International Transportation Management Benchmark Study Winners See Strategic Value of Visibility

Transcription

1 In partnership with International Transportation Management Benchmark Study Winners See Strategic Value of Visibility Written By: James Blaeser Publisher Published November 2011 Sponsored by:

2 Executive Summary Welcome to American Shipper s third annual International Transportation Management Benchmark Study. During the third quarter of 2011, American Shipper surveyed more than 200 supply chain managers on their international transportation management practices, processes, and the technologies that support them. ii Exectutive Summary Each year this report takes a hard look at the nitty-gritty aspects of international transportation management (ITM) including planning, booking, tendering, order management, event management and visibility. American Shipper s benchmarking initiatives seek to parse out companies that are succeeding at any particular function and examine why they are successful. These winners are the top tier of respondents based on their answers to a set of questions that are seeded in the questionnaire. With respect to this survey the winners meet three key criteria: Report that they are capable of sending an electronic purchase order (PO) (such as an EDI 850 file) to a logistics service provider (LSP). Have visibility to shipment specifics five or more days in advance of shipping. These details include the number of containers, cartons, weight and dimensions of the shipment. Meet or exceed the targets provided to them by their transportation procurement function. Using these measures, there were roughly 30 respondents who could be categorized as winners. This is the head of the class, so to speak. Similar to previous years, winners tend to be larger companies ($1 billion or more in annual sales) and include heavy representation from the retail/wholesale segment.

3 Multitude of ITM Systems In many ways the state of ITM systems in 2011 has changed little in the last year. The majority of companies still rely on a mix-andmatch of systems, third party service providers, and manual processes. Only 5 percent of respondents claim they leverage systems to support their whole ITM process. The average respondent to this year s survey is using one fewer ITM system or platform than they were a year prior. This patchwork of systems and manual processes has been documented for the past three years by this report, and evidence that things may be getting less complex is a good thing for many who struggle with integration headaches. However, this technology market remains highly fragmented, and it s unlikely that shippers or 3PLs will be able to automate more of their ITM effectively without tapping multiple systems, and ultimately more vendors. Remember that our survey respondents are managing multimodal transportation. Processes and requirements vary widely across transportation modes, creating a need for specific systems to meet those demands. Like last year, our winners still have more technology than the average although that gap is shrinking as winners have been the most aggressive in cutting back on the number of unique systems they are using. Winners reduced their systems from 5.7 in 2010 to 3.9 in iii Exectutive Summary Connectivity and Data Quality International transportation is an inherently collaborative exercise that demands electronic connectivity to logistics providers and other suppliers. On average shippers and 3PLs have 8.2 unique integrations, while winners average 9.2. Naturally 3PLs have considerably more integrations (13.1) due to their role as hubs in the international transportation network. Those connections are only going to be as useful as the data that they transmit. Survey respondents were asked to rate the quality of data provided by various providers in terms of timeliness, accuracy and completeness. The results are surprisingly good if you believe the conventional wisdom that carriers, in particular, do a terrible job providing quality data.

4 Data quality is the cornerstone of visibility. If data related to an international shipment is late, inaccurate, incomplete, or otherwise unavailable, shippers and 3PLs have no chance to make the adjustments that can save time, money or both. Centralization vs. Localization Survey respondents are split when it comes to running ITM centrally, regionally or locally. Winners appear to favor a centralized approach, particularly in terms of planning. Systems are of key importance to centralizing a large, complex operation like those our survey respondents are tasked with, and centralization directly supports visibility. iv Exectutive Summary Visibility Surprisingly, visibility is getting worse when measured by how many days prior to shipment a company knows the specifics, such as the number of pieces, weight, etc. However, winners are actually getting better. Bear in mind winners only needed five days notice to qualify as a winner, and here the average winner has 16 days. Here s where the ROI comes into play. Companies that have visibility to shipment specifics can optimize their transportation plans. Goods that are needed faster can be expedited to market. Costs can be taken out through mode shifts to lower cost options where applicable. Destinations might be changed altogether to take advantage of other opportunities that have arisen, or to overcome unforeseen disruptions that have come up since the PO was cut. There are many scenarios that can play out; the point is none of them exist without visibility.

5 Table of Contents Executive Summary... ii Section I: Introduction...3 > Background...3 > Winners...4 > Terminology...4 > Hypothesis...5 Section II: Demographics...5 Section III: The State of ITM Section IV: The Benefits of Automation...18 Section V: The Future of ITMS...22 Section VI: Winners...26 Appendix B: About Our Sponsors...27 > BravoSolution...27 > CH Robinson...27 > Descartes...28 Table of Contents > GT Nexus...28 > SAP...29 Appendix A: About Our Partner...30 > Retail Industry Leaders Association (RILA)...30 Appendix C: About American Shipper Research...31

6 Figures Figure 1: Industries Surveyed...5 Figure 2: Company Sizes Surveyed...5 Figure 3: Percentage of Revenue Spend on IT...6 Figure 4: Job Titles Surveyed...6 Figure 5: Transportation Modes Managed...7 Figure 6: Current International Transportation Management (ITM) Process...8 Figure 7: Last ITM System Update or Implementation Figure 8: Percent of IT Budget Spent on ITM Systems...9 Figure 9: ROI from ITM Systems...10 Figure 10: Satisfaction with Current ITM Systems...11 Table of Contents Figure 11: The State of ITM Study Average...12 Figure 12: The State of ITM Winners...12 Figure 13: Number of ITM Systems...13 Figure 14: Number of Unique Integrations to Carriers, 3PLs, Portals, etc Figure 15: Quality of Data Provided by Partners...14 Figure 16: Use of Systems Integrators and Consultants...15 Figure 17: Current Functionality Winners vs. Average...16 Figure 18: Current Functionality Shippers vs. 3PLs...17 Figure 19: Visibility Days Prior to Shipment...18 Figure 20: Productivity PO per Year per FTE...19 Figure 21: Central vs. Local Logistics Management Study Average...20 Figure 22: Central vs. Local Logistics Management Winners...20 Figure 23: Has Your Procurement Department Established Metrics for Measuring Savings Targets?...21 Figure 24: How Effectively Did Your Department Performance Against Those Targets?...21 Figure 25: Plans to Buy/Replace/Upgrade ITM Systems...22 Figure 26: Inhibitors to Investment in ITM Systems...22 Figure 27: Drivers to Systems Adoption...23 Figure 28: Drivers to Systems Adoption Shippers vs. 3PLs...24 Figure 29: Future ITM Systems Delivery Model 09 to Figure 30: Future ITM Systems Delivery Model Shippers vs. 3PLs...25

7 Section I: Introduction Background During the third quarter of 2011, American Shipper surveyed more than 200 supply chain managers on their international transportation management practices, processes, and the technologies that support them. This report is the third annual study on this subject produced in conjunction with the Retail Industry Leaders Association (RILA For many, a transportation management system (TMS) is an encompassing term that covers the full cycle of transportation activity; including procurement, planning, order management, tendering, event management, and financial settlement. For the purposes of this study, the focus is placed specifically on the stages involving planning through event management and the visibility into each leg of the process. Procurement and settlement are purposely set aside to focus on the blocking and tackling of international logistics management planning, order management, tendering and event management. This year s study also includes a closer look at connectivity to vendors and partners in addition to central versus local management practices. It is also critical to understand that this benchmarking initiative strictly pertains to international and cross-border transportation management; what American Shipper refers to as International Transportation Management or ITM. Qualified respondents represent a variety of industry segments, including retail, manufacturing, materials, and third party logistics. Likewise, these respondents run the gamut of size based on annual sales. (Responses from carriers, consultants, technology vendors and other unqualified respondents are not included in the aggregate data presented in this report.) 3 Section I: Introduction Distribution channels for the 31-question benchmarking survey included American Shipper s Website, list, and newsletters. In addition, members of RILA were invited to participate via promotions directly from RILA. As a policy, American Shipper does not share any individual survey responses. All data is displayed in aggregate form only.

8 Winners American Shipper s benchmarking initiatives seek to parse out companies that are succeeding at any particular function and examine why they are successful. These winners are the top tier of respondents based on their answers to a set of questions that are seeded in the questionnaire. 4 Section I: Introduction With respect to this survey the winners meet three key criteria: 1. Report that they are capable of sending an electronic purchase order (PO) (such as an EDI 850 file) to a logistics service provider (LSP). 2. Have visibility to shipment specifics five or more days in advance of shipping. These details include the number of containers, cartons, weight and dimensions of the shipment. 3. Meet or exceed the targets provided to them by their transportation procurement function. Using these measures, there were roughly 30 respondents who could be categorized as winners. This is the top 15 percent of the class, so to speak. Similar to previous years, winners tend to be larger companies ($1 billion or more in annual sales) and include heavy representation from the retail/ wholesale segment. Terminology In the interest of being succinct and direct, this study uses several terms or acronyms. These explanations and definitions should be kept in mind when reviewing the results that follow. Logistics service providers (LSPs) are companies that charge a fee for supply chain services, including but not limited to transportation, distribution, warehousing and customs clearance services. A third-party logistics provider (3PL) is a non-asset-based LSP. This survey uses many segments that are straightforward, but some are less clear. Small companies are those firms with less than $100 million in annual sales, medium-size companies are $100 million to $1 billion, and large companies have more than $1 billion. Many of the data points illustrated in these pages break down the differences between companies that automate international transportation management versus those that handle this manually. In the context of this study automated companies are those that employ at least one software application to support their international transportation function. However, automated does not mean human interaction has been entirely eliminated. Likewise, manual does not mean these firms do not use , faxes, and other technologies. The study assumes that basic computing power is ubiquitous in the transportation management field.

9 Hypothesis Based on the previous year s study results, transportation industry trends, and events that have occurred since that time, a number of hypotheses were tested in this study. These include: 1. Systems supporting international transportation processes would be more prevalent than last year s study showed. Figure six shows this is not the case. 2. Shippers and 3PLs will reduce the number of applications they use to manage international transportation in order to reduce complexity, among other benefits. Figure 13 suggests this is happening. 3. Visibility to shipment specifics prior to shipment will improve compared to last year. Figure 19 shows that this is incorrect in general, but there are some exceptions. 5 Section II: Demographics Overall, the demographics from this study are very close in some cases identical to those of last year s report. Survey respondents represent all major categories tracked by American Shipper, including manufacturers (38 percent), retailers (26 percent), and 3PLs (28 percent). Likewise, company sizes represented are nearly identical to last year s study. There are slightly more respondents from large companies, as measured in terms of annual sales. Section II: Demographics Figure 1: Industries Surveyed Figure 2: Company Sizes Surveyed 8% 28% 38% 41% 30% 26% 29% Manufacturers Retail/Wholesale 3PL Other Shippers Less than $100 million $100 million to $1 billion Greater than $1billion 220 total respondents

10 The large majority of respondents report that their companies spend at least 1 percent of annual revenue on information technology investments including hardware, software, and maintenance. 10 percent spend very aggressively on IT, setting aside 10 percent of sales for these investments. International transportation remains a manager- or director-level function. Nearly three out of four survey respondents come from this segment. C-level and executive-level responses representing 18 percent of the population are almost entirely from the 3PL industry. Figure 3: Percentage of Revenue Spend on IT Figure 4: Job Titles Surveyed 6 10% 3% 8% 6% 17% 12% Section II: Demographics 34% None 35% 25% 48% C-Level (CEO,CIO,CFO, etc) Less than 1 percent Executive (SVP, VP, GM, etc.) 1 to 2 percent Director 3 to 5 percent Manager More than 5 percent Staff 144 total respondents 157 total respondents

11 Shippers and 3PLs participating in this study are responsible for an array of transportation modes, which is vital to understand when reviewing these study results. Companies with different products and service requirements will depend on different modes of transportation to meet their demands. This study looks at multimodal transportation management instead of focusing on any one specific mode. Figure 5: Transportation Modes Managed FCL Ocean 85% Airfreight 79% LCL Ocean Parcel/package Cross-border truckload 65% 64% 63% 7 Cross-border rail/intermodal Ocean transport (other, non-containerized) Other, please specify 8% 31% 36% 220 total respondents 0% 20% 40% 60% 80% 100% Section II: Demographics

12 Section III: The State of ITM In many ways the state of international transportation management (ITM) in 2011 has changed little in the last year. Most companies rely on a mix-and-match of systems, third party service providers, and manual processes. Very few leverage systems to support their whole ITM process. Figure 6: Current International Transportation Management (ITM) Process 8 Section III: The State of ITM 16% 16% 5% 2% 22% 38% A mix or hybrid of all of these Those companies that leverage a system to support at least some portion of their ITM function are working with technologies that can vary widely in age. However it does appear that a respectable portion (more than 40 percent) of shippers and 3PLs are operating with systems they purchased or upgraded in the last two years. Manual, we handle our entire international supply chain with phones/faxes/ In-house developed and maintained software 3PL(s) represent us in foreign countries and manage most/all of the activities Remote via systems or platforms provided by technology vendor(s) None of these 220 total respondents Figure 7: Last ITM System Update or Implementation 17% 22% Less than one year ago 6% 14% 19% 1 2 years 2 5 years 5 10 years More than 10 years ago 21% N/A 99 total respondents

13 Spending on international transportation management (ITM) systems as a portion of the overall IT budget among shippers remains steady compared to It appears some 3PLs are spending more aggressively, as 22 percent of the respondents in this year s study report spending 15 percent or more of their IT budget to purchase and support ITM systems. That s up from 15 percent in This makes sense 3PLs should spend more on ITM systems, because in many ways this is their product. It s hard to imagine a 3PL can be competitive in today s logistics market without the support of sophisticated technology. Figure 8: Percent of IT Budget Spent on ITM Systems 9 60% 54% 3PLs 50% 46% Shippers 40% 30% 20% 10% 0% 16% None 33% Less than 5 percent 16% 9% 5 to 10 percent 0% 4% 11 to 15 percent 22% 1% More than 15 percent 147 total respondents Section III: The State of ITM

14 Figure 9: ROI from ITM Systems 100% 80% 16% 22% Excellent Good 60% 42% 34% Fair Poor 40% Very Poor 20% 32% 29% 0% 11% Inbound 14% 1% Outbound 99 total respondents 10 Section III: The State of ITM Respondents were asked to rate the perceived return on investment their company has seen from investments in ITM systems managing inbound transportation, outbound, or both. Almost all respondents rated both their inbound and outbound transportation processes, but the differences between the two were negligible. Overall ratings rose noticeably from 2010, where 70 percent of respondents rated their ROI average or better. This year more that number stands closer to 85 percent, suggesting that the new technology shippers and 3PLs are buying or upgrading is working.

15 Figure 10: Satisfaction with Current ITM Systems 100% 80% 12% 20% 12% 32% Excellent Good 60% 44% 48% Fair Poor 40% 68% 53% Very Poor 20% 36% 30% 0% 8% Average Inbound 12% Winners Inbound 10% Average Outbound 16% Winners Outbound 220 total respondents 11 It s fitting that satisfaction a very subjective measure is up Most companies are seeing an ROI and that s ultimately what this is all about. Satisfaction levels between inbound and outbound transportation management functions vary a little. What s more interesting is the discrepancy between the average respondent and our winners category. Not one winner was dissatisfied with their ITM systems. Roughly a third rated their outbound transportation system as excellent. High marks from a discerning bunch. Section III: The State of ITM

16 The following two figures (11 and 12) breakdown the key segments of the international transportation management process in order to highlight where shippers and 3PLs are using technology, and where they rely on manual processes. Like last year the study average is largely manual in the planning process. Technology is more prevalent in the nitty-gritty aspects, such as order management and booking. Every function included in this outline shows large increases in the use of technology. Winners companies who are outperforming their peers clearly prefer to automate these functions, and where they can t automate they outsource. Figure 11: The State of ITM Study Average 12 Section III: The State of ITM 100% 80% 60% 40% 20% 0% 3% 5% 32% 61% Planning 5% 9% 49% 38% Order Mgmt 4% 26% 29% 41% Booking 10% 16% 33% 41% Event Mgmt 4% 15% 47% 34% Visibility N/A Outsourced Automated Manual 220 total respondents Figure 12: The State of ITM Winners 100% 80% 12% 12% 44% 4% 24% 25% N/A Outsourced 60% 40% 56% 80% 40% 52% 67% Automated Manual 20% 0% 32% Planning 8% Order Mgmt 16% Booking 20% Event Mgmt 8% Visibility 220 total respondents

17 The average respondent to this year s survey is using one fewer ITM system or platform than they were a year prior. This patchwork of systems and manual processes has been documented for the past three years by this report, and evidence that things may be getting less complex is a good thing for many who struggle with integration headaches. However, this technology market remains highly fragmented, and it s unlikely that shippers or 3PLs will be able to automate more of their ITM effectively without tapping multiple systems, and ultimately more vendors. Remember that our survey respondents are managing multimodal transportation. Processes and requirements vary widely across transportation modes, creating a need for specific systems to meet those demands. Like last year, our winners still have more technology than the average. However, it appears they have been the most aggressive in cutting back on the number of unique systems they are using. 13 Figure 13: Number of ITM Systems 3PLs ' PLs '11 Average ' Average ' Section III: The State of ITM Manufacturers ' Manufacturers ' Retailers ' Retailers ' Winners ' Winners ' total respondents

18 International transportation is an inherently collaborative exercise that demands electronic connectivity to logistics providers and other suppliers. On average shippers and 3PLs have 8.2 unique integrations, while winners average 9.2. Naturally 3PLs have considerably more integrations due to their role as hubs of the international transportation network. Those connections are only going to be as useful as the data that they transmit. Survey respondents rated the quality of data provided by various providers in terms of timeliness, accuracy and completeness. The results are surprisingly good if you believe the conventional wisdom that carriers, in particular, do a terrible job providing quality data. 14 Data quality is the cornerstone of visibility. If data related to an international shipment is late, inaccurate, incomplete or otherwise unavailable, shippers and 3PLs have no chance to make the adjustments that can save time, money or both. Section III: The State of ITM Figure 14: Number of Unique Integrations to Carriers, 3PLs, Portals, etc. 3PLS 13.1 Winners 9.2 Study Average 8.2 Retailers 7.3 Manufacturers total respondents Figure 15: Quality of Data Provided by Partners 100% 5% 7% 2% 5% 6% 5% 15% Excellent 80% 60% 33% 33% 36% 41% 46% 49% 45% Good Fair Poor 40% 20% 0% 41% 20% 38% 15% 7% 38% 19% 5% 41% 10% 3% 39% 2% 1% 1% 1% Suppliers Rail/ Customers Motor Air Ocean 3PLs Intermodal Carriers Carriers Carriers 9% 35% 10% 32% 7% Very Poor 175 total respondents

19 Roughly one in three leverage their expertise to shape up their processes and technology, down from more than 40 percent in Most notably, 3PLs showed a drop from above 50 percent to 32 percent. Bear in mind Fig. 7 showed that 22 percent of the respondents implemented or updated an ITM system within the last year. Perhaps the winding down of those projects accounts for some of the drop off. Figure 16: Use of Systems Integrators and Consultants 100% 80% No Yes 60% 64% 63% 68% 68% 15 40% 20% 0% 36% Winners 37% Retail/Wholesale 32% Manufacturers 32% 3PLs 154 total respondents Section III: The State of ITM

20 In general, winners have more functionality than the average survey respondent. This makes sense since they use more systems to support more segments of the ITM function. It is interesting to see that winners not only have track and trace visibility tools, but they have connectivity, collaboration and analytical capabilities. Going back to the issues around data (see Fig. 15), accessing quality data from logistics providers and creating intelligence from it are the keys to strategic supply chain visibility. Figure 17: Current Functionality Winners vs. Average 16 Section III: The State of ITM Tracking & tracing 79% 66% Electronic shipping 62% documentation 51% Connectivity to customers, 58% vendors, partners, etc Order management Analytics Freight invoice management Electronic booking Shipment scheduling Event management Collaborative transportation 49% 54% 47% 62% 42% 38% 42% 58% 41% 58% 40% 54% 38% Winners 50% management Contract management Dynamic rate engine Financial settlement Parcel shipping Transportation network optimization Claims management Route/schedule optimization Freight exchange Mode optimization Other, please specify 30% 29% 23% 25% 19% 21% 19% 25% 19% 25% 18% 29% 17% 29% 17% 12% 14% 17% 14% 4% 13% Average Returns/reverse logistics Network design 17% 10% 144 total respondents 8% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80%

21 3PLs still have considerably more functionality than their shipper customers, particularly in terms of those nitty-gritty functions like order management, booking, and event management. Recall that these are the same segments that shippers often outsource when they can t manage the process themselves. Figure 18: Current Functionality Shippers vs. 3PLs Tracking & tracing Electronic shipping documentation Order management Connectivity to customers, vendors, partners, etc Shipment scheduling Analytics Event management Electronic booking Freight invoice management Collaborative transportation management Parcel shipping Route/schedule optimization Dynamic rate engine Contract management Transportation network optimization Claims management Other, please specify Mode optimization Financial settlement Freight exchange Returns/reverse logistics Network design 3% 6% 12% 18% 18% 21% 17% 15% 14% 13% 12% 13% 15% 13% 12% 11% 9% 15% 21% 24% 24% 24% 26% % 39% 42% 38% 37% 37% 36% 36% 39% 42% 42% 45% 49% 52% 52% 55% 58% 58% 64% 67% 73% Shippers 3PLs 144 total respondents 17 Section III: The State of ITM

22 Section IV: The Benefits of Automation Surprisingly, visibility is getting worse when measured by how many days prior to shipment a company knows the specifics of the shipment, such as the number of pieces, weight, etc. That said, winners are actually getting better. Bear in mind winners only needed five days notice, and here the average winner has more than three times that. 18 Here s where the ROI comes into play. Companies that have visibility to shipment specifics can optimize their transportation plans. Goods that are needed faster can be expedited to market. Costs can be taken out through mode shifts to lower cost options where applicable. Destinations might be changed altogether to take advantage of other opportunities that have arisen, or to overcome unforeseen disruptions that have come up since the PO was cut. There are many scenarios that can play out; the point is none of them exist without visibility. Section IV: The Benefits of Automation Figure 19: Visibility Days Prior to Shipment Winners ' Winners ' Shippers ' Shippers '11 3PLs ' Pls ' total respondents

23 Productivity levels have remained relatively steady from Freight volumes across the trades covered by American Shipper remain flat while firms have continued to hold off adding more staff to support what we believe are historically lean international transportation departments. 3PLs saw further increases in productivity as they continue to handle more and more international freight volumes and their role in the supply chain becomes more significant. Figure 20: Productivity PO per Year per FTE Winners 1,244 1,299 1, Automated (excluding 3PL) 1,235 1,362 1, Manual (excluding 3PL) PLs ,200 1, total respondents Section IV: The Benefits of Automation

24 Survey respondents are split when it comes to running ITM centrally, regionally or locally. Winners appear to favor a centralized approach, particularly in terms of planning. Systems are of key importance to centralizing a large, complex operation like those our survey respondents are tasked with, and centralization directly supports visibility. Figure 21: Central vs. Local Logistics Management Study Average 100% 4% 2% 4% 3% 7% 2% N/A 80% 29% 34% 26% Other Local 20 60% 40% 24% 25% 18% Regional Central Section IV: The Benefits of Automation 20% 41% 47% 34% 0% Planning Execution Measurement Figure 22: Central vs. Local Logistics Management Winners 100% 4% 4% 4% 4% 80% 8% 16% 16% 24% 20% 60% 40% 68% 64% 56% 20% 4% 4% 4% 175 total respondents N/A Other Local Regional Central 0% Planning Execution Measurement 175 total respondents

25 Fewer respondents have savings targets to achieve compared to This is surprising, given the volatile market conditions over the past two to three years. Just like 2010, those companies that had targets generally met or exceeded them. Only 17 percent were over budget to any extent. It s impossible to succeed without goals. Figure 23: Has Your Procurement Department Established Metrics for Measuring Savings Targets? 100% No 80% 38% 44% Yes 21 60% 65% 40% 20% 0% 62% Retail/Wholesale 56% Manufacturers 35% 3PLs Outperformed procurement targets by a considerable margin Outperformed procurement targets 160 total respondents Figure 24: How Effectively Did Your Department Performance Against Those Targets? 16% 1% 4% 24% Section IV: The Benefits of Automation Met our procurement targets 54% Slightly behind our procurement targets Missed procurement targets by a noticeable margin 74 total respondents

26 Section V: The Future of ITMS The market for ITM systems looks nearly identical to last year. About 20 percent of survey respondents are budgeted to make some addition to their portfolio in the next two years, while another 16 percent are considering the idea. Satisfaction with the current process manual, automated or otherwise remains the number one reason shippers and 3PLs are not investing in new ITM systems. A lack of resources, due to recent investments in ITM systems, ranks third with 12 percent. Figure 25: Plans to Buy/Replace/Upgrade ITM Systems 22 No plans to replace 50% 66% 64% Section V: The Future of ITMS On our company s 5-year plan Budgeted within the next months Budgeted within the next 12 months 15% 16% 14% 10% 12% 9% 9% 8% 28% 0% 10% 20% 30% 40% 50% 60% 70% 80% Figure 26: Inhibitors to Investment in ITM Systems total respondents Available systems do not provide the functionality we require 39% 4% 5% 5% 8% 9% We do not have the technical expertise to make a change We re in the process of upgrading or replacing our system Organizational resistance to change Lacks return on investment We recently upgraded or replaced our system 17% 12% None of these Current system meets our needs 99 total respondents

27 Compared to previous years, the drivers to adding ITM systems remain similar. Efficiency and cost savings remain the top drivers, while visibility and connectivity have picked up traction recently. Figure 27: Drivers to Systems Adoption Improve operational efficiency Cost savings 71% 69% 72% 68% 83% 87% Visibility Integration, with vendors and partners 48% 53% 68% 66% 58% 64% 23 Customer demands Integration, internal Expand my offerings/ Increase operational scale/capacity Bring systems in line with industry standards Green initiatives 11% 17% 19% 32% 38% 29% 38% 34% 29% 35% 36% 49% 47% 46% 51% 0% 20% 40% 60% 80% 100% Section V: The Future of ITMS 153 total respondents

28 Shippers and 3PLs are both in the market for ITM systems but naturally they are in this for different reasons. 3PLs are looking for the whole ITM package whereas shippers are more interested in connectivity, visibility and, ultimately, the cost savings they can provide. Figure 28: Drivers to Systems Adoption Shippers vs. 3PLs 24 Section V: The Future of ITMS Integration, with vendors and partners Customer demands Visibility Bring systems in line with industry standards Expand my offerings/ Increase operational scale/capacity Cost savings Support additional transportation modes (ie-parcel, rail, etc) Green initiatives Integration, internal Other, please specify 3% 6% 14% 24% 25% 30% 30% 31% 31% 43% 44% 44% 50% 50% 56% 65% 62% 62% 73% 0% 10% 20% 30% 40% 50% 60% 70% 80% 78% Shippers 3PLs 153 total respondents

29 Overall it appears that systems provided by logistics service providers could lose share to software-as-a-service offerings provided by technology providers. Twenty-eight percent of study respondents looking for systems plan to implement a SaaS solution, up from 18 percent in Meanwhile, systems provided by 3PLs have slipped to 13 percent of the average compared to 22 percent in A closer look at the responses from 3PLs and shippers shows that shippers are more likely to purchase a software solution of any kind SaaS or installed while 3PLs are more like to customize a system or build their own from scratch. Figure 29: Future ITM Systems Delivery Model 09 to Licensed software purchased from outside vendor 30% 31% 30% Software as a service provided by an outside vendor Software provided by 3PL, carrier or other logistics service provider Customized package (Heavily customized packaged software) Built in-house or custom built 13% 18% 20% 17% 15% 16% 13% 15% 16% 15% 22% 28% total respondents Section V: The Future of ITMS 0% 5% 10% 15% 20% 25% 30% 35% Figure 30: Future ITM Systems Delivery Model Shippers vs. 3PLs Licensed software purchased from outside vendor 25% 32% Built in-house or custom built Customized package (Heavily customized packaged software) 8% 11% 25% 25% 3PLs Shippers Software as a service provided by an outside vendor 19% 32% Software provided by 3PL, 6% carrier or other logistics 16% service provider 0% 5% 10% 15% 20% 25% 30% 35% 153 total respondents

30 26 Section VI: Winners Section VI: Winners Winners appear to be breaking away from the pack in terms of results in Here are some of the best practices highlighted in this report that have a strong correlation to this group s performance. Winners embrace technology and expect strong ROI in terms of cost savings and increased capabilities. Winners squeeze value from their systems. They get far more functionality from only slightly more technology. Winners centralize their ITM processes where possible to achieve scale, control and, ultimately, higher visibility. Winners focus on improving supply chain visibility to unlock the strategic value of their systems investments. Winners seek to limit the number of systems they use, where possible, but continue to embrace a network of applications to support strategic functions. Winners demand quality data from international transportation vendors and partners to support visibility initiatives.

31 Appendix B: About Our Sponsors BravoSolution BravoSolution offers leading software and services to fit the needs of today s sophisticated supply management organisations. Our services organization, one of the world s largest teams of professionals dedicated exclusively to sourcing and procurement consulting, delivers lean, targeted services to support strategic sourcing and procurement initiatives. Our industry leading software toolkit supports the full supply management lifecycle across myriad industries, geographies and business models. As of today, over 40,000 procurement professionals in 60 different countries are benefiting from BravoSolution s technology and services, unlocking tangible benefits including of increased process efficiency, decision support, cost reduction, improved process governance, greater quality relationships with vendors and the ability to share, understand and act upon the wealth of sourcing-related data held within their organization. CH Robinson Founded in 1905, C.H. Robinson Worldwide, Inc. is one of the world s largest third party logistics companies, providing global freight services and the world s first global Managed TMS solution, as well as logistics outsource solutions, fresh produce sourcing, and payment services. C.H. Robinson s 36,000-plus customers range from Fortune 500 companies to small businesses in a variety of industries. For more information, visit our website at 27 Appendix B: About Our Sponsors

32 Descartes 28 Descartes (TSX: DSG) (NASDAQ: DSGX) is the premier provider of Global Trade Compliance, Supply Chain Execution and Mobile Resource Management services. Descartes Global Logistics Network (GLN) unites global businesses and trading partners, allowing them to collaborate in a cost effective way and maximize productivity and efficiency. Trading partners that connect to the GLN join Descartes Federated Network, the world s most extensive multi-modal business network with over 35,000 trading partners connected, including ground carriers, airlines, ocean carriers, freight forwarders, third-party providers of logistics services customs house brokers, freight payment agencies, manufacturers, retailers, distributors, mobile services providers and regulatory agencies. Appendix B: About Our Sponsors Descartes is headquartered in Waterloo, Ontario, Canada and has offices in North America, EMEA and Asia-Pacific. More information and industry updates are available at and GT Nexus GT Nexus offers a cloud-based platform that the world s biggest companies use to drive efficiency and agility across the global supply chain. Leaders in manufacturing, retail and logistics services all share GT Nexus as their standard, multi-enterprise collaboration platform. Users operate against a core set of information across multiple supply chain functions to optimize the flow of goods and trade information, from order point to final payment. Customers include Xerox, Williams-Sonoma, Nestlé, DHL, Sears, Caterpillar, Kraft Foods and The Home Depot. For information, visit

33 SAP As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 172,000 customers (includes customers from the acquisition of Sybase) to operate profitably, adapt continuously, and grow sustainably. For more information, visit Transform your linear supply chain into a responsive supply network, and quickly adapt to ever-changing markets. Our supply chain management software can help you synchronize your planning, distribution, transportation, and logistics for an always on 24/7 operation. Recognized by key industry analysts as one of the marketleading supply chain management (SCM) software solutions, SAP SCM can also help maintain your relationships with suppliers, customers, and contract manufacturers facilitating your connections and collaboration around the globe. Learn more about our SCM solutions 29 Appendix B: About Our Sponsors

34 Appendix A: About Our Partner Retail Industry Leaders Association (RILA) RILA is the trade association of the world s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad. For additional information visit 30 Appendix A: About Our Partner

35 Appendix C: About American Shipper Research Background Since our first edition in May 1974, American Shipper has provided U.S.-based logistics practitioners with accurate, timely and actionable news and analysis. The company is widely recognized as the voice of the international transportation community. In 2008 American Shipper launched its first formal, independent research initiative focused on the state of transportation management systems in the logistics service provider market. Since that time the company has published more than a dozen reports on subjects ranging from regulatory compliance to sustainability. Scope American Shipper research initiatives typically address international or global supply chain issues from a U.S.-centric point of view. The research will be most relevant to those readers managing large volumes of airfreight, containerized ocean and domestic intermodal freight. American Shipper readers are tasked with managing large volumes of freight moving into and out of the country so the research scope reflects those interests. Methodology American Shipper benchmark studies are based upon responses from a pool of approximately 30,000 readers accessible by invitation. Generally each benchmarking project is based on qualified responses to a question survey depending on the nature and complexity of the topic. American Shipper reports compare readers from key market segments defined by industry vertical, company size, and other variables, in an effort to call out trends and ultimate best practices. Segments created for comparisons always consist of more than 50 responses to keep the potential margin of error to a minimum. Library American Shipper s complete library of research is available on our Website: AmericanShipper.com/Research. 31 Appendix C: About American Shipper Research Annual studies include: Environmental Sustainability Export Compliance Import Compliance International Transportation Management Transportation Invoice Payment Transportation Procurement Contact Jim Blaeser Publisher American Shipper BlaeserJ@Shippers.com

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