Fine-Tuning Technology
Small fleets are finding tech packages that enable them to stay competitive.
Jim Beach
Technology Editor
Enterprise software has been available to the trucking industry for about 20 years now. Initially, only the largest fleets could afford the computing power and IT staff necessary to run these powerful software packages.
But over the decades, computing power got cheaper, making it affordable for the not-so-large carriers. And, with the advent of web-based applications, software providers can now offer subscription-based packages at price levels many smaller fleets can afford.
These applications allow small and medium-sized carriers to realize efficiency and productivity gains in their operations. And these fleets can offer services the big boys offer in terms of electronic data interchange (EDI) ordering and billing functions, cargo tracking and performance records.
As a result, most every carrier running 50 trucks or more uses some type of truck-specific software. Those that don't probably should in order to stay competitive.
"I'd say if you talk about a fleet with more than 50 trucks, more than three-quarters of them have some sort of software," says Dave Mook, chief technology officer and chief operating officer for TMW Systems in Beachwood, Ohio.
"We don't see a lot of people coming from purely paper anymore," Tom Davies, FreightDATA Software, Cerritos, Calif., says. "More often they have an old home-grown system that no longer allows them to keep up with their competitors, or the software vendor they were using has gone out of business."
Other software providers agree. "I don't run into anyone anymore that has nothing in terms of some kind of computer software," says Steve Cummings of TGIF Software, Visalia, Calif. "I'm working now with a potential client with a relatively small LTL operation – about 150 shipments a day. Ten years ago, I would have expected someone with 150 shipments might still be doing things manually, but these guys have a PC-based system and want to upgrade."
"Probably 10 or 15 years ago, it was pretty common to run into customers who had never had a computer system. They were just thrilled to be able to print checks and bills," says Rusty Watkins, senior vice president of McLeod Software in Birmingham, Ala. "Since then, particularly in the last four or five years, the level of sophistication has grown exponentially in terms of the functionality customers expect."
Of course, such software does more than just print checks and allow customers to track shipments. Enterprise software ties all parts of a trucking business together.
"Enterprise software by definition is software that solves an enterprise problem," says TMW's Mook. "That always involves accounting and in the case of trucking, it's any software that does order entry, planning, dispatch, invoicing, settlement, governmental compliance, HR. It should be something that is on the desktops of most of the people in that firm. And when you add mobile communications, the drivers are also end-users."
Software Efficiencies
Carriers invest in these kinds of software packages because the systems help improve efficiency, customer service and strategic planning, among other benefits. Overall, the key benefit to carriers is efficiency. "That's been the No. 1 driver over the last 20 years is that this kind of software leads to greater efficiency," Mook says.
While having the computer print bills was a major plus for Valerie Liese, president of Jack Jones Trucking, her system improved front office efficiency in other ways as well. Jack Jones Trucking, a local LTL carrier based in Southern California installed a system from FreightDATA Software about 15 years ago.
"The first benefit was, I didn't have to type 300 bills each night," she says. The company runs 45 trucks and operates a 126,000-square-foot warehouse. Their system includes the typical applications, an EDI module and a warehouse package. Recently, the company began using a web interface so their customers could track their shipments online.
"That's really helped us tremendously by cutting down the number of customer calls we field every day," she says. "It saves us about eight hours a day."
Perkins Logistics, Indianapolis, also made the switch from a manual system about 10 years ago. The company installed TMW Systems software when the owner decided he needed better tools in order to grow, according to Greg Maiers, chief operating officer. The company runs 300 power units and 800 air-ride trailers throughout 48 states hauling office furniture, store fixtures, tradeshow exhibits, kitchen cabinets and other freight.
"The single biggest thing we saw was efficiency," Maiers says. "We added speed and productivity to virtually everything we do."
Making the jump from a homegrown system was Brown Trucking of Atlanta when the company switched to software from Maddocks Systems. "We were using a proprietary system written by one our programmers," Kevin Slaughter, vice president says. "I used to say all we were doing in dispatch was paperwork for the payroll department. Our system was really just an invoicing and payroll system."
Brown Trucking runs 460 trucks throughout the Southeastern U.S. and as the company began to grow four years ago, it soon became apparent their in-house system wasn't up to the task. "We realized we needed to integrate with our maintenance program so we started looking for something different," Slaughter says. The most immediate benefit was in the payroll and billing process at Brown Trucking. "We didn't have to do as much key punch and clerical work."
Slaughter says their software handles payroll, AP/AR, maintenance, bills of lading, EDI, safety, driver recruiting and includes a web service that allows customers to check their loads and order pickups.
For some carriers, when they think of efficiency, they think about cutting staff, but that's not necessarily the point. "The majority of the folks that buy software often think I can get some software in and reduce headcount," says Matt Cacace, chief operating officer with McLeod Software. "But it's more about growing your operation without having to add additional staff. Maybe with a software system, someone can add 50 trucks and one operations person. Without the software, you may need two or more to handle 50 trucks."
"For truckload carriers, one of the key measures of efficiency is how many trucks you can manage with the least number of non-driving employees," says Ernie Betancourt, CEO, Innovative Computing Corp., Brentwood, Tenn. "That is one of the great benefits of this type of software."
Brown Trucking's Slaughter says his company's software aided their growth in recent years. "We've more than doubled in size during the four years we've had the software – from 200 trucks to 460 trucks – and we've added very little clerical staff. We've grown a lot with this and I think we have the infrastructure in place to continue to grow."
Keeping Tabs On The Fleet
Perhaps one of the more important features for truckload carriers, according to McLeod's Cacace is the ability to "see" and manage your fleet. "If you have 50 or 100 trucks running around out there, an automated way to view those trucks by region, or where those trucks are headed. You have better control over your fleet. Plus, the information the system generates allows you to measure each lane and each truck for maximum productivity.
That's a tremendous benefit for Perkins Logistics, Maiers says. "When integrated with Qualcomm, our system lets us know where our fleet is at every minute. We couldn't do that without the system. With this visibility, we can look out multiple days ahead to see where supply and demand is going to be by state. We are able to match up trucks and loads much quicker and direct our internal sales groups on an hour by hour basis to pick up productivity. And we are able to do all those things with less people."
The systems retains a wealth of data on customers, trucks, drivers, trailers, freight lanes and rates fleets can use for planning purposes. "When you really start using your software as a management tool, learning how much revenue you are making per mile per traffic lane per customer, you can really start making some money," Mook says.
"Without our system, I couldn't do a decent lane analysis," Slaughter says. "This has improved our performance by letting us know what's a good load and what isn't."
"We use the system to look at gross margin profitability by lane and by customer," Maiers says. "The data is readily available and that can be integrated with deadhead miles, which allows us to understand where our fleet density is."
Enterprise software also enables small and medium-sized fleets to meet customer demands for faster reports, load tracking and electronic billing and ordering. And this demand continues to drive the technology. "Shippers are driving the move toward more sophisticated software," says Steve Cummings. "There is a constant demand for perfect service and the ability to repeat that service."
Shippers don't demand that carriers have a certain type of software system, but they do have delivery requirements that a fleet can't meet without some type of software. "We haven't seen that a shipper has come down and told a carrier he needed to get a system," Mook says. "What the shipper says is, 'I want you to deliver with a six-minute window and you have to take my EDI.' That will lead a carrier into a buying cycle for an enterprise system."
"Customers keep raising the bar," Greg Maiers agrees. "They want updates on their loads, automatic updates. In our business, everything is time sensitive. We do 2,500 deliveries a week, everyone of them by appointment. The products we haul are made to order and in most cases, there is somebody waiting on them. We would not be able to meet these on-time windows without the software tools."
To keep up with customer demands for more information, Maiers says his company will invest in geo-fencing technologies in 2007. Geo fences are virtual "fences" set around certain points using GPS and mobile technology. Maiers explains they will set fences a certain distance from delivery points so that "when a truck penetrates the geo fence, our system will generate a delivery notice and send it via email to the customer, alerting him the their load is on its way."
More recently, carriers have been asking for add-ons to their systems that allow two-way live wireless data communications between drivers and dispatch, according to FreightDATA's Davies. That includes live load management where drivers use a PDA or cell phone to acknowledge pickups and deliveries as well as traditional GPS location functions.
"In this way, the carrier has the POD information within seconds of the actual delivery and if they have a web site, the customer has it within a minute or two of that."
Web-based Services
Davies says carriers are also asking for sophisticated web sites that allow customers to track shipments, get rates, schedule pickups and track carrier performance. And with many software providers also offering web-based subscription services, even the smallest fleets can give their customers this service.
"The Internet is the great equalizer in our industry," says FreightDATA's Davies. "A sophisticated web site can make a $2 million company look just like the $100 million guy to his customers."
Using the software providers' servers to host applications a company accesses over the Internet is a cost-effective way for smaller fleets to make the jump to an enterprise-wide software system.
"In this way, the carrier has no IT department, no servers to worry about, no software/hardware updates," Davies explains. "They just deal with managing their freight company, not their computer department."
Web-based subscription services allow the larger software providers to court fleets that may have been considered too small to afford their systems. "I don't think we have a bottom-end," says ICC's Betancourt. "It's a different market than it was."
McLeod's Matt Cacace agrees the market has changed with the advent of web-based applications. While noting that the "meat of the market" was probably fleets with between 100 and 1,000 trucks, he adds, "we don't target a specific fleet size. The applications are pretty scalable. We have customers of all sizes."
So, if enterprise software is now more affordable and can make even the little guys look like the largest fleets in terms of service, why haven't all fleets made the switch?
"Typically, in small companies, it's the lack of technical expertise," Cacace says. Some firms lack someone that can manage the installation process and then administer the software. Plus, as Cummings notes, "There's still a mind set among some in the industry that technology is a necessary evil, rather than an important business tool. They would rather buy a new truck that spend money on a computer system because they can't see what a system does for them."
Price is still an issue, even for a scaled-down system. "For smaller carriers, those doing maybe only about 50 LTL shipments a day, there isn't much out there in their prices range in terms of a full package," Cummings says.
Other small operations just don't need a system to run their trucks. "You don't need the same level of tools if there are only 20 or fewer trucks and you have the owner, dispatcher and payroll clerk all rolled into one person with the spouse helping out in the office," Mook says. "They know where their 20 trucks are."
Yet, even these small guys are beginning to invest in software. "If they want to do business with Wal-Mart or Sunoco or Home Depot – customers that want to use EDI transactions, shipper report and on-time reports – then your data needs go beyond a simple spreadsheet."
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