Lower barriers to entry have flooded the freight-tech space with software startups catering to individuals and businesses across the supply chain — carriers, shippers, drivers and third-party logistics companies (3PLs). In fact, it seems that hardly a week goes by without a new transportation management system (TMS) announcing its debut in an already crowded marketplace.
Many of the new entrants position themselves as disruptors, knocking incumbents down like dominoes. Others offer generic technology packages that focus almost exclusively on automation.
Either way, too many startups focus on how they can apply the latest technology to the logistics industry — a prescriptive strategy that is not always the best route for widespread adoption.
Transformational software packages that work with a customer’s existing systems offer a third and more powerful means of addressing industry challenges.
“Disruption is forcing a change — transformation is leading an industry to change,” explained Jason Lawrence, chief technology officer, LiteLink, a blockchain and artificial intelligence (AI) logistics solutions company.
Transformation is a more sustainable and profitable path, he said, because it allows legacy businesses to share in the wealth created by new technologies and innovations.
Slow and steady wins the race
Few today question the need to innovate. Siloed business operations, continued reliance on paper- and phone transactions, and lack of transparency are creating huge pain points for shippers, carriers, drivers and 3PLs.
A majority of stakeholders want to alleviate the pain, but they are not necessarily comfortable with changing their way of doing business up front, said Ashik Karim, LiteLink’s CEO.
LiteLink works with companies across the supply chain. His company’s winning strategy, said Karim, a veteran tech executive with experience leading three other software startups, is to gradually introduce new technologies that address specific customer problems, eventually transforming the way the company operates.
“It’s about how your software can meet the needs of the existing business but can learn and be configurable over time,” Karim said. The key is introducing customers to a few features at a time. “Once they get used to these new features and realize the benefits, you can introduce the next set of functionalities.”
Listen to your customers
That multi-step process starts by listening to the brokers, shippers and carriers that are coming into the tech ecosystem. Are their customers happy? Do they have the ‘right’ visibility into their shipments? Are they spending too much money on logistics?
Technology companies need to be aggressive about “chasing” down problems that might be a drag on their customers’ bottom lines, said Karim, while reverting to traditional modes of inquiry to figure out what is and isn’t working.
“It can’t be a software view,” he observed. “It has to be a business view.”
Once the solution provider understands the core issues, they can build a platform that addresses the problem.
Automation alone won’t move the needle, Karim emphasized. Most logistics companies already have the capacity to track shipments; moreover, “fixed package” software that provides a “dot on a map” won’t help a customer who is upset because a shipment is late.
A proactive, next-generation approach leverages the rest of the data — geo-fencing, driver patterns and other variables — to forecast late deliveries before they happen so there is time to course correct.
A smart solution
Consider 1SHIFT Logistics, LiteLink’s flagship logistics and freight management platform. 1SHIFT offers advanced real-time visibility of shipments, while flagging in advance anything that might hold up the freight, such as weather, changes in speed or a truck that has veered off an optimized 1SHIFT route.
Armed with this information, shippers and 3PLS can take steps to prevent problems from occurring in the first place. Plus, the system gets smarter over time, enabling businesses to wrest even more benefits from the platform.
“With the data I’ve collected, I can see the problem types on the road with my trucks,” said Shanila Karim, LiteLink’s business delivery lead. “Is it traffic? Is my product melting before it arrives? It’s huge. It provides the power to make stronger business decisions.”
LiteLink uses similar tactics to tackle the huge and costly problem of detention. The platform stores geofencing data on a blockchain ledger, providing shippers and carriers with an immutable historical record of the actual time the truck arrived. It provides visibility into the audit trail, Shanila said, so customers can understand what caused the delay.
“Was it the speed? Did the drop take longer than it should? I can go into the analysis — where did I bleed and why did I bleed time and money?”
Communicate with partners
Logistics businesses tend to be risk averse, Karim warned. It’s incumbent on technologists to demonstrate how “cool stuff” like blockchain, IoT, geofencing can unlock efficiencies and save customers money.
Collaboration is another key ingredient in the transformational software approach. The more supply chain participants pool their data, the more efficient the overall system becomes.
Providers need to partner and streamline communications, Karim said, so that “your customers and my customers can enjoy and succeed in this mega new platform that everyone has visibility into.”
That philosophy aligns with the shipping sector’s rich history and relationship-based business model. Self-described disruptors like Amazon and Uber aim to create closed, winner-take-all ecosystems, Lawrence observed.
LiteLink, for one, envisions a future where everything from freight matching to driver ratings resides on an open blockchain solution, “so you can’t have one monolithic company that comes in and monopolizes the industry.”
A virtuous cycle
As carriers, 3PLs and others cautiously embrace change, new entrants can chart a course with forward-looking solutions that enable all businesses to grow and thrive, optimizing an entire industry along the way.
Patience is the key to making that vision a reality, Karim said.
If there’s one lesson he’s learned running three successful startups, it’s that software companies need to introduce new technologies at a pace tailored to specific industries and clients.
“So many startups think tech is the be-all and end-all,” Karim said. “But you’re not selling a technology, you’re selling a journey with the destination in mind.
“Tech is the smallest piece of the puzzle. Demonstrate you are investing in the company’s transformation, and the payoffs will come.”