In the 3PL business niche, technology is an important calling card, an enabler, the glue that binds all the other service offerings together.
No place is this more evident than with Transplace - The 3PL & Technology Company.
It’s on the Transplace business card in plain view: The 3PL & Technology Company. It didn’t say Transplace, a 3PL with technology services or any number of permeations on the theme. There it is, as solid as a Texan handshake, Technology Company.
Thomas “Tom” Sanderson, CEO of Frisco, Texas-based Transplace said in an interview with AJOT, “We’d thought about it for quite sometime…we like tag lines. ‘The’, as in ‘The’ Home Depot, and “3PL & Technology” we thought was a very good description of what we do.” Transplace: The 3PL & Technology Company.
Sanderson explained a little further the logic behind the tagline and indeed the company itself, “3PL means so many things to so many people and we thought it was a way to distinguish ourselves from others [3PLs] and very reflective of what we offer in the market place.”
Indeed 3PL (Third Party Logistics) is an industry difficult to define. In many cases it is more an addition to an existing service base that is marketed to third parties, like a forwarder adding trucking and warehouse management services or a warehouse company selling its own WMS married to other technology based transportation products. Generally the 3PL sector of the business is asset light and service high.
Sanderson, who has been CEO of Transplace for nearly 13 years, has spent quite a few years in the “technology space” of transportation services, which is reflected in the emphasis of technology solutions to management. Although in its very earliest beginnings, the company was part of J.B. Hunt (which itself ironically has transitioned into an intermodal company with trucks from a trucking company with intermodal services). Transplace in its present form is a non-asset 3PL whose services are technology based – a business model becoming more the norm in the transportation/3PL service sector. The company’s basic service sectors are Transportation Management, Intermodal Services, Truck Brokerage, International Logistics and Supply Chain Consulting, although all of these related services have overlaps and are combined and blended into other “products”.
The Chicken & Egg of Customer Diversity
It is a bit of a chicken & egg situation when discussing the relationship between customers and services. Which came first, the seeking of a service solution or the service of a solution to the customer? Often the answer is nebulous as it is a little bit of both.
Sanderson says that the Transplace customer base includes manufacturing companies in paper and packaging to which they have added chemical industries, manufacturing companies of paper and building materials as well as retailers – primarily inbound to retailer…supplier DC rather than delivery. “Its great to have that breadth of industries we serve, one of the things that makes our technology so strong.”
According to Sanderson, the diversity of the client base helps build the “robustness” of the TMS (transportation management system). While Transplace might compete on a pure technology basis with the Oracles and Saps of the world, “they will also manage the freight transportation of their customers” which sets them apart from pure tech companies.
There is a mix and match approach to Transplace. The 3PL will provide a soup-to-nuts approach to choosing mode, carriers, pick up and delivery, freight claims and all the other real time aspects of the movement of goods between origin and destination. Alternatively, Transplace is setup to handle the entire technology side of the business as well. “We will blend anything from a pure technology offering to a pure outsourced offering,” Sanderson said.
In some respects the variety of service sectors and scale are the key to Transplace’s market success. For example, observe the trucking side of the business. Because Transplace has a large network of truckers and customers, it can mix and match to the mutual benefit of all parties. One of the greatest challenges to trucking is successfully getting the most out of every mile – maximizing space and efficient routing to make back hauls money makers. From a customer point of view, timely deliveries at competitive costs are the name of the game. For both sides, making all the moving parts work productively and cost efficiently is the goal. That’s where a 3PL as a middleman can be a big advantage to both shipper and trucker.
As Sanderson explains, “We can use our proprietary TMS to dynamically scan across our network to turn LTL shipments into truckloads. This provides favorable cost per pound savings to customer and typically is a little faster.”
But being able to successfully mix and match is a matter of scale. Without a large enough customer base and Rolodex of trucking and transportation resources (Transplace is a top ten trucker), it wouldn’t work. As Sanderson says, “We have the scale - billions of dollars flow through the system every year. If we didn’t have that [scale], you wouldn’t be able to find the opportunities [to match LTL shipments to truck network schedules].”
The technology aspect is the real glue to putting together the service offerings. As Sanderson says, “We are big believers in the cloud.” The difference for the customer is that the onus of technology is on Transplace, rather than themselves. In a sense the customer gets to concentrate on its core competencies and leave the IT portion to Transplace. “We put an update of our software out every month so there is an incremental improvement all the time.” The customer doesn’t need to continually upgrade their software or even hardware.
Building sufficient scale starts with customers. How a 3PL builds a customer base in the first place is critical to what follows in terms of service offerings. As mentioned above, sometimes that starts with a core competency within the supply chain. As service sectors are added so are customers, sometimes through acquisitions and other times strategic partnerships. But Transplace’s emphasis on technology has added a wrinkle to adding customers. Transplace’s technological expertise is becoming a “go to” for information and skills beyond the pure realm of a transportation based 3PL. Customers are using Transplace as their de facto IT department, quite aside from the normal range of services.
Going hand in hand with this development is consultancy. As Sanderson explained at a SMC3 presentation in Chicago, “How to optimize a distribution network for our customers’ customer” involves answering questions like: “How many DCs do we need? Where should they be located? What types of [transportation] services do they need?” All of which are fed by the holistic overview and scale that the company has developed.
Viva la Mexico
Although Transplace is predominately a domestic operation (albeit it does have freight forwarding and NVOCC services), it is heavily involved in the NAFTA markets, particularly Mexico. As Sanderson noted Mexico “intra and cross border freight management is the fastest growing” segment for the company. He says, “People underestimate Mexico” pointing out that Transplace’s main office in Monterrey has the highest percentage of college graduates of any office in the company. “Mexico has very skilled labor, is very close to our markets, has affordable resources and is a great market for manufacturers.” Adding that Mexico is still challenging with “a complex border crossing with Customs brokerage and trans-loading often required….it’s a great relief when you can step up and handle their freight.”