Reliable service is table stakes at this point: People are already expecting on-time pickup, on-time delivery, good prices, and that their freight to not be damaged. So companies have to take it to the next level. If you’re easy to do business with and transparent around what you’re doing—and able to provide that transparency in flexible ways with technology—you’ll be set up to be successful.
For those of us in the software industry, “delivering a product” can be as simple as pushing a button. But in the commodities world, delivering a product is a much more complex process, with many moving parts.
Ken Sherman has spent his entire career solving problems across supply chains. In his 15 years at GE, he rose to Supply Chain Manager and Master Black Belt (you’ll have to ask him 🤷), managing everything from customer service teams, production lines, scheduling distribution, transportation, and warehousing.
In 2003, he joined IntelliTrans, where he has been the President since 2014. The company focuses on creating supply chain transparency in the specific-but-sizeable break and break-bulk commodities markets. IntelliTrans’ solutions are technology-driven, encompassing shipment visibility, data visualization, automation, TMS and inventory management systems, plus a range of services related to everything from dispatch oversight to auditing.
Over his 30+ years in the business, Ken has watched the industries that he serves change and evolve. He’s accrued quite a bit of insight into both the commodities businesses and the carriers on which so much rides (pun intended). We thought these insights might be interesting to some of our audience members with a stake in these sectors. Ken joined us to share his thoughts on the role technology plays in these industries, and what companies can do to stay ahead of the game.
Can you tell us a little bit more about what IntelliTrans does and who your customers are?
Most of our customers are in the bulk and break bulk commodity industries—large companies in the plastics and chemicals, forest products, mining and metals, cement, and energy industries.
We really help them with three things:
One (which is the oldest part of the business that IntelliTrans started in 1992) is helping companies track where their shipments are, when they’re going to get to where they’re going, and what the current state of affairs is with them. We track about 40% of North American rail and provide the same services in Europe. Since 1992, we’ve expanded from rail to include truck, barge, and ocean-going containers: Basically all the large surface transportation modes.
The second vertical of the business is the Transportation Management Systems (TMS), which help our customers execute their freight. We help them manage carriers, lanes, and rates. And communicate shipments to the carriers—ideally using the lowest-cost mode and the lowest-cost carrier in that mode. Our TMS solutions also help on the carrier side, getting them to accept the shipment, schedule pickups and delivery, and calculate how much the customer should pay for based on the carrier and the contract.
Then the third vertical is loosely entitled “inventory solutions.” That’s where our Global Vendor Managed Inventory (GVMI) offering comes in: Sensors in storage silos retrieve information via telemetry and project that information back to the suppliers (our customers). This helps them execute the freight using the lowest-cost mode and the lowest-cost carrier because they have greater visibility into what their customers are doing and know when to send more. We also help them manage transload facilities, where companies may rail cargo most of the way then transload the product into a truck, for the final 50 or 150 miles.
Sitting on top of those three verticals are a whole range of services where we basically act as a key component of our customer’s transportation department. So we’ll intervene with carriers on in-transit exceptions, audit bills, pay bills, manage the inbound supply of empty equipment into their facility. We also create analytics and dashboards and help them drive continuous improvement within their operations.
Our services extend all the way out to providing supply chain health checks solutions, where we audit their processes and performance compared to industry best practices and/or peer groups and give them ideas around how they can improve things like on-time delivery or cost-to-serve or business process automation, etc.
What changes have you seen in the industry over time? How has that been either impacted or affected by technology?
Every time the economy goes into a dip like we’re in now, our customers have to do more with fewer people and carry less inventory as the companies try to extract cash and reduce operating costs. Over time, this has resulted in a few things:
1) There’s greater and greater pressure to automate business processes. For example, some companies are looking at how to simplify the invoice-auditing process using technology.
2) A lot of knowledge is lost when people leave these organizations. We help them mitigate that through our technology and services. If we’re the ones who are responsible, say, for auditing the bills—and that requires a substantial amount of expertise and knowledge—the onus of having that knowledge is transferred from the customer to us. Or we can embed that knowledge within the technology, making it so that somebody with a lower level of experience in the organization can be as effective as somebody with a much longer tenure.
3) Another thing we’re seeing is that not only our customers, but our customers’ customers, have reduced their staff and inventory. Therefore need for time-definite deliveries has increased a lot.
Back when I was in the sheet and film business at GE, running the supply chain of that division, if I shipped the day we were supposed, we were generally okay. Now, our customers need you to hit something like a half-hour time slot because they don’t have enough people to receive loads at random times throughout the day and they don’t have enough inventory to sustain large delays in delivery.
When I joined IntelliTrans 17 years ago, most of the demand was on rail because of the long and high variability of those transit times: It might be two weeks to get from origin to destination, plus or minus three or four days. Now, what we’ve seen is a much greater need for in-transit visibility across all modes, because of that need to hit tighter windows.
Let’s peddle back to where you mentioned “embedding knowledge into the technology.” How exactly do you do that?
Well, you can do things like code in rules that say, “If this happens and this happens, then do this,” versus somebody having to know, “If this bill comes in and it has this and you see this, then dispute it.” Think of it like rules engines and proactive or reactive notifications. For example, you may want to say, “Hey, if you see this doesn’t match with this, dispute it and send it here.” All of that can be automated in a pretty straightforward fashion nowadays.
That’s essentially how we make the organization more efficient—whether it’s us doing the auditing or the client doing the auditing. And we can do that across a lot of processes: communicating shipments, tracking the carrier, managing exceptions in transit, scheduling loads, and so forth.
Does that usually involve some kind of software modernization process or can you work with customers’ existing systems?
Usually we work with their existing systems because they’re basically bolting us on to their infrastructure to allow us to help make them more efficient. A lot of times their ERP system—whether it’s SAP or something similar—has buckets that you put information into: accrual, approved invoices, sent checks, shipping instructions, etc. We automate the processes surrounding that while doing the interfaces for the client’s systems that are required to make sure that key information is populated.
“Transportation” is a sort of umbrella category for a lot of different sub-industries (e.g., rail, trucking, shipping). What are the different goals or challenges for each sector?
Their goals are actually very similar. Any transportation company wants to provide on-time delivery at the lowest cost with the greatest level of customer service. It’s how they achieve those goals that’s different.
Rail has certain advantages around there being maybe one or two ways in and out of a plant. There might only be one carrier that serves that plant. So it’s easier for our customers to say which carrier they’re going to use because they’ve then got a 100% share of the business. However, that can result in varying level of service because of that lower level of competition. We have to work very tightly with them to make sure that they’re getting the level of service that they desire.
The same thing happens in trucking at times of high demand. When the market gets like it was in 2018, when it was very difficult to secure a truck to get a load covered, we had the same challenges around making sure the carriers were performing. You’ve got more choice, but you still might have performance lower than you would like based on the fact that there’s too much freight and too few trucks.
At a more detailed level, rail ends up becoming more complicated because a lot of shipments are not delivered by the same carrier that picks them up. In some cases, the carrier that picks it up may provide what’s called a “through rate.” They’ll collect, say, $5,000 from the shipper and = give $2,000 to the delivery carrier and they’ll keep $3,000. In other cases, you can do what’s called a “rule 11 move,” where the shipper can negotiate with and pay those two carriers separately. So they might pay $3,000 to the first carrier and $2,000 to the second carrier. That gives the shipper greater insight into where the costs are coming from and greater ability to negotiate rates, because they might have two options for the delivery carrier but only one option for the pickup carrier. However, it also leads to a much more complicated invoice, auditing, and payments process.
At the highest level, the question is still, “Am I using the lowest-cost mode and the lowest-cost carrier?” The details are what’s different.
What are some of the main pain points and challenges you see across the board for the companies you work with?
I think the main thing is staffing levels, because they are compressed very tightly every time the economy goes the wrong way.
The other thing most of our customers face is being at the far end of the bullwhip effect in the supply chain. For example, some of our customers make chemicals that go into plastics that go into making a part that goes to an assembly company…which then goes to a tier-one assembly company, which then goes to an automotive manufacturer, which then goes to the consumer.
Whenever the economy changes—kind of like now—these companies get whipsawed back and forth to a much greater degree as consumer demand changes. That manifest as a lot of orders that are placed late or that are canceled or changed, which makes scheduling difficult and can also impact their yields. If I need 5,000 pounds of scrap to dial in a run of 500,000 pounds of plastic product, but now I’m only making 400,000 pounds, my yield drops from like 99% to 90%.
Then the carriers, in particular the railroads, have to be closely monitored. We talked about the variability in rail transit times. So you’ve got a reduced workforce, variable performance from your carriers, frequent order changes from your customers, and a manufacturing facility that wants to do large manufacturing runs.
Then, if the manufacturing facility goes down, there’s another huge problem. There are continuous manufacturing operations where disruptions result not in a few bad parts but in an entire line being down for hours or days.
So now they’re dealing with order changes, manufacturing disruptions, large manufacturing runs, and performance variability from carriers, possible shutdowns—all while trying to keep the wheels turning with fewer people. That’s the hand our customers have been dealt and that’s why we’ve built the technology and services and processes around helping customers deal with the reality of what they’ve got.
It sounds like there are a LOT of moving parts for your customers and I imagine the technology involved is critical to keeping things on track. Where do you see the biggest technology gaps in your industry?
This is not unique to us and I’m not sure I would call it a gap versus an opportunity: But as the workforce is changing—both in terms of demographics and working styles and what people are familiar with—a lot more folks want something like an app on their phone or on their desktop that enables them to take action quickly.
So it comes back to embedding the knowledge within the technology: giving users easy ways to view exceptions and well-presented options around what to do. Some of the things we’re working on are simplification of the delivery mechanism and making it more mobile. Before, you might have somebody with 30 years of experience analyze a table of data to realize there is an exception and properly handle it. Now, we want anyone on our customer’s team to be able to say, “Hey, this one is coded red because it’s wrong and here’s what I should do about it.”
What do you think companies can do to be more proactive about addressing some of the different challenges we’ve talked about across their businesses?
Some of it is awareness of what’s going on and knowing what we refer to as “the art of the possible.” Because a lot of folks have been in the industry for a while and they’re familiar with how it works, they may not even be aware that a solution that does A, B, and C even exists in a way that is relevant for them and their industry.
A lot of folks go to industry meetings and—I know it’s hard to make time even for that. But I find it’s valuable to try to attend similar meetings in segments outside of your own. You’ll get to see what other industries are doing within their organizations and identify new strategies that you can leverage. It’s about that taking the time to get above the execution details and learn from what other people are doing.
We see data security as a rising challenge for all kinds of companies. Is that a big issue for your customers?
It is. And we see increasing security audits. IntelliTrans and our corporate parent, Roper Technologies, also keep evolving our security standards and expectations. There’s a lot of emphasis on password security and penetration testing and all these things, which are important and need to be done.
The one thing I would also encourage companies to do is to make sure that they’ve got processes around how they make sure that people aren’t using each other’s accounts. When somebody leaves the company, they should be immediately disabled from all systems. Not just the email and everything else, but accounts with companies like us. That’s where we see the greatest actual holes in any process.
There are ways to automate the detection of such things. For example, disabling someone who hasn’t accessed the system in 30 days. But, frankly, if somebody is going to do something wrong, it’s probably going to be within the first 30 days. So we make sure that if our customers don’t have a technology solution—like a single sign-on process—to deal with those issues, that they at least have the business processes in place to manage things like accounts, authentication, roles and responsibilities, etc.
There’s a lot of emphasis on the technology side but there needs to be an equal amount of emphasis on managing the user community.
I’m sure your customers are also dealing with a lot of data. What challenges do they face in that area?
We do quite a bit in terms of getting our customers’ order data, carrier contracts and rates, transportation data, and marrying all of that together.
We’ve had to do things like that for years. Because even within rail transportation, the shipper might say something was shipped on Saturday, but the rail carrier might say it wasn’t switched until Monday. So then, what’s the actual ship date and how do you ascertain which one should be used?
Or let’s say we’re looking at order data: and the shipper has one spelling of “ACME Industries” and the railroad has another, such as “ACME Products LLC” or any number of spelling variants. To complicate things further, a lot of these companies buy and sell plants from each other, so they have former Company X facilities that are now ACME Industries, but the railroad might still know it as Company X.
We’ve helped customers deal with that data complexity by developing all kinds of soft logic—from marrying things up to aliasing and replacing information.
In your opinion, how can technology be used by transportation companies to differentiate themselves?
On the transportation company side—the carriers themselves—the biggest thing is to make it easy to do business with them and to provide as much transparency as possible in terms of what’s going on. And making that information available in either an industry-standard or flexible way. If we do it the industry-standard way then at least there’s different organizations that can be converted, say, to an API for a system that the shipper might be using. Or if you’ve got an API built yourself, your customers might be able to call that.
You also want to make it easy to execute the shipment. You want to be able to say it was received, provide updates as to where the inbound asset is, when it’s going to get there, when it showed up, when it left, where it is in transit, when to deliver all of the invoice information for both main part of the move, the line haul, and the fuels—plus the extra fees or charges. Making all of that transparent and easy to get at is important.
Reliable service is table stakes at this point: People are already expecting on-time pickup, on-time delivery, good prices, and that their freight to not be damaged. So companies have to take it to the next level. If you’re easy to do business with and transparent around what you’re doing—and able to provide that transparency in flexible ways with technology—you’ll be set up to be successful. Until the next evolution happens and we have self-driving trucks or teleportation or whatever comes next!