Welcome to the 31st edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I explained my controversial view that 3PLs shouldn’t be using tech to spend more time with customers
Great article!!! There's so much to unpack here. But to summarize our own experience, most brokers / 3PL's have had very little success with their "TMS" solutions (yes, a few have - see below - but most have failed).
The main reason for the failures is that no shipper wants to get boxed in with a single vendors provided TMS software (and IF the 3PL's TMS-like system also services their carriers they ALWAYS fail - as the carrier doesn't want the 3PL / broker to "see" who their direct shipper customers are what the rates are). Generally, if a conflict of interest is present, than any TMS solution will fail no matter the provider.
Regarding build v. buy...this is much more complex. To use cars as an example, Ford make good cars with a great service network. Some parts they make, some they farm out to others. They then do a fine job of assembling it all and provide a nice warranty. Therefore, this stops most of us from even thinking about building our own car. I think freight tech is similar in nature. You just need a PROVEN and RELIABLE software partner that meets 70%+ of your core needs from their core code base, and then trust that they will farm out features or services (or integrations) to the best of breed outside providers. They can then provide you with a nicely finished solution that's all wrapped up in a written agreement for service and support.
Finally, very (VERY) FEW brokers, 3PL's, carriers or shippers can build their own truly useful and efficient tech. Sadly, they THINK they can - and I've seen many of them waste a literal fortune trying to be a software company when they should really be focussed on being a freight service company. Just having access to simple cheap software development tools and knowing a few people that are "web designers" does not make you a software company - they just end up with a so-so website and bad "TMS-like" technology written by people people that just don't know enough about this complex industry to build anything truly useful in the real world. Thus, NOBODY finds their "new TMS solution" actually useful (and they also can't overlook the obvious and clear conflict of interest imposed on them).
Yes - there ARE a few exceptions (CHRW's Navisphere and their TMC solution, for example). Or, some of the big VC funded digital brokers that can afford to hire BOTH industry experience AND top developers. But - that's rare (and it's still not a guarantee of success, with many high profile failures already littering the landscape).
Again, great article!!! Hopefully it will make people think before they commit to trying to be a software company. Trust me, it's a lot harder than it looks lol.
Great article!!! There's so much to unpack here. But to summarize our own experience, most brokers / 3PL's have had very little success with their "TMS" solutions (yes, a few have - see below - but most have failed).
The main reason for the failures is that no shipper wants to get boxed in with a single vendors provided TMS software (and IF the 3PL's TMS-like system also services their carriers they ALWAYS fail - as the carrier doesn't want the 3PL / broker to "see" who their direct shipper customers are what the rates are). Generally, if a conflict of interest is present, than any TMS solution will fail no matter the provider.
Regarding build v. buy...this is much more complex. To use cars as an example, Ford make good cars with a great service network. Some parts they make, some they farm out to others. They then do a fine job of assembling it all and provide a nice warranty. Therefore, this stops most of us from even thinking about building our own car. I think freight tech is similar in nature. You just need a PROVEN and RELIABLE software partner that meets 70%+ of your core needs from their core code base, and then trust that they will farm out features or services (or integrations) to the best of breed outside providers. They can then provide you with a nicely finished solution that's all wrapped up in a written agreement for service and support.
Finally, very (VERY) FEW brokers, 3PL's, carriers or shippers can build their own truly useful and efficient tech. Sadly, they THINK they can - and I've seen many of them waste a literal fortune trying to be a software company when they should really be focussed on being a freight service company. Just having access to simple cheap software development tools and knowing a few people that are "web designers" does not make you a software company - they just end up with a so-so website and bad "TMS-like" technology written by people people that just don't know enough about this complex industry to build anything truly useful in the real world. Thus, NOBODY finds their "new TMS solution" actually useful (and they also can't overlook the obvious and clear conflict of interest imposed on them).
Yes - there ARE a few exceptions (CHRW's Navisphere and their TMC solution, for example). Or, some of the big VC funded digital brokers that can afford to hire BOTH industry experience AND top developers. But - that's rare (and it's still not a guarantee of success, with many high profile failures already littering the landscape).
Again, great article!!! Hopefully it will make people think before they commit to trying to be a software company. Trust me, it's a lot harder than it looks lol.
Tim Higham
CEO
AscendTMS (www.TheFreeTMS.com)