[PODCAST] Talking Trucking Tech - Episode 2

Microdea 2020-07-08 20:44:13
Microdea on Jul 08 2020

Below is a transcript of the podcast episode. There may be inaccuracies, or edits of the audio version added for readability.

Steele (00:09):
Hello everyone. Welcome to the second episode of Talking Trucking Tech with Microdea. I'm Steele Roddick and I'll be your host each week as guests and I talk about how technology is transforming the transportation and logistics industry. The goal of TTT is to help carriers and brokers successfully manage the rapidly changing landscape of freight technology, including trends, platforms, best practices, and business results. Today on TTT, we have Jeff Bielmann one of our sales folks here at Microdea and someone who has spent a lot of time in supply chain in general, and the trucking and logistics industry in particular, over the course of his career. He is somebody who knows about his trucking tech and really tries to keep his finger on the pulse of what's happening in the industry. Today. We're going to discuss the evolution of transportation management systems, what they're good for, where gaps exist, and some thoughts on where they're headed in the years to come. Welcome to TTT. Jeff. All right, let's get to it. Let's start with maybe a somewhat controversial take. I've heard you say a couple of times in theory, why should TMS is not exist?

Jeff (01:11):
Okay, so this isn't really like my own original idea, but you know, I'm not the first to have noticed, especially if those operating like in freight tech, especially in newer SaaS startups that have the ability to architect their systems in new ways. Kind of we're doing here at Microdea as well is really that all of the functions provided in what is basically a TMS it's it means at its most basic fundamental level. When we talk about how the average, I would say almost mid market trucking company in North America - thinks about the TMS as a basic management system used first and foremost for dispatch before anything else.

Steele (01:48):
And then typically ties [the TMS] into other functionality in the front office with order management and to the back office, obviously with accounting functionality or integrations to other such systems. So the idea now is with enterprise 2.0, we have all of these web based platforms that speak well to each other. You can actually take on most of the tasks that a traditional TMS or transportation management system software would do if you pull them together the right way, but that's not easy to do. So it's more of an in theory with this new approach to enterprise and enterprise integration between systems in real timebetween different systems and let's say your traditional ERP for trucking then it really just depends. I don't know if there's anything that stands out in particular for a vendor that they can do to fill that gap. There are so many vendors out there in the space but at this point we don't necessarily need that many and they could be built in hodgepodge together and managed in a fairly good way. If you have a vendor that kind of knows the space, it could just be some basic web based technologies, and that's kind of a bit of an opinion piece, but the way that we look at technology and who's growing the fastest, that's kind of the trend towards TMS functionality today.

Steele (03:08):
In some ways there's an un-bundling of the TMS where you can put a few different things together in a way maybe that you couldn't in the past.

Steele (03:18):
Yeah, that's right. So there were, and there always has been some sense of integration even going back 20 years, let's say in, you know, trucking technology. But generally think of the TMS as a bit of a monolith - a Jack of all trades and a master of none, really, because that's just how systems were deployed and created and customized versus for companies in the past. And now you know, there were maybe some key integrations, but now there's so many kinds of integrations that can be done and maintained really well between those systems. So it's a different way of looking at it, really.

Steele (03:56):
What are some of the big advantages of current TMS systems over the ones kind of common way of just using a whiteboard and spreadsheets and kind of good old human brain power?

Steele (04:07):
Yeah. Well, I guess it depends on what your expectations are and what you expect to get out of a TMS. You know, in some cases it may be that spreadsheets actually are just fine. They're in fact, they can be very powerful tool for people to use and manage their own business. But you know, it's not that everything needs to scale, but at some point, you know, they're really not particularly scalable and it can be costly tools to support your business as you grow. And then you end up in a similar situation to other companies of your size, having a hard time, actually executing on what you believe are your differentiating factors as a transportation service provider. So in the end again, a TMS system for trucking is really just a management system for trucking. It can in its most basic form, be something that works for a relatively mature company. I may ask them about their previous experience adopting technologies and perhaps they may just have done it because their peers had done. So, you know, and they're a bit of a traditional management systems for records, keeping compliance and maybe a dispatch decision-making at minimum. And now they can do just so much more if you put the right time and in can actually keep these systems abreast of quick changes in your actual operational needs. So those are some of the advantages over it, but of course, starting small, there's nothing wrong with doing things quite manually and hacking things together. Like I do it to myself. This is a bit of a combination of both. So, you know, it can only get you so far using a manual method, you know, especially with distributing teams these days.

Steele (05:42):
No, it's surprisingly hard to make it better than that. Like a spreadsheet is just super powerful. I do agree with that part of it. But interesting. So maybe what are some of the most important things to look for when evaluating TMS technology, where to some of the biggest differences or competitive advantages lie?

Steele (06:02):
Yeah. And a few ways one would go back to what I was just mentioning around, you know, generally how scalable or accessible platform is how easily it can, you can grow with it both technically and commercially as you scale, but also how easily and how well it plays with others via these integrations. Right? So perhaps it could be on the front office side communications and integration to email or to document management or image capture system you know, on the operational side, it could be to route optimization. It could be a rating engine tied between that and sales and all the time back into, accounting integrations. So there's just so much that can be done there, but what, what to really look for is still going to take a moment.

Steele (06:55):
Obviously we here at Microdea are working with hundreds of trucking and logistics companies you know, but there are other players in the supply chain and there's no real consensus definition of a TMS. If we speak to others, let's say I'm an, a shipper TMS or a commodity specific like oil and gas TMS that does scale ticketing differently than other vendors, you know, so there are niche vendors, they're international freight forwarders, you know, so of course a ground-based three PL freight brokers in North America, as well as those that do inter-modal and others that do international orders you know, all the way down to your ocean and airline, air carriers as well. So there's so many different angles, but it usually comes down to some kind of, let's go to Gartner. I'm going to actually quote fair definition because there is no real consensus and it's a bit of an eye-opener for those of us that spin our heads in trucking so much.

Steele (07:53):
Okay.

Steele (07:56):
So Gartner again, generally for going to go out and do like a magic quadrant and look at like a study you know, over a particular category in software, right? They they're kind of like the category leader in that space, but there is no real consensus definition of what the TMS is in the segments because transportation is just a huge industry and trucking and North America is a, you know, $7 billion per year, $8 billion per year industry actually last year. So generally a TMS transportation management system is used to plan freight movements. Okay. Freight general, do freight rating and shopping across all modes. Okay. And select the appropriate route and carrier and manage freight bills and payments. So that meant is that actually mentioned quite a bit, that happens from beginning to end. And if you are a, a, an asset based trucking company or a non asset based ground freight broker, a lot of the stuff may not matter as much.

Steele (08:49):
You know, if you're a freight broker, you often have requirements of both by requirements of shipper. So, you know, we talked about a rating, so you're not talking about managing your own rates for customers as a service provider. You're also looking at the the need to manage your own rates with your vendors, with your carriers or your other 3PLs who work with you know, having some kind of a logical routing guide, selecting the appropriate route you know, managing your documents, managing payments and systems. So really the requirements change kind of across the board. But if you're looking primarily at trucking and logistics, kind of our segment here is still, I think the main things right now that companies are trying to differentiate on they usually come down to operational very heavy operational improvements, operational efficiency, let's say. And then when it comes to kind of the front office customer service, trying to provide a better quicker service, something that they can actually use with pride and go to the market and, and you know, have quarterly business reviews with large contracted customers. And these are the kind of things I think that companies are trying to do now that perhaps you know, it didn't matter as much, five years ago before Amazon got into the space. That's my long winded answer to it.

Steele (10:09):
Yeah. Yeah. I think the, yeah, the call it of just how, just how complex or just how many different little niches that's definitely been a big learning of mine is. Yeah. It's often treated, I know, especially bit of a shot fired up new, new kind of tech ventures are often like, look, it's a really massive industry. We can just take a, take a chunk out of it. But, you know, in fact it's not really like one big homogeneous industry there's in fact, you know, countless different little niches in there.

Steele (10:37):
Yeah. So in, I think the I've noticed, I would say now versus three years ago, just like with very limited exposure to this, you know, what kind called anecdotal, but freight tech VC's focused on this space that actually are getting a little bit more savvy. The difference. Yeah. Yeah, definitely.

Steele (11:00):
So how has the move to cloud based technology kind of change the TMS game over the past? I don't know, maybe decade,

Steele (11:10):
I mean the move, I guess, a bit of a gradual, a gradual move. I think the beginning of the move, if you can think about it would be hard, you know, and still in some ways is, but I would say trucking has been, you know, a bit of an under-served not so much of a hot, kind of a market in terms of investment until just a few years ago. And so originally the systems out there were pretty bare bones and the number of vendors in the space, I think they do well based on good old reputation and you know, being, being very, having a lot of domain knowledge, knowing this space really deeply. But now cloud based technology allows domain experts to come in and quickly stand up where most in the past may have failed their own trucking software, very niche in a scalable way, in like a multi-tenant sass type of environment that you can roll out code for everybody in a continuous way, but also kind of work up market and support the unique needs of carriers as they mature.

Steele (12:11):
And as they get a little bit larger all within like a system that companies maybe didn't have the ability to to stand up and they would have had to customize in the past online really. So it's, it's mainly from like the vendors changing, how we implement software and who can get into the game, I think is what's really changed it because of all the niche vendors out there. But I mean also just being able to buy something, being able to go through a sales cycle for a buyer is I think a little bit easier now. You know, the cost is to making mistake is still really high. And, and I think also computing power, obviously, you know, you, if you get into some really heavy micro services running on an ongoing basis, like messaging apps and such then that can get really heavy.

Steele (12:57):
Whereas now if you distribute that across all these different vendors you know, it's definitely something that SaaS just allows for. Yeah. Rather than everything, all having to be installed at quite a high kind of bar to entry on premise, which is also quite powerful. So that trade off is still there. There's still quite a bit of power and value in the customized, typically on premise solutions who we're seeing a bit of, you know, that change over time and it's become much easier to do a whole lot of just online. That's what I've seen in the last 13 years.

Steele (13:28):
Yup. Yeah. No, that makes a lot of sense and yeah, no - transition definitely still underway.

Steele (13:35):
All right. How do you know you can trust a TMS partner especially these days with kinda more cloud based systems like you're talking about, and especially during, while we're still in the kind of coronavirus period, depending on where you're living and depending on what time at what, at what moment in time you're listening to this podcast, but you know, there might still be limited or no face to face interaction at all. So yeah. Talk to me about trusting it, a tech TMS partner.

Steele (14:01):
Now you're bringing up a good point on the second. That's the second side trust in a TMS partner. I don't know if that is any different than a, you know, he would answer the question for trusting any other type of potential software vendor, and then in the enterprise size software space, presumably depending on the size of the company that's that you are you know, quite often that includes a handshake sticker in there, you know, and so that going away is kind of weird, but I think everyone has kind of adopted to to video. I'm surprised to see in this, in, in this industry, it really is kind of a new handshake. So I would say there's, I don't know if that's been an issue for a lot, you know, obviously we're talking about different times right now, but in terms of trusting people, Hey, I think of course you're going to weigh functional requirements like anybody does when looking at the right you know, TMS or other software company.

Steele (14:52):
And I suggest to be open minded in the requirements gathering process to, you know, looking for potential process, change opportunities on your own side, you know, with your own, within your own operations, if you see any other best practices or other unique ideas, it's a great opportunity to kind of put those into play. Of course, when it comes to trust so much of this, like in the industry, it's a, you know, it's kind of a small little neighborhood, so of course social proof that's going to happen. You're going to want to speak to one or two of their existing customers about their experience with them. That stuff is sometimes hard to get out of a really good sales pitch you know, and an industry rating really. So what are, what do your customers actually say about your themselves? It's the most valuable thing? I think we all can understand and accept that this point that you know, just by their head, but we buy with our heart a bit.

Steele (15:41):
So that'll say a lot on their ability to play well with others. And then I would say something that's a little bit overrated in the process that I haven't I've seen happen and I've seen it happen. All right. But I haven't seen it. I've seen it go awry so many times and it's basically easily doing a trial, a simple proof of concept without really investing the time and energy and everything above, you know, so if you're going to do a POC or a trial, do it right. Don't, you know, log in on the 23rd hour for an hour and play around with something, but actually go through it. And here's another idea though, if you kind of have the maturity or foresight to see it through is because I've been put through this you know, working in the past and CMS vendors. And it was actually a great opportunity to show how we can collaborate with other freight tech vendors and how they can collaborate with us out of one or two potential competitors in that category. They're gonna select the new, you know kind of integrated TMS and going through with at least one of those integration conversations with them, with one of those vendors at the same time in your buying cycles, seeing how they play with each other and, you know, commercially technically what they write it down on. You know, I'll before kind of executing your contract there's depending on who you're working with, there can be a great opportunity to kind of, I don't know, have a bit of positive influence in your relationship and your ability to listen to the vendor as well and provide valuable feedback to them. As you you know, as he decided to move forward with whether this is a TMS vendor or any other freight tech vendor. So see how well they actually play with others. Yeah. Yeah. There's so many ways to do that. The trust thing is kind of, I don't know if there's a quick answer to that video video

Steele (17:29):
Okay. In the future, what do you see as being the next wave or next generation of TMS technology? Will we see kind of the unbundling of the various different pieces as you kind of mentioned, or is it all about connectivity and integrations having a role to play in what's the future of the TMS?

Steele (17:51):
No, it's probably the, so before the VML thing got dropped in there, the whole thing kind of connected, right. And I think it's both connectivity and it's integrations, right? It's, it's powered flexibility on your, on your own side, but you know, kind of knowing, you know, working with vendors that know what they do best. And so, you know, there's definitely that side. I think, I think what what you see, not only from a talking point or the way that many different vendors often address the same challenge with different value props is around communications and visibility right now and what that means to each player, right? Because they all care somehow a lot about that, whether it's, you know, externally or for internal purposes for systems communications purposes, but they also care for different reasons and in different, almost competitive ways, often between a shipper and, and you know, a carrier.

Steele (18:44):
So communications and visibility is often kind of one of the major. One of the areas that I think is really interesting right now. But also look at some of the new models out there. Some basic, almost like for very small, the micro trucking under six truck market, we're smaller carriers working with convoy, which I hear has some pretty good LTL freight in certain markets. And I guess a friend of a friend of mine, I guess, in the industry, working at convoy had, let's say, I think it was early April, just as one example, I'm sure more has happened since then, but where they basically do screen scraping of a million loads off of a bunch of monitored carriers and, you know load board websites like like many other load boards do. So a days million load scrape, they won, I believe 25%, about 250 million of those in a day without a single human touching it, including the process of bidding on it, routing it, dispatching it to a carrier using their own basically connected front end TMS, like a mobile TMS. So there's a whole lot of cool stuff helping out there. And you don't need to think of the idea of a TMS differently if basically you have a, you know, Uber acting like a freight broker with a hundred, I don't know the numbers, but so much capacity.

Steele (20:04):
Yeah. I know. I've read a lot about the like fully, fully, fully automated load matching stuff. It's interesting. One of the, one of the, like often, often it comes up when they interview kind of like the head of product at Convoy or, or, you know, people in similar roles. And they'll always say you know, they always say, well, it's a big industry. And even if we are quite large, like there's still quite a lot of room for other people to play it. I think that's like, I think that's oddly true. Like, it feels like something that's like easy to say, but people aren't worried about the competition, but it's, yeah. I feel like it, oddly enough, it will be true for, for quite some time where you, you kind of have both things coexisting for, you know, the foreseeable future even. Alright. So final question. What's a trend TMS technology that the industry maybe was dismissive of at first that turned out to be a real game changer, or at least was more important than everyone first thought it might be.

Steele (20:59):
Okay. cause usually it's the other way, right? Usually people talk about the things that have high expectations, but kind of maybe went bust or never went like blockchain, right? Everybody's a blockchain expert, but no, this is the other way about, so oddly enough, and the, you know, I was surprised after I work here at Microdea. And I got to say, I love it from a tech side, powerful, very powerful you know, strong domain expertise side. I'm trying to try not to plug for from my own vendor here, but it's so weird that document imaging document management process automation for the back office, these are where all of the sticky glue and the manual tape typically was done as these trucking companies scales.

Steele (21:48):
This is so much obvious waste and still so much manual, you know, human led process that is paper driven. And so being able to effectively manage your operations and your back office from a documentation and document capture, point of view, being able even sometimes to deliver, capture a POD and bill immediately, it's weird how sticky that is. Not only at all my idea, but I think the capturing of images and just simply digitizing things that are still out there in the physical world being processed manually is extremely powerful. And it takes you by surprise because of how, how boring it is. Yeah. I'll take the blame for it. I'm going to take the blame for 10 years for,ufor that one.

Steele (22:42):
No, cause I like it just, well, you know, forgive me for plugging here for our own company here, but yeah, no, that's totally, that's totally. Is that okay? No, it's totally a good like yeah. I think looking at it, I think that's a really good answer. Yeah, no, but it's true though. It's boring, but people all have it, but like make fun of it. And yet they have no idea that how much money this company makes right off the podcast.

Steele (23:12):
Uh all right. Well, thanks again, Jeff, for joining us today and thank you to everyone out there tuning in to the second episode of TTT be sure to click, subscribe, to hear about future episodes. And if you'd like to hear more about Microdea, you can always check us out at microdea.com.

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Founded in 1995 and headquartered in Markham, Ontario, Microdea is a fast growing document management and automation software company serving hundreds of customers in the transportation and logistics industry, including truckload and LTL carriers, private fleets, brokers and 3PLs.

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