DC Velocity - December 2016

The result will be the improved and automated communications that many of us have come to expect.

CE: Replacing aging infrastructure and systems implementations. Many companies are operating on systems installed in the late ’90s and early 2000s, when capital budgets for logistics systems were looser. Bringing systems up to date will enable increased functionality and can make data easier to access.

MH: Legacy technology can make it difficult to rapidly customize applications to meet customer needs. It’s a challenge to move fast or to innovate on these aging systems. There are a few scalable packaged solutions, but they’re also plagued by legacy technology. Modernizing these platforms enables automation, self-service marketplaces, and big data algorithms, and ultimately makes it easier to match capacity and demand. This is a big reason why we’ve chosen to develop our own systems—a cloud-based platform gives us the flexibility to deploy new software very quickly.

MW: In the past, large companies with significant transportation budgets were the primary beneficiaries of transportation and logistics IT solutions. The advent of cloud-based solutions has made it possible for companies of all sizes to access transportation management systems (TMS) and other technology tools and realize cost savings and improved efficiency. One of the most significant areas of opportunity is transportation optimization. In the past, companies may have viewed optimization solutions as too expensive, too difficult to implement, or not user-friend-ly. However, in today’s market, there are many cloud-based solutions that are affordable and easy to use for any business.

Q: All of you work in logistics, but in your own unique subsegments. What area within IT will deliver the most profound benefits for logistics operations over the next two to three years?

AH: Developing technology to connect the world in different ways and collecting data for creating better outcomes for all concerned. Our technology, and the data that is derived from it, results in more profitable carriers, which in turn means better service for shippers.

CE: Cloud computing. In the next few years, we are going
to see increased functionality from cloud-based logistics
solutions and greater potential to integrate applications.
This will allow people to access applications from mobile
devices anywhere they have an Internet connection. The
benefits are the ability to be more agile and flexible in how
solutions are delivered and how data is displayed by the
business.
MH: Automation is impacting everything we do. We’re
seeing tremendous value in using our IT to match freight
with capacity—that’s in both truck brokerage and inter-
modal. And we’re using sophisticated technology in our
logistics facilities, including advanced robotics. Not too
far down the road, we expect automation in the form of
autonomous vehicles.

MW: There are a number of trends that we are following, such as e-commerce and omnichannel fulfillment, as well as the IoT [Internet of Things] and GPS-enabled mobile devices. We view predictive analytics and big data as very promising in terms of providing information that will support more informed decision-making in real time by logistics practitioners.

Q: What feedback do you get from businesses as to why they are reluctant to make investments in IT services?

AH: Until recently, there wasn’t a need for transportation companies to make huge changes. Change would come only in response to a crisis. In addition, the available solutions were too expensive and required extensive change management that was not always welcomed by the culture. All of transportation is like a legacy business—which by definition tends to be slow to adopt change. A “tipping point” will occur within the next 18 months. Over that time, reduced IT costs will lead to increased adoption. These factors will force companies to commit to a tech approach instead of an old-school brokerage approach.

CE: Cost is the excuse that’s given, but in reality, businesses have a hard time explaining the benefits to senior management. For shippers, logistics is seen as an expense, and it is challenging to justify the increased expense of IT investments versus the benefits. A lot of companies have been burned in the past by not being able to demonstrate an ROI [return on investment] on their logistics IT investments. This makes senior executives wary of new investments without a lot more due diligence.

MH: Many companies in our industry have legacy systems that are 30-plus years old. These systems are built on obsolete technology and are not upgradeable. It would be a risky, years-long process for them to replace these main-frame systems with a new platform. This technical debt is inhibiting innovation.