Thought leadership and a notable abscence of hype are hallmarks of Descartes' annual conference. Here we discuss highlights from the event.
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Since Descartes is the largest transportation/logistic software company in the world, it is important—and interesting—to attend their annual customer conference. Unlike many marketing-driven conferences, the agenda is driven by Descartes customers. So that means limited—or no—hype.
Descartes Then and Now
Ed Ryan, CEO of Descartes, presented an evolutionary view of Descartes (Figure 1), their software and services as well as a place to work. As many know, Descartes has built a lot of their logistics suite through acquisitions. Interestingly, many of the companies acquired were family owned and managed firms.
Descartes is absorbing more than some code and employees from these acquisitions. They are including families who depend on Descartes’ future growth for their personal ‘legacies.’ Ed mentioned that Descartes is committed to helping these founders fulfill that potential based on the entrepreneurial goals they had when they started their companies.
Last year three firms were added to the portfolio: Oz Development, BearWare, Inc., and MK Data Services (MK Data). Today, the founders are all wearing the Descartes shirt and building a bigger market share for what they do around the globe with Descartes.
Since we first met in Descartes 1996, they have grown from a small TM software company doing direct store delivery to the largest transportation software company in the world with ocean, air, ground, and international trade. Of late, a lot of their focus is in the retail sector where Omni-channel is driving huge changes in the logistics world (See Figure 2).
Large they may be, and the overall transportation technology market is growing as well, yet these changes only scratch the surface of what is yet to come. Interestingly, although we often think of the world as mobile and connected, the penetration of connected mobile in the US trucking industry is still pretty low with only about 25% of the vehicles having GPS. Though most drivers have some kind of mobile phone, they are mostly not connected to the carriers’ applications (except the bigger carriers, of course). So we have a long way to go—with lots more software, services, and hardware to sell. And there is more to be done in terms of functionality to support transportation across our planet. (We will come back to that in the What’s to Come section later in this article.)
Descartes, like many expanding companies, absorbs the old and the new customers; today, more of the older customers are buying into the new trends and technologies. Sessions on Home Delivery, for example, were packed, as top retailers talked about their experiences implementing advanced and modern supply chain practices to succeed at the demanding last-mile delivery expectations of today’s customers. Embedded within an overarching topic like home delivery is the blending of several products such as continuous optimization for route planning, mobile, telematics, Fleet Management,1 tracking, electronic proof of delivery, and inventory planning, what to say of full integration to the etailers’ commerce platform.
One session of particular note was with Home Depot and Estes talking about home delivery. It was insightful getting the contrasting perspectives of the carrier vs. the retailer and the issues associated with last mile, same day/next hour challenges. It was a real opportunity to talk to Home Depot, who has been shy until now about going public with their program. In past years, companies like John Lewis and Woolworth have talked at Evolution, adding to the body of knowledge on how to get home delivery done right.
This Retail track also highlighted several research projects, one focused on B2B customers, the other on B2C, and the contrasting expectations of what they consider service and what they are willing to pay for. Without these kinds of insights I am not sure how companies can plunge into the radical changes often required in home delivery and not lose money. If you wanted to learn how to run a PROFITABLE home delivery program, this would have been the place for you.
Pooling is another area that has gone from fairly mundane deconsolidation operations to very advanced services for retailers. With Omni-channel and parcel as well as more deft inbound techniques and retailers’ need to flow inventory into their stores, pool operators, enabled by technology, have gotten pretty sophisticated. Today they offer suppliers and retailers much needed cost-effective options to keep costs down, yet provide support for the changing dynamics in the consumer market.
Another area Descartes excels at is the Freight Forwarder market, where forwarders are competing for customers and fighting to maintain margins on fees. They do this by constantly expanding their services to increase revenue, and using automation to reduce costs. Descartes has expanded from some forwarder modules to a full enterprise management system for forwarders’ front and back office. This includes visibility from the customer’s PO through to final delivery, customs and security filing, rating, and pricing and invoicing, to name a few key capabilities.
Of course the Carrier is a core market for Descartes. Carriers’ issues today include mobile, enhanced driver automation and metrics/KPIs (key performance indicators) to get the most out of their dwindling driver pools (in the case of trucking). I was surprised (well maybe not) at the low level of KPI management that carriers use to manage their business. This is an area in which Descartes would like to partner with more customers. Interestingly, in the last year I have attended several transportation software conferences, and analytics, dashboards, and metrics are key investment areas.
Clearly the industry needs them due to higher demand and greater competition from non-traditional “logistics” companies who are trying to break into the lucrative last-mile areas. (Need we mention Amazon or Uber or retailers investing in their private fleets?)
Carriers who have grown beyond basic services now have enterprise management challenges and need to move beyond manual paper-based methods for conducting business. A simple addition would be electronic proof of delivery and mobile geo-fencing that can digitally demonstrate on-time delivery. This reduces disputes and, therefore, improves metrics such as DSOs by days, as well as reducing the time and cost of labor involved in tracking paper and people to resolve issues.
Automation on a tactical level, but connected to KPI management, also can help reduce on-the-road challenges. Metrics such as reduced drive stops, out of route, idle/speeding, and other waste, nets more stops per day and reduces the cost and time off for equipment maintenance. That is better performance from drivers and equipment. Descartes talked about some of their customers saving $4,000 per year per truck with automation/going paperless. That is really serious money, clearly needed in the often, low-margin trucking industry!
Global Trade is an area in which Descartes now leads the market. Having acquired a few companies that provide customs information, security, and customs filings, they now not only have a suite, but the expertise to provide the technology, integration, and services to support shippers, retailers, and freight forwarders in this complex zone.
What’s to Come
There is a lot of ‘fine tuning’ going on at Descartes lately. Last year they announced a migration of single modules to suites, organized according to customer or platform, that blend the best of their portfolios into rich solutions. So of course they spent a lot of money and time on that. Now the job is to finesse them into ever richer solutions to ensure the areas they are investing in (such as the Home Delivery, Mobile, and Customs/Global Trade and so on) are market-leading.
Many sessions were highly interactive with customers who have a very large stake in planning what’s to come in the Descartes portfolio (although the beach and the sun were ever tempting).
A key note by Ken Wood, who is Executive Vice President of Product Management, provided the big picture themes of where Descartes is headed.
Global Trade, Risk, and Security are an area of continued investment. Of continuing concern, especially now, is the focus on illicit movement of goods. Companies who illegally trade with organizations and countries that are on denied parties lists, and known, bad actors are not only breaking the law, it sure is not good for their brand. Ken showed one example, of which there are hundreds, of major international companies not doing their due diligence when they sell goods to these parties. Descartes has made significant investments in this area to provide security filings, denied parties lists, customs filing, and global trade management and product/ shipment tracking.
Of particular note to all-sized companies is the implementation of the most recent, new automated filing for US Customs such as ACE and AES; and Japan’s AFR,2 as well as a change to trade regulations and practices such as Transpacific Partnership. In fact, global companies know there will always be another trade negotiation and deals aplenty between trading blocks and nations. Companies need to know what they are, keep up with their requirements, take advantage of opportunities they may present, and maintain compliance with whatever reporting or restrictions that may apply. Today it is just tooooooooooo complicated to do all this manually.
No industry is more impacted and most ready for The Internet of Things than logistics. Though transportation professionals often don’t use the word IoT, they use these technologies every day. Still, we have just scratched the surface and will be amazed at what is to come in the next decade. The software to manage the driverless trucks, drones, warehouse robotics, voice and retinal recognition, and other interesting technologies will be absorbed into the logistics portfolio of the future.
Descartes’ Evolution keeps growing in attendance and thought-leading content and technology so necessary for one of our most essential industries. Our world and our businesses cannot function without the transportation world. More ideas to keep pace or lead a new generation of business are required.
Though it is financially prudent for software companies to not get too far ahead of the market, Descartes is exhibiting the thought leadership their customers need to manage well today and prepare for the future.