E-COMMERCE TRANSPORTATION EXECUTION

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1 E-COMMERCE TRANSPORTATION EXECUTION Streamlining transportation execution in today s omni-channel distribution environment is a clear cut process if you re using a modern, multi-mode transportation system Produced by In partnership with

2 E-commerce sales are on track to hit $523 billion by 2020, up 56% from $335 billion in 2015, according to Forrester Research, Inc. And by 2020, the firm expects 270 million consumers to be browsing and buying online, up from 244 million in Business-tobusiness (B2B) e-commerce sales are hitting even bigger targets, and on track to surpass $1 trillion by 2020, Forrester reports, up from $305 billion in As manufacturers, distributors, and retailers struggle to wrap their arms around what these upticks mean for their businesses, the pathway from point of origin to end user for this billions of dollars in merchandise continues to be assessed, dissected, and approached in various ways. According to the 25th Annual Trends and Issues in Transportation and Logistics, e-commerce has both shippers and third-party logistics providers at a strategic crossroads right now. For many companies, the growth of e-commerce has drastically changed how they manage this distribution channel, the study s authors write, and they ve worked towards creating a unified and coherent omni-channel strategy. Of course, achieving that unified and coherent strategy isn t always easy, nor is there necessarily a good roadmap to follow. Shippers are literally pioneering new territory in their quest to achieve this Holy Grail. And as many have learned, omni-channel is not just another distribution option to be added to the other independent networks managed by the company, according to the study. It requires an integrated strategy to create and deliver value for all members of the supply chain regardless of where the customer is shopping, what device they re using, and how often they login/out of the system. 1

3 Transportation Execution seems to be forgotten about until it s too late and then shippers find themselves rushing around trying to solve the problem after the fact. JP Wiggins, VP of logistics at 3Gtms Software For many shippers, the solution lies in e-commerce-focused transportation execution enabled by a modern transportation management system (TMS). In this white paper, we ll further explore the key challenges that shippers are facing in the e-commerce/omnichannel environment and show how transportation execution and optimization is already helping companies jump these hurdles, improve customer service levels, and cut costs. Addressing the Amazon Effect Few would argue the impact that Amazon has had on the logistics environment, where same-day, next-day, and twoday have become common freight approaches for even the smallest, inconsequential, and unimportant packages. Where this level of urgency was once reserved for critical products, over the last 5-10 years consumers have literally come to expect that pair of shoelaces, dog food bowl, or bath towel ordered online to be delivered within a day or two, max. This is just one of the many ways that Amazon has impacted the supply chain, and it s bubbling over onto the business-to-business (B2B) side of the e-commerce equation. Both businesses and consumers are expecting more rapid delivery of smaller orders, and that s forcing shippers to use faster order cycles, says JP Wiggins, VP of logistics at 3Gtms Software. To support this trend, TMS must be able to execute properly across multiple transportation modes, including parcel, LTL multi-stop truckload, pool distribution and intermodal. This requires a modern, multi-mode TMS that manages tendering and booking; documentation; and tracking and proof of delivery as well as transportation planning functions like load planning, load consolidation, carrier selection, and carrier connectivity. Unfortunately, many shippers overlook the need for execution when selecting and utilizing TMS in today s fast-paced, e-commerce-centric logistics environment. For example, many logistics managers assume that order management (OMS) and warehouse management (WMS) will address their order fulfillment challenges. Transportation Execution seems to be forgotten about until it s too late, says Wiggins, and then shippers find themselves rushing around trying to solve the problem after the fact. Dynamic Transportation Optimization Enabling streamlined transportation for both B2C and B2B e-commerce channels requires some upfront legwork on the shipper s part. As portals, websites, and shopping carts are either developed or upgraded, for example, special thought should be given to how systems will integrate with one another, how information will be fed in and out of the enterprise resource planning (ERP) system, and how orders will be physically handled, managed, and delivered once they come in. To work most effectively, these decisions should also factor in the need to deliver high levels of customer service at the lowest possible cost. These issues aren t always easy to pin down in the e-commerce world, where order sizes and quantities are extremely fluid and liable to change quickly. Everybody is responding to their customers changing supply chain, and forcing changes on their vendors. So where a manufacturer used to ship out 6,000 units of a specific product to a B2B customer on a monthly basis, for example, that same company is now ordering a few thousand units every week, and not always using consistent order sizes. 2

4 With e-commerce, the fact that order sizes are constantly changing directly impacts shipment quantities, says Wiggins, and that, in turn, affects both carrier and mode selection. The only way to efficiently address these fluctuations is through dynamic transportation optimization. So where figuring out which mode is best is fairly straightforward in the offline world, the same decision needs more careful thought in the omni-channel arena. It also has to be executed faster and with more precision. Ignore this reality and before long your company will be forced to manage transportation cost spikes and other negative impacts of that oversight. It s simple if you re using just one mode like parcel, but parcel only works in the B2C environment, Wiggins explains. In B2B, shippers need a multi-mode strategy and must be able to execute and choose between parcel, LTL truck, inter-modal, find consolidation opportunities, and keep transportation costs down. Meeting the Challenge Head-On The flowering of e-commerce while welcomed by most manufacturers and retailers has introduced far more risk and complexity for logistics managers, Logistics Management s Patrick Burnson writes in E-commerce reshaping logistics. Determining the optimal distribution network has never been more of a challenge, as shippers strive to strike a delicate balance between service and cost. Shippers can achieve that balance by utilizing a multimode TMS that can deftly manage execution and optimization in a highly automated manner. By selecting a TMS that integrates easily with the company s omni-channel distribution plan, shippers can: Gain a 360-degree view of their fulfillment operations Attain accurate order visibility and status from carriers to understand exactly where inventory is at any moment Tightly integrate with an ERP, thus allowing order adds/changes/deletes while planning 3

5 Determining the optimal distribution network has never been more of a challenge, as shippers strive to strike a delicate balance between service and cost. Equip route planners with the ability to dynamically optimize up to the point of freight actually leaving the warehouse Make proper mode decisions for specific shipments, from parcel to truckload to carload Account for constraints and leverage exception/alert handling (i.e., to know when orders will be delayed or which of them can be rerouted) Gain inbound visibility at the warehouse (or even store) level to forecast labor requirements Utilize freight opportunities such as consolidation, pool distribution, and reverse logistics Orchestrated properly, the e-commerce supply chain also improves customer satisfaction, enables new warehouse efficiencies, exposes shippers to new delivery capabilities, helps reduce inventory, and leads to cash flow improvements. All of these benefits directly impact the shipper s bottom line while ensuring that it stays ahead of the pack on the e-commerce/omni-channel front. To do that using old-school integration methods would be entirely too complex, says Wiggins. It s much better to set up a web service and let these systems use it. Wanted: Fast, Efficient Customer Service A producer of quality mattresses for independent retail stores, regional outlets,and national chains across the U.S. for more than 40 years, Corsicana Bedding, LLC, is one B2B company that is realizing the benefits of good transportation execution. A maker of a wide range of premium mattresses and bedding products, the company prioritizes service and on-time delivery with strategically placed production facilities throughout the country. As its communications around loads became more complex and numerous, Corsicana sought out a TMS that would enable new business initiatives, increase its use of automation, and streamline its operations. For example, some loads had as many as 20 s going back and forth, making sure we knew what was covered, explains Michael Strickland, director of logistics. It was cumbersome and we needed a TMS to help streamline that. To enable smooth integration with existing systems and users, a modern TMS from 3Gtms makes it easy to hook in to anyone who needs access to transportation costs, services times, and shipment visibility including in-house users, suppliers, and customers. For example, when an ERP needs to figure out transit time and a carrier for an order it can get that information from the web service. And if a customer order portal needs to quote real transit times and costs for an order and give them options, it can hit up the TMS web service for that data. Ultimately, the company selected the 3Gtms 3G-TM system, which boosts productivity by improving shipment efficiency and communications; increasing shipment visibility; and providing greater financial transparency. Using sophisticated optimization algorithms and actual rate cost, 3G-TM delivers the best plan that can be realistically executed. 4

6 Corsicana s improved automation and business intelligence have improved the manufacturer s efficiencies while providing additional benefits. We strive to provide an exceptional customer experience before and after each purchase, right down to strategically shipping our products, explains Strickland. Now with improved visibility and operational data, we can ensure fast, efficient service for our customers. Executing Efficiently & Producing Results The transportation industry has changed dramatically in the last 20 years, when many TMS solutions were originally designed. Challenges that are now considered normal weren t even thought of then, including e-commerce and omni-channel. 3Gtms unique focus on providing the most advanced functionality in an architecture that emphasizes usability, flexibility and expansion, Wiggins says, provides a TMS platform that will execute effectively and produce results for companies that are struggling to adapt to the e-commerce logistics environment. About 3Gtms 3Gtms is the fastest growing, Tier-1 transportation management system (TMS) provider. It is dedicated to helping mid-to-large shippers and logistics service providers gain a competitive advantage through technology. Whether you move $5 million or $5 billion in freight, 3G-TM solution seamlessly manages the full transportation lifecycle, including transportation planning and optimization, execution and settlement, empowering customers to make better shipping decisions while meeting their service goals. 3Gtms is dedicated to delighting its customers and as a result, holds a 100% customer satisfaction rate that is unmatched in the industry. For more information, visit: 5