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Commentary: Interoperability should be supply chain tech’s sole tech focus in 2021

‘One size fits all’ doesn’t

A single transportation management system is not suited to serve every party optimally. (Photo: Jim Allen/FreightWaves)

The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

Interoperability is key to a connected supply chain of expert management and consistency, end-to-end visibility and optimization, and interoperability is the necessary goal in logistics technology due to one root cause: a single transportation management system is not suited to serve every party optimally.

If there were a system marketed to serve every party well, there would first be doubt in the validity of the claim, but it would lead to the next logical question: “At whose expense?” For TMSes with such a wide target market, serving the space between shippers, 3PLs, freight brokerages and carriers, there would have to be components that favor one party over another. The TMS catering to everyone is simply landing somewhere in the middle, and very likely a better solution exists for any of those given parties.

Another concern with a wide-reaching TMS is also one of the goals the industry is striving for: end-to-end visibility. Companies may be less comfortable with the idea of visibility when their TMS has customers on multiple sides of the screen.

The large number of TMSes on the market makes interoperability a necessity, but adding to this need is the acceleration the industry has seen due to COVID-19. Visibility helps in the process of restarting supply chains, when many markets experienced delays and shutdowns, by providing data that affords better decisions.

“System connectivity and synchronicity is in an entirely different place now than it was in the past. A multi-tenant shipper TMS can build a native integration to a multi-tenant carrier TMS, solving the need for a single TMS provider to invest in a sales function broad enough to capture parties in all three segments,” says Eric Johnson in his recent article “The Unviable Proposition of a ‘TMS for Everyone,’” published in his weekly newsletter, The LogTech Letter.

Ashutosh Prasad is the founder and CEO of KoiReader Technologies, a logistics tech company offering a full suite of artificial intelligence APIs. In an email, he says, “COVID caused a total market acceleration by at least 2-3 years. It made digital and operational automation a strategic imperative across the entire logistics, supply chain and maritime ecosystem.” 

Further driving the need for interoperability is the focus on real-time data and visibility, which has even become the expectation, derived from consumer demand. The Amazon effect — the disruption of the retail market, shifting away from brick-and-mortar to e-commerce — means retailers are improving their customer experience in order to compete. In many cases, this results in spending more on faster shipping times and better tracking and transparency of customer orders. This is the consumerization of enterprise: consumer interest causing enterprise-level interest, in this case, on the matter of visibility.

“Regardless of where a company stands in the age of digital transformation, a digital freight forwarding technology platform should harmonize all operations and streamline management. The result is the same — creating effective freight management, securing more bookings and building higher customer service levels,” said Miles Varghese, CEO and co-founder of Cargologik, in his company blog post titled: “Freight Forwarding Technology: What Freight Forwarders’ Tech Stacks Must Include.”

Interoperability in implementation comes down to APIs and EDIs. APIs are quickly replacing or at least enhancing EDI connections. The common question is whether APIs have the reliability, robustness and security to completely replace the older EDI technology. EDIs are an industry standard and have the benefits of dependability, but they are cumbersome in the setup. APIs, on the other hand, have greater adaptability in communication and have the capability of real-time syncing to web applications, unlike EDIs, which work in batches. EDIs haven’t given up their place in the industry, but integrations must be able to accept EDI and non-EDI data. Ultimately this is the important factor in interoperability, adapting to use the best technology for the integration because the industry has yet to leave behind EDIs completely.

The focus on the connectedness of the various systems in the industry, and not attempting to solve this by uniformity, indicates we’re seeking the right solution. It’s not about one size fits all; it’s about the potential of interoperability.

Click for more FreightWaves commentaries by Charley Dehoney.

Charley Dehoney

Charley Dehoney is a growth-focused executive, consultant, advisor and investor, with more than 15 years of experience at the intersection of transportation technology. He's helped create revenue systems that have supported hundreds of millions of dollars in growth for the businesses he's helped build. Dehoney is currently serving as CEO of Manning's Truck Brokerage, a 50-year-old, private equity-backed logistics company. He lives in Omaha, Nebraska with his beautiful wife and three strapping young sons.