value network level. The level of outsourcing to a third-party logistics provideris high, and 68% of line-of-business users are satisfied with these relationships. This study isconfirmation of the data that we reported on user satisfaction in our Voice of Supply Chain Studyin the spring of 2012.Copyright © 2012 Supply Chain Insights LLC Page 9
    • Figure 9. Importance of vs. Satisfaction with Supply Chain Management Systemsfrom Supply Chain Insights’ Voice of the Supply Chain Leader Survey in March 2012In summary, the opportunities lie in closing the gaps in analytics and using new techniques forsupply chain visibility. The answer to both of these problems requires education and retooling forthe provider of transportation solutions. Companies want to use enterprise and inter-enterprisedata. They are awash in data, but lack insights. As a result, companies should focus on: • Driving Value in Integration. The term “integration” is used often with very different meanings. The line-of-business buyer is seeking integration with order management and ERP and has a lower priority with Warehouse Management Systems (WMS). While many solution providers attempt to paint a rosy picture for WMS/TMS integration, the market momentum is with order management and ERP planning systems. • Use of In-memory Analytics with Pre-defined Data Models. Transportation optimization solution providers have been slow to adopt newer forms of in-memory analytics for improved reporting. This should be the number one goal for companies buying an integrated data solution from an ERP solution provider like Oracle or SAP. However, do not take it for granted. Instead, map the requirements for reporting carefully and test in pilot deployments.Copyright © 2012 Supply Chain Insights LLC Page 10
    • • Deployment of New Forms of Analytics for Supply Chain Visibility. While clients request “supply chain visibility” solutions, there is no industry standard definition for visibility. It varies from a simplistic solution like track and trace to a more complex model for predictive alerting. Getting clarity on the definition is the first step on solving the company pain shown in Figure 10 for supply chain visibility. Transportation management is the first place to start to close this business pain.Figure 10. Primary Considerations for TMS SelectionFigure 11. Company Pain PointsCopyright © 2012 Supply Chain Insights LLC Page 11
    • ConclusionTransportation management solutions are mature with a high satisfaction level with line-of-business users. The primary opportunity is in the advancement of analytics.Copyright © 2012 Supply Chain Insights LLC Page 12
    • AppendixGet the complete set of summary charts from this Supply Chain Insights research study. Quantitative study methodology and demographics:Figure A. Study DemographicsCopyright © 2012 Supply Chain Insights LLC Page 13
    • Figure B. Industry and Company Size of RespondentsFigure C. Experience with Third-party Logistics SystemsCopyright © 2012 Supply Chain Insights LLC Page 14
    • About Supply Chain Insights LLCSupply Chain Insights LLC (SCI) is a research and advisory firm focused on reinventing theanalyst model. The services of the company are designed to help supply chain teams improvevalue-based outcomes. Commercial offerings include research-based Advisory Services, aDedicated Supply Chain Community and Web-based Training.About Lora Cecere Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights LLC and the author of popular enterprise software blog Supply Chain Shaman currently read by 5000 supply chain professionals. Her book, Bricks Matter, publishes in December 2012. With over nine years as a research analyst with AMR Research, Altimeter Group, Gartner Group and now as a Founder of Supply Chain Insights, Lora understands supply chain. She has worked with over 600 companies on their supply chain strategy and speaks at over 50conferences a year on the evolution of supply chain processes and technologies. Her researchis designed for the early adopter seeking first mover advantage.Copyright © 2012 Supply Chain Insights LLC Page 15