2018 Transportation Management Survey Findings ebook

Transcription

1 2018 Transportation Management Survey Findings ebook A Competitive Advantage for Top Performers Due to the accelerated growth of ecommerce and home delivery, transportation management (TM) is gaining strategic importance in the marketplace. Top-performing, high-growth companies are putting successful TM strategies and technologies into action to sharpen their competitive edge and ultimately, drive revenue. Descartes and DC Velocity conducted a global benchmark study in 2018 to provide multiple perspectives on issues impacting transportation management (TM) today. The second annual survey identifies key industry trends; examines current practices, strategies, tactics and technology; explores how TM s strategic value is measured; and provides projections on its future growth. Plus, by comparing this year s findings with those from our 2017 benchmark study, this ebook offers insights into whether viewpoints are changing or staying the course. Learn more about the survey results

2 Who We Surveyed The 162 respondents who took part in the 2018 survey represented a wide array of industries, as well as multiple geographic areas of operation and transportation modes. Here s a snapshot: INDUSTRY BREAKDOWN LOCATION OF OPERATIONS TRANSPORTATION MODES 70 % Shippers 30 % LSPs 38 % Canada 81 % United States 23 % LatAm 30 % EU 18 % ROW 28 % Aus TL (75%) LTL (73%) Air (58%) Parcel (54%) Ocean (52%) Rail (44%) Private / Dedicated Fleet (35%) Other (16%) Wholesale/distribution (20%), third-party logistics providers (19%) and discrete manufacturing (16%) are the top three industries represented. 30% of respondents were from the logistics services community. Respondents from retail, food & beverage, chemical, consumer goods, automotive and pharmaceutical companies participated. This pool of respondents is slightly more diverse than in the 2017 survey, with a growing number of organizations reporting operations in Europe, Canada and Asia. While the study included companies with a global footprint, participants reported a heavy U.S. presence. A significant number of the respondents (25%) had a transportation spend greater than $100M Over-the-road transportation was the mode used most often, with more than 70% of respondents using LTL and Truckload. The increased global diversity of this year s participants correlates with the high percentage of international shipping modes represented (air & ocean)

3 How We Analyzed Results We tested two hypotheses to learn how they affected transportation management strategy, tactics, technology and business performance: Competitive weapon (18%) Customer service differentiator (40%) Basic service (32%) Necessary evil (10%) First, we asked survey respondents to rate their management s strategic view of TM and narrowed our view to focus on two categories: the Competitive and Basic/Necessary groups Competitive/Differentiator Basic/Necessary HYPOTHESES TESTED - Is management s perception of transportation management value a self-fulfilling prophecy? - Is financial performance a factor or the result? Industry leading (18%) > Average (48%) Middle of the pack (31%) < Average (2%) Bottom performer (1%) Then, we asked survey respondents to rate their company s financial performance and narrowed our view to focus on two categories: the Leading and Mid/Below Leading Middle & Below Survey Insights: Management s perception of transportation management is key to the role it can play and its value to the overall business. While there is a relationship between financial performance and the strategic importance of transportation, the correlation is not as strong as in 2017.

4 Examining Future Growth When asked to forecast their companies anticipated growth over the next two to three years, this year s respondents provided projections that contrast significantly with 2017 responses. For example, 2017 top performers were two times more likely to grow faster than their laggard counterparts. However, this year there is virtually no difference between the growth rates projected by top performers and laggards. SURVEY INSIGHTS An improved global economy combined with more diversity among survey participants could be responsible for decreasing gaps in projected growth rates between top-performing and laggard companies in the 2017 and 2018 surveys. MANAGEMENT VIEW / 2-3 YEAR GROWTH FINANCIAL PERFORMANCE / 2-3 YEAR GROWTH 61% 61% 65% 56% 17% 13% 19% 17% 17% 12% 15% 9% 9% 14% 4% 9% 2% 0% 0% 0% >15% 5-15% <5% No Growth Shrink >15% 5-15% <5% No Growth Shrink Competitive/Differentiator Basic/Necessary Leading Middle & Below

5 Shaping TM s Future Survey respondents were asked a series of questions to learn more about industry trends and business priorities impacting the future of transportation management system (TMS) use. FUTURE IMPACTS BUSINESS DRIVERS VALUE MEASUREMENT MORE Available Capacity ecommerce LESS 63% Customer Service 56% Business Growth 54% Cost Reduction Pressure 80% 56% 43% Cost Per Shipment Service Level Targets Contribution to Revenue Once again, respondents cited the capacity crisis, which includes driver shortage (51%) and carrier capacity issues (45%), as the top industry/regulatory change with the greatest impact on transportation management over the next five years. Ecommerce (36%) and home delivery (23%) combined to create the ecommerce avalanche, which received the second-highest ranking again this year. It s interesting to note that cross border logistics and security requirements (13%), driverless vehicles (11%) and crowdsourced logistics (9%) continue to be nonfactors. The top three business priorities driving TMS expansion for all respondents were improved customer service (63%), business growth (56%) and cost reduction pressure (54%), mirroring the 2017 survey. However, Competitive Weapon companies that understand transportation strategic value placed heavier focus on improved customer service (+18%), business growth (+29%) and the fourth highest choice - new channels (+15%). When asked how transportation value is measured by their organizations, 80% of respondents cited cost-per-shipment, making it the overall top measurement, followed by service level targets reported at 56%. This was a significant flip compared to 2017 when customer service received the top ranking from more than 70% of respondents. Overall, measures that move the value of transportation beyond traditional logistics metrics still lag by a significant margin. Yet, management that recognizes the strategic value of TM is much more focused on metrics that capture its broader impact on the business.

6 Shaping TM s Future Survey respondents were asked a series of questions to learn more about industry trends and business priorities impacting the future of transportation management system (TMS) use. INFORMATION SHARING SURVEY INSIGHTS 68% 67% Within Transport Department 63% Warehouse and Distribution 68% 67% 63% 62% Supply Chain Operations 61% Customer Service When compared to 2017 results, results concerning sharing transportation information are mixed. While sharing with sales, customers, suppliers and carriers is on the upswing, communicating with the fundamental areas of transportation, warehousing and customer service is either stagnant or decreasing. Overall, higher performing companies continue to do the best job sharing transportation information with few exceptions. 60% 49% 56% 50% 41% 39% 56% 54% Sales Customers Suppliers Carriers More than half of leading financial performers (52%) selected ecommerce as the most impactful change to transportation management in the future. Achieving compliance of HOS (11%) was not a top-of-mind concern this year, indicating many companies are already addressing driver mandates. Top performers are much more focused on business growth than their lower-performing counterparts. Capacity constraints are driving up costs and shifting focus, while also making it more difficult to service customers.

7 Keeping Pace with Change Competitive Outlook When asked about their greatest competitive concerns, delivery speed topped the list (41%). Low cost/free shipping moved up from fifth place last year to second place (38%), suggesting companies are concerned about the consumerization of transportation services. 41 % Faster Delivery Options 37 % Low Cost Shipping 28 % Value-Added Services 27 % Don t Know 25 % Providing Visibility 17 % Disruptive Technologies Top performers are also focused on rising consumer demands, ranking valueadded services in second place above lower cost shipping. The fact that fewer respondents admitted they don t know their competitive concerns, with that response slipping a notch this year to fourth place, hints that competitive pressures are being felt. Yet competitors use of disruptive technologies concerned only 16% of respondents. STRATEGIC APPROACH Similar to last year, the majority of respondents characterized their company s transportation strategy as either leading-edge (40%) or following trends (36%). Leading financial performers were more than twice as likely to adopt leadingedge practices. The gap to adopting leadingedge practices increased between those that consider transportation strategically important (+2%) versus those that see little to no value in transportation (-6%).

8 Preparation for Change SURVEY INSIGHTS 13% 28% Stay the Course 48% 43% Invest in Technology 17% 37% Cut Costs Competitive/Differentiator To learn more about future planning, we asked how respondents are preparing for macroeconomic, industry and regulatory change. While investing in technology was the overall winner (51%), it was 12% lower than last year. Looking for new transportation services providers (45%) jumped up to the second-highest ranking, followed by changing transportation strategy (40%). Respondents who consider transportation as a competitive weapon are twice as likely to change their strategy as those who view it as a basic/necessary evil. The latter are more focused on short-term fixes such as cutting costs and finding new providers. 61% 28% Change Strategy 35% Basic/Necessary 56% New Service Providers 26% 9% Outsoure to 3PL When it comes to planning for change and keeping pace with competitors, companies that view transportation as a competitive weapon are more likely to adopt leading-edge practices, change strategies and invest in technology than companies that view it simply as a necessary function.

9 Focusing on Visibility IMPROVING VALUE Cutting costs (45%) and automating processes for better customer service (39%) were considered the two most important strategies and tactics for improving transportation value, swapping positions from 2017 survey results. Also changing positions were centralizing transportation management (30%) and offering high-value services (27%), which ranked #3 and #4 this year. In general, leading organizations are less costfocused and more business- and customervalue driven than lower-performing companies. REQUIRED CAPABILITIES Visibility once again claimed the top spot as the most-needed capability to effectively manage transportation, moving up 7% from last year to 67%. Core TMS functions of carrier rating/ selection, order management, execution and carrier bid management round out the top five capabilities. Two changes to note from last year are order management, up to third place from sixth, and business intelligence, which moved up two slots to sixth. Consolidation fell from third to seventh in the rankings. Respondents gave little attention to specialty functions such as contract management, dock appointment scheduling, audit, parcel, fleet routing, logistics messaging network and yard management. 1 Visibility 2 Rating / Carrier Selection 3 Order Management 4 Execution 5 6 TOP 6 TM CAPABILITIES Carrier Bid Business Intelligence Dashboards THE STATE OF VISIBILITY To follow up on the importance respondents placed on visibility, we asked them which techniques their companies are currently using. EDI received the highest ranking at 55%, closely followed by real-time GPS with 47%. It s not surprising to learn that top performers are much more likely to be using real-time updates. Almost three-quarters (74%) of leading companies use real-time visibility techniques versus only 57% of laggard companies, who are more likely to rely on manual methods such as spreadsheets, s and calls ranging from 44% to 61%. SURVEY INSIGHTS Top-performing companies tend to be less focused on cost-cutting strategies and more on forward-thinking options to create value, such as improving customer service with automation. Plus, they are much more likely to use real-time visibility for updates.

10 Maintaining 2017 Adoption & Spend Levels TECHNOLOGY ADOPTION Early Adopters v. Laggards IT SPEND OUTLOOK While laggard companies reported they were going to spend more, it may not happen as over 80% of them have greater struggles getting their projects approved compared to top performers who are significantly better able to justify TMS investments. 44% Early Adopter 24% Laggard 41% Early Adopter 18% Laggard When asked to describe their company s strategy for technology adoption, this year s respondents provided information strikingly similar to the 2017 survey responses. Overall, 41% identified their organizations as either early adopters or fast followers, while almost 18% cited their companies as laggards. Companies with leading financial performance were two times more likely to be early adopters than poor financial performers. Surprisingly, how management views transportation s strategic value did not significantly impact technology adoption strategy as it did in Down >5% Same as Today Up 1-5% Up >5% Similar to 2017, survey respondents reported that transportation IT spend will increase over the next two years. The majority of increased spend will be driven by companies who view transportation management as a competitive weapon (60%). Poorer financial performers are focused on closing some of the spending gap with 43% increasing spend, while over half (53%) still plan to maintain current levels. INVESTMENT OBSTACLES Overall, nearly a third of the respondents (31%) reported they have no obstacles to TMS investment. For the remainder, management perspective on transportation s value (30%) and its financial performance (47%) weighed heavily, as it does with a majority of survey topics. SURVEY INSIGHTS While obstacles may be decreasing, the percentage of respondents who reported that TMS investment isn t a priority or that its payback isn t clear to the company underscores the need to further educate executives on transportation value.

11 Aligning Value and Investment AREAS OF GREATEST VALUE As in 2017, respondents cited the same top four areas for gaining the greatest TMS value in the next two years. This year visibility claimed the top ranking with 37%, followed by execution (31%), rating/optimized planning (30%) and performance analysis (30%). Upon closer examination, companies that recognize the strategic importance of transportation management are even more focused on visibility (55%) and considerably less focused on execution (15%). Other focus areas such as carrier bid (12%), contract management (11%), managing specialty modes (11%), vehicle control in and out of facilities (8%), audit (7%) and international shipping (5%) were not top of mind. FUTURE INVESTMENT AREAS Transportation management focus and IT investment for the next two years are highly aligned, with the same top four areas reported in both categories. However, investment in visibility was cited significantly more (43%) than the next three areas: performance analysis (27%), rating/optimized planning (25%) and execution (24%), respectively. Performance analysis, which was projected to increase in importance by 2017 survey respondents, jumped two spots to the #2 ranking this year. Companies with a strategic view of transportation management were even more focused on investing in visibility (55%) and rating/optimized planning (40%). TOP 4 TMS INVESTMENT NEXT 2 YEARS 1 Visibility 2 Execution 3 Rating / Optimized Planning 4 Performance Analysis SURVEY INSIGHTS In general, companies are aligning their IT investment with the areas where they anticipate gaining the most value from TMS, such as investing more in visibility capabilities to improve customer service.

12 Key Survey Takeaways There is a definite correlation between management s strategic value of transportation and a company s performance, with higher strategic value resulting in better financial performance. Carrier capacity is the dominant issue significantly influencing the strategies, tactics and use of transportation technology. Technology investment is still the leading choice to address industry trends, but the search for new carriers and a change in transportation strategy are gaining ground. Visibility emerged as the top capability and technology requirement for all respondents. Understanding transportation value is still a significant issue for many organizations, especially for lower-performing companies, and a key inhibitor to increased TMS adoption. Transportation IT spend will increase over the next 2 years, with the greatest investment expected in visibility and optimized planning.

13 A COMPREHENSIVE SOLUTION WITH ADVANCED CAPABILITIES If you need to increase operational efficiency, reduce complexity, decrease costs or enhance customer service, the Descartes transportation management suite can help. Whether providing an end-to-end solution or a quick fix for a specific transportation issue, our modular solution provides the depth of standard capabilities you need as well as an incredibly broad array of advanced capabilities that power the largest logistics operations in the world. From one platform, can be implemented in weeks rather than months. It is straightforward to use and leverages the Descartes Global Logistics Network (Descartes GLN ) to connect your carriers and trading partners. Traditionally, transportation management solutions have focused on a standard set of processes including contract management, load planning & optimization, execution and freight audit. Descartes transportation management creates even greater value by providing advanced capabilities: Private/Dedicated Fleet Dock/Yard Management Pool Distribution Parcel Visibility and Performance Management Descartes Global Logistics Network Real-time freight tracking and visibility To learn more about Descartes TM solutions, click here.

14 Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logisticsintensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at and connect with us on LinkedIn and Twitter. The Descartes Systems Group Inc. 120 Randall Drive, Waterloo, Ontario, N2V 1C6, Canada Toll Free Int l info@descartes.com Uniting the People & Technology That Move the World Network. Applications. Content. Community. 2018, The Descartes Systems Group Inc. All rights reserved.