OpenRoad’s Vice President of Information Systems, Wes Tilgner, sat down with industry leaders, Haley Evans (Vice President at TriumphPay) and Michael Horvath (Co-founder, Executive Vice President, and Chief Marketing Officer at Revenova) for an insightful panel conversation — hosted by Crain’s Chicago Business — on navigating the post-COVID boom in the supply chain and logistics industry.
Since the COVID pandemic began, the logistics industry has been tested repeatedly as consumers shopped online in record numbers—a trend that shows no sign of abating. Executives of three companies that frequently collaborate to serve the logistics industry shared their insights with Crain’s Content Studio.
What role does your organization play in the logistics industry?
Michael Horvath: Revenova provides customer relationship management-powered transportation management solutions for logistics service providers, freight brokers and shippers. It runs on Salesforce.com, a cloud-based software that helps organizations effectively streamline their sales and marketing operations. Our customers enjoy the benefits of the features, security, reliability and scalability of the Salesforce.com platform with the transportation management features needed to manage the entire quote-to-cash process of shipping freight across the globe; in other words, customer relationship management-powered transportation management.
What are some of the biggest challenges currently facing freight brokers and logistics service providers?
Evans: Two of the biggest challenges facing freight brokers today are maintaining carrier capacity and preserving efficiency while margins continue to be compressed. Because of the current rate environment, brokers need to find and keep carriers happy to continue serving their customers. This can be difficult to do while keeping a healthy margin, so brokers must look for other ways to develop a growing carrier base.
Tilgner: Logistics is about bringing everyone together to work efficiently. During volatile market conditions like we’re currently experiencing, providing the best experience for both shippers and carriers takes extra care. Bringing together the diverse technology platforms of the different market segments we serve is also a challenge we’re working through every day.
Horvath: The logistics industry is experiencing very tight truck capacity, largely due to a driver shortage, emphasizing the need for freight brokers and logistics service providers to build and maintain a larger and more dedicated carrier network. Tight capacity also means tighter margins and volatile pricing, putting pressure on operations to maintain competitive customer pricing and profitability.
With carrier capacity so tight, how are you finding and keeping carriers in your network?
Tilgner: We’ve always relied heavily on our personal relationships with carriers. Our carriers appreciate our core values of proactive communication, personalized solutions and respect. We’re continually investing in technology that helps us communicate, track and pay carriers quickly and easily. Our logistics software, Revenova TMS, is built on a customer relationship management platform that helps us stay connected with our carriers. And HubTran, now a service of TriumphPay, has made processing shipment paperwork and carrier payments simpler for everyone.
Horvath: Carrier relationship management is arguably even more important than customer relationship management. If you have carrier capacity in your network, you’ll find freight to move. Unlike most transportation management applications that are solely focused on load management, ours empowers customers to effectively prospect, onboard and retain carriers by engaging them in a more personalized and targeted fashion based on detailed carrier preferences. Offering loads that meet their lane preferences and providing functionality for easy settlement and quick payment builds trust and loyalty. If you’re easy to do business with and personalize the experience, your carrier partners will stay with you.
Evans: While rates are certainly part of the equation, over the last few years we’ve seen brokers focus even more on the carrier experience. Carriers want to know, “Are you easy to do business with?” “Am I able to speak with a person when I call?” “Do you provide carriers with a portal where they can self-serve and see all of their information, loads, invoices and payments in one place?” In our everyday lives, we’re used to phone apps and seeing information in real time. Carriers have similar expectations; brokers either need to develop this technology or partner with someone who can provide it for their carriers.
“Two of the biggest challenges facing freight brokers are maintaining carrier capacity and preserving efficiency while margins continue to be compressed.”
Haley Evans, TriumphPay
Given your organization’s experience with COVID-19, what business continuity plan recommendations would you offer customers?
Tilgner: With a major disruption like we had last year, the shippers that thrived were those that partnered with logistics providers with the relationships and technology to adapt quickly. Critical to success is having those hard conversations up front with logistics providers regarding schedules, budgets and contingency plans. We’ve all had to be flexible, use new technologies and protect our company culture during the COVID-19 pandemic.
Evans: As you think about how your work gets done, think about the location of your workforce. Due to COVID and many restrictions placed in countries overseas, companies had less control and contact with their off-shore labor force. Because of this, we’re seeing companies start to bring their labor closer to home. Another aspect to consider is what technology can be used to mitigate risk and still enable you to scale without increasing headcount.
Horvath: The pandemic exposed the IT infrastructure and business application strategy of many companies that were simply unable to deploy an “at home” workforce that could fully function in a distributed environment. Many legacy applications operate on local networks that weren’t designed to scale to a fully remote workforce. Our recommendation has always been to deploy cloud-based solutions that can fully function wherever there’s an internet connection, offering scalability and accessibility on demand with little to no local application or IT infrastructure required. Cloud platforms have proven to be reliable and secure—often more secure than local infrastructure—and they enable company employees to work from anywhere.
How will artificial intelligence improve logistics operations?
Evans: The logistics industry was built on repeatable tasks, and many of these tasks are still completed manually today. We’ll always want people answering the phone and building relationships with customers and carriers, but we’re really starting to see technology take over the manual and repeatable tasks. Ultimately, this will help brokers with their margins, enabling them to deploy more employees to sales and customer service.
Horvath: Logistics is a document-heavy industry. AI is currently being used to process documents, and automate traditionally manual processes in both operations and accounting—reducing the cost and processing time. Other opportunities fall into the predictive analytics category. For example, AI could reliably calculate spot market prices, predict on-time pickup and delivery based on real-time traffic and weather analysis, and use the information to optimize routes to ensure on-time performance. Probably the most disruptive use of AI is in the autonomous vehicle projects we see across the industry; self-driving vehicles and drones are all dependent on AI technology.
Tilgner: While it’s difficult to predict where AI will take us, I can see it making improvements to most areas of our operations. We’ll be better at predicting carrier capacity in lanes, reducing the miles that trucks drive empty, processing paperwork and paying carriers more accurately without human involvement—and it will enable us to provide better, more targeted service to our partners. It isn’t all about replacing people with computers, but giving people what they need to be efficient.
“It isn’t all about replacing people with computers, but giving people what they need to be efficient.”
Wes Tilgner, OpenRoad Transportation
What are some best practices to reduce back-office time and carrier settlement payment expenses?
Horvath: Shipping typically involves dozens of documents. There’s a growing trend toward digital engagement to reduce the physical handling of paperwork–electronically communicating and processing documents saves a lot of time. Of course, once a carrier has submitted the required proofs of delivery and supporting documents, they expect prompt payment. Electronic payments have been around for quite some time and the area for cost reduction is in auto-settlement—basically, where the system can auto-approve invoice amounts, confirm that the required supporting documents are present, and then present the payment options to the carrier within seconds after the paperwork is submitted. This is an area we’ve focused on in partnership with TriumphPay and Hubtran, and are seeing very good results.
Tilgner: This is one area where we’ve seen great improvement with new technology. First, we make it easy for carriers to deal with paperwork electronically by integrating intelligent document processing, logistics software and accounting—all through cloud-based connections to create a seamless process. It’s important to have this integration in mind when selecting software partners. HubTran for document processing and Revenova TMS is an example of a great integration we rely on every day.
Evans: The first thing you want to look at are those manual and repeatable processes. Consider whether you can use technology to automate those, or at least decrease the amount of time you have someone working on them. You can make manual processes efficient only to a certain extent. Once you reach that point, as you grow your business, you’ll continue to increase your headcount in back-office and non-revenue- generating activities.
What are the most effective key performance indicators you’ve used to drive process improvement?
Tilgner: The foundation of all our processes is our people, so we look at our employee turnover ratio as
an indicator of our culture. Hiring and retaining great people means we have the experience and expertise to execute our business well. We also look at the percentage of carrier settlements that need manual interaction because of missing paperwork or rate discrepancies.
Horvath: Our customers focus on service delivery and profitability metrics, so it’s important to have a TMS that can track overall organizational performance as well as profit margin and activity down to the transaction level. In addition, customers focus on operational metrics such as on-time delivery, quotes generated per salesperson, close ratios, average time to book a carrier and customer satisfaction ratings. They also track digital engagement percentages, such as the percent of processes where automation—versus employees—does the work in areas like order entry, carrier matching and engagement, digital bookings and auto-settlement. By automating routine tasks, brokers and logistics service providers can deploy their human capital to much higher value-added functions. By automating routine tasks, brokers and logistics service providers can deploy their human capital to much higher value-added functions.
Evans: One of the main metrics we track is the percentage of payments that are reversed. A reversed payment means that we paid the wrong entity and had to stop a payment and reissue. For us, this is always well below one percent, and we build our processes to keep this number low. If this number increases, it doesn’t just cost us human capital to fix the payments—it also impacts our customer and carrier experience. As a payments network, we want to ensure that the correct person gets paid on time every time.
How does your organization maximize customer satisfaction and retention?
Evans: Maximizing customer satisfaction and retention is the same in almost every industry—do what you say you’re going to do and do it really well. We continue to focus on creating on a great customer and carrier experience by hiring the right people to serve our stakeholders.
Tilgner: We’ve always treated customers as individuals with unique needs and requirements. We make the effort to understand their businesses so we can be prepared for whatever they need from sales, operations, accounting or technology. Personal service through stable relationships has been successful for us.
Horvath: We developed our TMS on the world’s highest rated and most popular customer relationship management platform for this very reason. Our customers have options available to deploy world-class tools for customer engagement, load tracking, billing and claims management using web-based and live call center support services. Many issues can arise when shipping freight; having a service-oriented partner that provides real-time visibility to load status and a multi-channel support model builds loyalty and retention.
“. . . if the customer’s freight is moving from a ship to a train to a truck for final delivery, the customer is expecting a seamless tracking experience across all three carriers.”
Michael Horvath, Revenova
How about carrier satisfaction and retention?
Horvath: Our TMS empowers customers to take the same “relationship management” approach used for customer-facing engagement and personalize it for carrier partners. Customers create a profile for each carrier’s preferences and use it in the carrier engagement process. The goal is to understand the types of freight they prefer to move in the areas where they prefer to work. In addition, our TMS makes it easy for carriers to engage, communicate and settle loads for payment with our customers.
Tilgner: Our carrier relationships are managed much the same way as our customers. We understand the needs of our carrier partners very clearly because we’re also an asset-based carrier. This gives us unique insight to the challenges and pain points for a carrier in today’s logistics industry. Our carrier teams match the carrier to the right load and clearly communicate throughout the trip. To finish it off, we pay carriers promptly and accurately with no effort required on their part. We work to make it a seamless and frictionless process for each of our carriers, and, when there’s a problem, our approach is respectful and understanding. All decisions are made based on the premise that each carrier will be our partner for many years to come.
Evans: With a hyper-focus on customer satisfaction, we’re committed to providing a product that’s relevant and user-friendly for all stakeholders. For carriers in particular, we provide a free portal and mobile app where they can see their loads, invoices and payments for all of their TriumphPay brokers. This transparency and visibility allows carriers to know where their payments are at all times.
What automation trends will likely improve logistics operations?
Horvath: We talk a lot about “digital freight brokering” where processes that used to be done by people can be done through automation. Certainly, the “happy path” transactions can be fully automated. For example, a customer enters a load on a portal and instantly receives pricing and approves the rate. The TMS automatically books the load and confirms the carrier. The TMS tracks the carrier from pickup to delivery providing real-time location updates while moving. Once delivered, the TMS requests documentation from the carrier and automatically processes it when received. Lastly, the TMS sends the customer a bill and pays the carrier. Of course, not all freight travels the “happy path” and that’s why there will always be a need for people to service customers and partners.
Evans: We’ve seen a couple of trends develop over the last few years. One is the number of integrations that stakeholders—transportation management systems, brokers, carriers, factors, shippers and technology providers—are engaging in to work together, faster and more efficiently. We’ve built integrations with our TMS partners to help brokers manage their payables and create a great payment experience for their carriers. We’ll continue to build integrations with all industry stakeholders to automate the freight invoicing and payment process.
Tilgner: As more software platforms integrate with each other through application programming interfaces and other technologies, we’ll see more accuracy and accountability, greater visibility, shorter loading and unloading times, and smoother settlement processes.
How has real-time shipment status for consumer shipments, aka the Amazon effect, changed how freight is managed?
Tilgner: Throughout the industry there’s a growing expectation that we know exactly where our customers’ shipments are located at all times. The trend is pushing logistics companies and technology providers toward further integrations of freight management systems. However, it hasn’t fundamentally changed how we manage freight. While we’ve always made sure that our customers know where their freight is, the technology available today has made it much easier for us to track shipments and provide more options for our customers to see that information.
Horvath: The visibility that Amazon provides consumers regarding shipment status and location has set expectations for movers of commercial freight to provide the same visibility. We see shippers demanding 15-minute updates on their shipment status along with pickup and delivery notifications. The challenge for logistics service providers and freight brokers is connectivity. It’s not uncommon to have more than 10,000 carriers in a network that the TMS must communicate with in each carrier’s preferred method. Then the incoming tracking data needs to be normalized for the shipper. So, if the customer’s freight is moving from a ship to a train to a truck for final delivery, the customer is expecting a seamless tracking experience across all three carriers.