Mercury Gate r Bf

8/13/2019 Mercury Gate r Bf

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Transportation Management SystemsMeeting the Challenges and Obtaining Results


January 2011


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Logis t ics Management | MercuryGate P


Introduction/BackgroundAs businesses become increasingly focused on optimizing their supply chain operations, logistics organiza-tions are continually forced to make critical decisions for creating a highly productive transportation man-agement system. The efciency with which a company runs its procurement and shipping operations cangreatly impact their business bottom line so companies are assiduously searching for methods to improvetheir transportation practices. Business goals such as reducing costs and overhead, growing prot margins,controlling materials and inventory, and improving customer service can each be achieved through the imple-mentation and efcient operation of transportation management solutions. The ndings to a recent market research study conducted by Logistics Management magazine, on be-half of MercuryGate International, Inc., conveys that transportation management software (TMS) facilitateshighly effective communications and information sharing among businesses and their shipping partners. Thisoutcome is realized through better decision-making as it pertains to freight route planning, carrier selection,scheduling & tendering, quality control, regulations and guidelines compliance, reporting, auditing, and in-voicing.

The survey results highlighted in this brief are intended to offer insights into the freight transportationneeds and concerns of companies with an annual transportation spend exceeding $5 million. Well explore

the challenges they face and how they are meeting those challenges. The research further focuses on theadoption of multi-modal transportation management systems (TMS) and the advantages shippers gainthrough its utilization.

Summary of Research Findings

u Mid and large market shippers expect to be investing signicantly in their logistics operations during thenext year. One-third (34%) plan to spend over $100 million on freight services and transportation equip-ment and solutions during this period while 42% will spend less than $25 million.

The area in which the highest percentage (44%) of respondents plan to invest will be on transportationmanagement software solutions implementations and upgrades.

u Routing, shipping rates, load optimization, supplier & customer communications, and visibility into all

phases of the shipping process are among the many areas in which companies are looking to improve.

In addition to increasing efciencies in these areas, shippers are further planning to set performancemeasurements and establish KPIs, and to effectively use data to improve upon their planning and deci-sion-making.

Interestingly, many companies have yet to automate operations that would accomplish these objectives.

u Organizations are leveraging multi-modal TMS solutions to improve business-critical initiatives. Busi-nesses contend that their TMS application enables better control over costs, improves logistics processefciencies and allows for better customer service.


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Scope and Management of Freight ServicesMid and large-market businesses tend to rely on acombination of shipping methods; on average, nearlythree different transport modes are used. Most ship-ments are truckload/TL (77%) and less-than-truckload/LTL (67%). Small parcel freight (33%) and ocean ship-ping (30%) are also commonly used methods.

On average, these businesses are dispatchingover 100,000 shipments monthly; slightly more thanthree-fourths of these shipments are domestic whileone in four are international loads (22%).

On average, roughly three-fourths of all freight ship-ments are managed by an in-house staff versus thoseloads being outsourced to a third-party provider.

Nearly all of the businesses surveyed use contract car-riers. While a small percentage rely solely on privateeets, many companies depend on both contract car-riers as well as private eet services for their shippingneeds.

To better achieve their freight transport objectives,

these companies plan to spend, on average, nearly$140,000,000 on freight and shipping solutions andservices during the next year.

500,00011%


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Many will be investing in TMS solutions, logistics stafng and outsourcing services.

We are evaluating using a 3PL and their TMS and are providing them with the interface requirementswhich will allow them to handle it.

Sr. Supply Chain Management; Chemicals/Pharmaceuticals; Transportation Spend $100M - $249.9M

Goals Looking to Attain through Transportation OperationsCritical operational areas in which medium and large businesses are looking to improve center on achievinggreater real-time visibility from shipment to settlement. Real-time information will further lead to optimizedloads, better routing, carrier selection and rate checking, enhanced KPIs, more intelligent decision-making,upgraded reporting capabilities and improved invoicing and payment procedures.

% of resp.Achieve visibility into shipment status 59%Establish KPIs 55%Optimize/consolidate shipments 55%Improve decision-making & planning/Allow for what-if scenarios 54%

Receive best rates available 52%More efcient route planning & scheduling 51% Reporting capabilities (manifest maps, load sheets, etc.) 47%Enable freight payment/auditing analysis 43%Identify best shipping routes 40% Achieve accuracy of and proper documentation 37%Container/Shipment tracking 35%Optimize resources/eet 35% Implement internet-based applications 29%Improve import/export operations 29%Reduce miles & CO2 emissions 29%Improve knowledge of customs & clearance issues 25%Attain regulations compliance 21%Enable staging bay planning, loading strategies, order picking efciencies, etc. 20%Minimize line stoppages 13%

I would like to see a TMS system which incorporates all of these traits: electronic communication with cusers & carriers; carrier KPIs; dashboard format; integration with ERP or WMS; ensuring the best rate for eashipment; route optimization (consolidation, backhauls, pooling, etc); freight invoice audit and payment. Logistics, Distribution, Operations Management; Furniture; Spend $10M $24.9M

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TransportationManagement

Software

LogisticsStaffing/

Personnel

3PLServices

FleetEquipment

Other

Transportation Solutions On Which Companies Will Spend

44%

33%30%

13%8%


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As already noted, the ability to monitor and manage key stages of the logistics operations in real-time signi-cantly affects resource optimization, cost management and customer satisfaction. Consequently, a growingnumber of businesses allow shipping partners visibility into their supply chain operations to better under-stand shipment status, mitigate risks and delivery problems, facilitate greater communication, allow access totrack and trace information, and improve efciencies and quality control.

Better visibility to the shipment from pick up to delivery would be best achieved through timely and compEDI communication from the carrier network. Logistics, Distribution, Operations Management; Computers & Electronics; $500M +

Shipping Issues and ChallengesDecisions relating to transportation planning, process efciencies, selecting the optimal technology solutionsand applications, and billing administration are among the many demanding issues that logistics operationsmanagers face. Furthermore, the diversity of shipments and the complexities associated with procurement and shippingprocedures requires information to guide precise decisions on transportation mode, routing rates and load

planning. These considerations compel businesses to more closely examine their freight practices and, subse-quently, target solutions to better manage their transportation operations.

Logistics managers are additionally challenged to ensure that shipments are accurate and on-time, thatcosts and stafng are resourcefully managed, risks are minimized and that real-time visibility is attained tomake possible functions such as trace-and-track as well as payment and invoicing status.

We need greater online visibility of freight invoices and more connectivity between the paymentcompany and the carriers. Logistics, Distribution, Operations Management; Automotive & Transportation equipment; Spend $100M - $249.9M

Companies Allowing Visibility Into Their Supply Chain

Give suppliers visibilityinto planned orders

Enable customers visibilityinto shipment tracking

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% of resp. Primary Challenge How companies will address challenge

27% Route optimization Use/implement a TMS solution. Greater systems integration. Better coordination with suppliers and customers. We are centralizing the planning and execution of our Inbound transportation through a TMS provide more control and visibility of our freight collect shipments coming into our factories.

Logistics, Distribution, Operations Management; Consumer Products; Spend $50M $99.9M

Were establishing valid rates for each opportunity, lane, mode and improved use of technologidentify transactional opportunities for optimization.

Sr. Supply Chain Management; Retail; Spend $500M +

Use of a TMS system will provide visibility into scheduling loads. Collecting inbound originwill be a critical start of improved routing.

Logistics, Distribution, Operations Management; Retail; Spend $100M $249.9M

18% Ensuring the bes t Adopt and upgrade technology solutions (GPS; CRM and ERP). Better advance planning. Bid out to more carriers and rate for each shipment better RFQ process. Improve rate comparison data. Outsource to a 3PL. Consolidate to one shipper. Benchmark and

keep up-to-date with industry info.

We will be implementing a TMS in 2011 to help with mode selection and accurate ratings. Logistics, Distribution, Operations Management; Pharmaceuticals; Spend $25M $49.9M

We are looking at a TMS that would get several quotes at one time rather than pulling them in Logistics, Distribution, Operations Management; Air Filters; Spend $10M $24.9M

13% Electronic communication Evaluate software apps such as TMS, WMS, CRM. Greater collaboration with suppliers and customers.with customers & carriers Better integration of EDI system. Better track and trace information for customers.

We are looking to establish a better system - software to connect with carrier and customersand to have real-time status of consignments.

Logistics, Distribution, Operations Management; Automotive Equipment; Spend $25M $49.9M

11% Track and trace Work more closely with carriers to gain better access to data. Use EDI. Install GPS systems and other tracking devices.

We are looking for a TMS provider who has a program covering ocean shipments that is as roas their domestic program.

Logistics, Distribution, Operations Management; Wholesale Trade; Spend $10M $24.9M

10% Integration with ERP Add software, middleware. Improve systems integration/connectivity. Implementing a WMS solution. or WMS

We are making the investment to connect our WMS with our TMS. We already have it connecto our ERP purchase orders to manage the inbound.

Sr. Supply Chain Management; Computers & Electronics; Spend $100M $249.9M

Our company has ve divisions with ve different ERPs. We are researching TMS providers t Logistics, Distribution, Operations Management; Fabricated Metals; Spend $100M $249.9M

7% Carrier KPIs Greater accountability, better training, generating better data and reporting capabilities. Implement software andmanagement tools.

Our particular system does not allow for certain KPI tracking, such as on time delivery, load t Logistics, Distribution, Operations Management; Healthcare; Spend $10M $24.9M

7% Freight invoice audit Outsource to a freight payment provider. and payment

2% Customer invoicing Evaluate new/improved TMS.

We have several customers that are not up to speed with EFT and/or EDI billing. Implementatnew TMS will assist us to cut carrier billing time and allow us to invoice our clients quicker. Thadditional time to receive and process invoices from the clients to lessen the impact of outstand

Logistics, Distribution, Operations Management; 3PL; Spend $250M $499.9M


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Freight Transportation Process HandlingInterestingly, a low percentage of companies have automated these critical business tasks. Roughly one outof three have automated the majority of these processes. Invoicing and tracking are commonly automatedfunctions but shipment consolidation is still handled manually by most.

Of similar proportion, approximately one-third are still handling these procedures manually. Roughlyfour out of ten have yet to automate potentially labor-intensive tasks such as rating, load tendering and carriermanagement. Of the jobs still being done by hand, however, a few are earmarked to be automated. Most whonow track shipments and invoice using manual procedures expect to automate these jobs in the near future.

Nevertheless, the consequences for not automating business-critical procedures can be steep. Non-auto-mated processes and information are apt to be disorganized which can result in tracking errors and shippingdelays. Poor quality control can lead to partial load shipments, underutilized assets, and unproductive manhours or substandard productivity. Failures in these competencies can mean higher costs and wasted spend-ing, missed opportunities and lost revenues, or dissatised customers.

Automated Manual/ Moving to No plans to Paper-based automate automate

Freight invoice audit & payment 44% 31% 18% 7%

Shipment tracking 42% 29% 22% 7% Transportation data analysis 36% 36% 20% 8%Load tendering 35% 37% 13% 15%Carrier data management 34% 39% 17% 10%Finding carriers & best rates 33% 41% 16% 10%Shipment consolidation 30% 40% 16% 14%

Use and Adoption of Transportation Management Software (TMS) Solutions To best address issues related to freight transportation, solutions such as multi-modal transportation man-agement software (TMS) are being evaluated and adopted as they afford shippers a tool enabling improvedtransportation operations efciencies.

The perceived benets of a TMS implementation are continually being recognized by logistics operations.While roughly one-third are already running a TMS solution, nearly one-half are moving to adopt or evaluatea TMS application within the next 12 months.

Usage And Adoption Of TMS Solutions

Running/implementing/ upgrading/adopting: (net 81%)

Not Running

Implementing now/Outsourcing, etc...

Now evaluating for adoption

Plan to invest, upgradecurrent app

Currently running

23%

4%

21%

33%19%

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Features that decision-makers most strongly consider when evaluating a multi-modal TMS solution for pur-chase include product capabilities, ability to better control processes, cost of the application and the return oninvestment, and compatibility and integration with other ERP applications.

Those claiming that ROI is a decisive factor in their evaluation estimate it will take about a year before theyllsee any payback on their investment. There are some, however, who feel it may take longer, and even others

who are uncertain of the timeline.

TMS Deployment The research shows that the major-ity of companies are currently hostingtheir TMS application on-site. Alterna-tively, a growing percent of these ship-pers have opted to run a TMS solutionas an internet-based, on-demand ap-plication (27%).

Business Benets Attained Through TMS TMS solutions have produced numerous business-critical benets. Through the use of technology, shippersand freight service providers claim they are equipped to better manage costs, improve transportation processefciencies, improve customer service, enable real-time visibility into their supply chain and achieve greaterprocess efciencies.

% of resp.

Controlling costs 69%Improve process efciencies 64%Improve customer service 61%Provide real-time visibility into supply chain and transportation operations 54%

Automate processes that were manual 53%Generate real-time data 48%Enable real-time visibility 47%Supply chain reliability 46%Improve asset utilization 37%Reduce labor costs 32%Becoming a more agile enterprise 32%Reduce on-hand inventory 23%Becoming green/Environmentally responsible 23%Asset tracking 22%Reducing scrap and waste 12%

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Criteria Considered Most Important When Evaluating TMS Solutions

Mentioned by 25%+

Capabilities/Robustness

Control over processes

ROI

Ease of implementation

Ease of integration

Cost of entry

49%

43%

38%

37%

33%

27%

Method Of TMS Deployment

Other14%

We Host Our TMS59%

Using An SaaS TMS Solution27%

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TMS Implementation ChallengesHurdles such as system compatibility and integration, cooperation from IT, user resistance and efforts toautomate manual tasks, availability of funding and resources to implement and manage their applicationare among the major challenges that businesses face when evaluating, implementing and operating a TMSapplication.

In addition, the purchase decision process can also present challenges. Similar to other enterprise applica-tions, the process for evaluating and implementing a TMS solution is likely be complex, prolonged and mul-tifaceted. Managers representing diverse disciplines - corporate management, IT, supply chain managementand transportation operations, etc. - each possess formative interests in a TMS implementation.

Im currently leading a 5 member cross-functional team consisting of shipping, warehouse, procurement,customer service and operations. Were determining where we are and what we need to put in place to furtheautomate the process. We are reviewing our current model and route/lanes, intermodal options, a stand-alonwarehousing option and 3PL services to include audit/payment. Our goal is to align our manufacturing plants with a North American trafc solution that is aligned with sales growth. Purchasing Management; Paper; Spend $5M $9.9M

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Challenges In Implementing a TMS Solution

Getting users to use system

Cost

Compatibility with current ERP apps

Automating manual procedures

Compatibility with existing platform

Having sufficient manpower

Lack of funding

Working with IT

Not understanding the benefits

Lack of corporate buy-in

Questioning whether it fits with business objectives

Determining requirements/features

37%

36%

35%

31%

31%

30%

25%

25%

23%

22%

21%

18%

Departments Involved In Decisions For TMS Solutions

Mentioned by 33%+

CorporateManagement

IT Supply ChainManagement

Transportation/ Fleet

Operations

Warehousing,Distribution,

Logistics

Purchasing

63% 60%52%

43% 33% 33%

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Logis t ics Management | MercuryGate Pag


Methodology This research was conducted by Logistics Management magazine for MercuryGate International, Inc. Thisstudy was executed in November, 2010, and was administered over the Internet among subscribers to Logis-tics Management. Respondents were qualied for being involved in decisions regarding the evaluation andusage of transportation management software solutions for either their own company or for use in otherbusinesses.

The ndings are based on information collected among 386 top logistics managers employed with me-dium and large market companies (dened as spending $5 million plus on transportation and freight solu-tions). Respondents are predominantly Logistics, Distribution or Operations Management (46%), Senior Sup-ply Chain Management (27%), Executive Management (7%) and Transportation Specialists (9%). A range ofcompanies are represented in the study: one-third (36%) work at businesses with revenues of $1 billion ormore, one-third (36%) are at companies in the $100 million to $1 billion range, and 28% are with businessesreporting $100 million or less in revenues. The industries represented in the study include manufacturers offood and beverage, chemicals and pharmaceuticals, medical equipment and supplies, computers and elec-tronics, automotive and transportation equipment, paper products, metals and textiles. Non-manufacturingbusinesses take into account 3PLs and transportation services as well as those in wholesale and retail trade.

About MercuryGate International, Inc.MercuryGate delivers transportation solutions that allow shippers, carriers, freight brokers and third partylogistics providers to plan and execute their freight movements, and analyze the performance of all involved.Customers optimize loads, rate and route loads, spot quote through both private and public bid boards, ten-der freight, track movements, audit carrier freight invoices, and send customer invoices anywhere in the world. Through a customizable workow engine, MercuryGate customers are able to move the parcel, LTL (less thantruckload), and truckload shipments as well as the more demanding multi-leg ocean, air, and rail movements.Customers may then analyze the information gathered as a result of freight moves to provide key perfor-mance indicators on their own processes as well as on carriers, suppliers, and all parties in the supply chain.For more information, visit www.mercurygate.com.

Contact Information:[email protected]

(919) 461-5921

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