So this month’s column was going to focus on the state of supply chain convergence, based on an interesting session at the transportation management software provider LeanLogistics’ user conference in April.
The session was a forum in which LeanLogistics customers talked about whether global and domestic transportation management were overlapping, and also how transportation was intersecting with other functions at their companies.
Then, two weeks after the conference, LeanLogistics announced that it had been acquired by Kewill (or rather, Kewill’s holding company had bought the company from LeanLogistics’ holding company, as is often the way in the world of software).
So that changed my focus into another type of convergence—software consolidation. But it turns out these convergences are really linked.
Kewill’s acquisition of LeanLogistics was out of the blue for me—as it was for several industry insiders I spoke to after the deal was announced. At its user conference, LeanLogistics executives were brimming with optimism. Revenue and customer numbers were growing. The company had launched new extensions to its TMS platform involving ocean and truck fleet, with ones covering parcel and rail on the way.
So I did not see this convergence coming. But upon reflection, it’s a deal that makes sense. Kewill has long been seen as a software provider for the forwarding and logistics services industries. It has provided tools that underlie global trade compliance, procurement and transportation management, and that is a rare combination.
Kewill has shipper customers—its website, for instance, details tools for specific verticals such as food and beverage and chemicals, and broader sectors like retailers and manufacturers. But the perception was that Kewill was first and foremost a software provider for the logistics industry.
The company has sought to change that perception over the last 20 months, starting with its acquisition of the former IBM Sterling multi-tenant TMS. That move was intended to complement Kewill’s existing on-premise TMS offering, but more than that, it was the company planting a flag. It initiated a campaign to attract more retailers and manufacturers.
“This acquisition is complementary to our current offerings and, in particular, allows us to better address the specific needs of the shippers who want to manage their own transportation planning and execution,” Evan Puzey, then Kewill’s chief marketing officer, told American Shipper at the time.
The LeanLogistics acquisition can be seen as another milestone in that initiative. LeanLogistics’ cloud-based multi-tenant platform, which allows users to combine their procurement and execution across modes and geographies, gives Kewill not only a book of very engaged customers, but also a well-respected tool to pursue future opportunities with shippers around the globe. Kewill’s global reach, as a systems provider to logistics companies, is much larger than LeanLogistics’.
The two sets of systems—aside from the Sterling TMS overlap—are almost entirely complementary. Kewill provides trade compliance and warehouse and yard management systems that LeanLogistics didn’t. LeanLogistics’ single workflow concept for transportation management is user-intuitive and also fits nicely within Kewill’s MOVE platform (where transportation, warehousing, and global trade management are designed to be housed within an integrated system).
LeanLogistics also brings to Kewill a deeply experienced managed transportation services team. The company’s sprawling Holland, Mich. headquarters includes teams dedicated to specific customers, and an operations center where engineers monitor global disruptions.
So it turns out this consolidation in the TMS industry is actually very much linked to the supply chain convergence I was originally going to write about.
To wit, in the informal poll of 30 or so LeanLogistics users in the convergence session, no one seemed to be implementing any supply chain convergence initiatives across modes or departments. Why? There are all sorts of reasons.
Bad data was one. One shipper said the data coming from his company’s ERP into the TMS was often flawed because of a poor connection (a 1-million-pound load was generated, for example).
Multiple systems was another issue. Half the room said they were using two or more TMSs and a third used three or more. And it’s not usually by choice. Manufacturers, for instance, often have to use multiple systems to satisfy the demands of retailers that dictate their systems be used. One shipper said they have 40 to 50 logins to meet various customer expectations. Another dimension is having to use various systems to track shipments.
These sound like reasons for a company to tackle convergence, both with systems and processes. But the reality is sometimes harsh.
“Convergence can be expensive,” one shipper noted. “Is the juice worth the squeeze?”
On the other hand, convergence can help a company better enforce rules, since it’s easier to keep standard operating procedures in one system than across multiple systems and instances. That’s especially true for companies that have grown and are using systems for different modes and in different geographies.
As one person in the crowd noted, “we use technology first and supplement with people. Wearing 20 hats works when you’re a small company, but it doesn’t scale.”
Convergence is happening all around, and the combination of Kewill and LeanLogistics could create some interesting convergence opportunities for their customers, if there’s the appetite, will and investment to tackle these projects.
CIO Insight: Convergence all around
