Ripping off the Band-Aid
If you’re a logistics or compliance manager or director chances are the idea of upgrading or migrating to a new technology has at least crossed your mind for 2014.
Whether or not that investment takes place depends on a multitude of factors, namely: whether there’s buy-in for logistics or compliance automation at the executive level; whether IT investment funds even exist; whether a recent ERP implementation has occurred, likely focusing the company’s attention on that broader technology project; and whether a system exists that the company deems worthy of investing in.
Once those hurdles are overcome, there’s another complicated question to answer: if I plan to make multiple investments in logistics and compliance solutions, is it better to tackle them all at once, or one at a time?
We’ve spoken in recent months to shippers on both sides of that coin. And in truth, I won’t be able to say with certainty one approach is better or worse for your particular company.
But let’s discuss the idea that it’s better to tackle multiple implementations at the same time — the “rip off the Band-Aid” approach — because there’s more sentiment than not that it’s easier to handle implementations piecemeal.
First, a ground rule. When we talk about multiple implementations, we’re talking about inculcating systems from different vendors to tackle different logistics or compliance problems. We’re not talking about buying multiple systems from the same vendor and implementing them altogether. That endeavor is complicated as well, but not to the same degree as assimilating best-of-breed systems from different vendors into an integrated platform on an accelerated timeline.
Let’s say, for argument’s sake, that a large importer decides it needs to overhaul its global and domestic transportation management systems (TMS) and its global trade management (GTM) system. Let’s also say this importer decides it needs better transportation visibility.
This shipper has some options. It could prioritize its needs, invest in the most pressing area first, and then tackle a new problem area each successive year. This would seem to be the most realistic option for many shippers, given the cost to buy a system and the time spent integrating it.
Alternatively, it could decide the best approach is to upgrade everything all at once. Here, the seemingly simpler solution would be to use one vendor that provides all of these systems, and trust the inherent cohesiveness of those systems might overcome the fact that one or two of the modules may not be the best one out there.
If the shipper opts for the “rip off the Band-Aid” approach, the other option is to handpick a different vendor for each need, pulling together an all-star team of systems and integrating them all on roughly the same timeline.
One shipper we spoke to is doing just this — new TMS, new GTM platform, and a visibility tool that resides outside of both. The shipper is using three different vendors and has been in the process of integrating the system over the last 18 months or so.
What are the merits of this approach? On paper, using the best systems for each niche ought to yield the best results. I compare it to grocery shopping. You go to the big chain supermarket for cereal, milk, and butter, the somewhat smaller organic chain for free range chicken, and the neighborhood farmer’s market for produce. Each shop yields the best cost-value ratio for your culinary needs.
The problem is coordinating transportation, logistics, and compliance in an automated environment is not as simple as putting a meal together. Butter from a chain supermarket, for example, talks pretty well to chicken from an organic store and carrots from the farmer’s market.
It takes a lot more behind-the-scenes work to make a TMS from a specialty TMS vendor talk to a GTM system from a compliance software specialist. It’s what the big enterprise vendors sell all the time — we’ve got all these solutions under the umbrella of a system you’re already using, so why leave the umbrella?
But the reality is system integrations are becoming less of a burden all the time. That’s not to say it won’t be a lot of work to integrate systems from two different vendors with an ERP from a third vendor. But most specialty vendors now understand the cloud-deployed software-as-a-service model on which they rely for ease of implementation and integration is a key selling point.
And that’s what makes the “rip off the Band-Aid” approach so compelling. The shipper we spoke with sounded exhausted and somewhat exasperated, but also undoubtedly excited. It’s a grueling exercise to take on multiple system implementations at once, but it also avoids the slow drip of tackling these in a phased approach over many years. It also eliminates the need to go back to the board to ask for additional money each budget cycle.
Most of all, there’s synergy in integration. As each system is deployed, the key considerations about communication between systems are addressed. So you can almost address the situation as one large integration, rather than a series of teeth-pulling integrations over the course of several years.
When you step back and think about it, doesn’t it make sense to ensure the TMS and GTM system are feeding the visibility system in precisely the way you want them to? And what better way to configure that arrangement than to work from a clean slate and build everything together?
Look, there’s no guarantee this approach will work for this shipper. If you work with three vendors at once, chances are there will be a hiccup or delay with one. Odds are things won’t go as smoothly in real life as they might have done in your head.
But assuming your company has freed up the funds to invest in multiple systems, and assuming you have the appetite to undergo a complicated, multi-faceted implementation, and assuming you’re hell bent on using best-in-class vendors for each area of your business, using the “rip off the Band-Aid” approach could yield more gain for your pain.