mar. 31, 2022The Loadstar
By Matt Bernstein, CEO, BravoTran 31/03/2022
Not long ago, freight forwarding operators managed shipments from cradle to grave. Operators orchestrated the shipment, performed data entry, communicated with carriers, kept the customer informed, and filed all the document s– all without much help from automation.
The industry has come a long way since then: automated rating, shipment tracking, and customer portals are now commonplace. But operators, the lifeblood of a freight forwarder, are still tasked with repetitive data entry and document management. Creating jobs, populating data, and filing documents looks very much like it did 10 years ago.
This is a big deal. Operators’ productivity could double without all the busy work. So why has our industry made so little progress in document and back-office automation?
Technology doesn’t fit the way people really work
Here are two problems that technology can solve for operators:
- Emailed documents: Operators spend hours reading attachments, performing data entry, and filing documents. A pre-alert takes 10 minutes to split up, doc type and file. Operators receive five or more arrival notices per shipment and each time they need to check for what might have changed: ETA? IT Number? Pickup number? Location? Death by a thousand cuts.
- Payables: By now, many freight forwarders have payables teams that have taken over the responsibility from operators for processing vendor invoices. But about half the time invoices don’t match the accrued costs and then the operator is back on the hook to resolve the discrepancy – looking at documents, checking shipment data, and composing emails.
Recent solutions have focused on technical fixes, without solving the real underlying problem for operators. For example, document systems pick off some of the incoming documents but not others. Payables packages focus on uploading invoice data to forwarding systems, but don’t address the real pain – handling exceptions. And worse yet, we’re asking the operator to learn and work in yet another system, adding complexity and annoyance.
Going forward, technology needs to deliver value that’s based on how operators really work: solving the whole problem, not part of it… working gracefully with exceptions as well as the “happy path”… and seamlessly embedding in the operators’ existing workflows and systems.
The return ain’t there
Even when the underlying tech is capable, a software offering needs to establish a clear financial return to see the light of day. Too many do not.
Front-loaded expense is the first and most obvious deal killer. The more you need to spend initially, the harder it is to financially justify. Fortunately, most SAAS offerings are starting to eliminate upfront charges.
Unfortunately, front loaded effort is still a big problem. Nobody but nobody, needs another IT project. And solutions also need to work with your business requirements, your documents, and your organisation to get buy-in. Integration with your forwarding system is easy. Integration with your business is harder.
Finally, too many projects are evaluated on technical metrics alone, and then get junked by executive leadership due to lack of return. In our experience, two business metrics drive huge returns.
- Operator productivity. How many shipments do your operators capably handle? Wouldn’t it be great to go from 75 open jobs per operator to 150? Pumping up operator productivity is the best way to improve conversion of gross margin to net margin. Gross margins ebb and flow with supply/demand dynamics. Conversion of gross to net is forever.
- Days to cash. Accruing properly, knowing your costs and rates, having your documents in order all contribute to fast and accurate billing. At the end of the day, it’s all about getting paid, especially in a tight margin business!
Fear of failure and failure to scale
Many freight forwarders have become skeptical that new technology solutions can really deliver speedy and dramatic change. But fear of failure drives stagnation. Everybody talks about agile, but in real life this means finding solutions that are testable in bite-size chunks. Agile also means that when a solution fails to prove out, you’re okay with throwing it out.
But figuring out a good pilot is only half the game. Too many pilots work great at the pilot phase, but fail to scale. Every new pilot needs to be rapidly scalable. This means high volumes, multiple languages, different time zones and across the world. It’s not easy but, fortunately, it is increasingly doable.
This playbook of early proof accompanied by a practical and aggressive ramp up is also important to win over operators. Operators can make or break almost any initiative. And even though operators are super busy, they will not willingly give up control of even the most mundane activities if they’re not convinced the alternative works better.
Now is the time
2021 was a great year for freight forwarders. Frankly, 2022 is looking pretty good too. But the smart freight forwarders aren’t counting on rising tides forever, and it’s only when the tide goes out that you discover who’s been swimming naked.
We need to continue to evolve the role of the operator by automating the mundane and pumping up productivity. Let’s use tech to put the focus on business judgment and problem-solving instead of data entry and document handling. It’s up to us to give operators tools that fit how they work, generate great returns, and support a roadmap for success.