A small, but storied company based in Deerfield, IL, has quietly been changing industry for over 100 years. Employing just 45 people, Kleinschmidt is a name many may know, but a company that you rarely see in the headlines. The EDI and data integration technology provider has been handling the “dirty work,” so to speak, of the transportation and logistics industries for more than 30 years, and that same work for so many other industries for more than a century.
“We’ve never really promoted ourselves in the past because we didn’t need to,” explains Phil Johnson, director of marketing and digital at the company. “With new technologies, that is changing.”
Just how Kleinschmidt became so important to the industry is a long story that starts with the teletypewriter, a macaroni-twisting machine and more than 100 other inventions dreamed up by its namesake and founder, Edward Kleinschmidt. In 1914, Kleinschmidt was credited with the invention of the teletypewriter/teleprinter. This device enabled operators to type and receive messages directly on typewriters rather than translating Morse code.
By that point, Kleinschmidt was already a somewhat accomplished inventor, opening a consulting business, if you will, in 1898, where he helped customers develop new products. The sign on his door said it all: Inventions Developed.
Eventually Kleinschmidt set up Kleinschmidt Electric Company, which merged with the Morkrum Company in 1919 to become the Morkrum-Kleinschmidt Company in 1924. In many ways, the merger foretold the role Kleinschmidt would play a century later in bringing companies together. Both Kleinschmidt and Morkrum filed for patents for start-stop synchronizing methods for code telegraph systems. Rather than fight a patent dispute, the companies simply merged.
By 1930, business was so good that AT&T purchased the company for $30 million and Edward Kleinschmidt immediately set his eyes on another venture, forming Kleinschmidt Laboratories a year later.
In 1949, the company landed a large military contract and purchased 13 acres of land in Deerfield to set up a manufacturing facility. Kleinschmidt in 2018 still occupies that same parcel of land.
Several mergers followed before the Kleinschmidt division of the company, then owned by SCM (a merger itself between Smith Corona and Marchant Calculating Machine Company in 1956), pivoted away from teletypewriters and towards providing network services for EDI and CLM.
In 1986, the company was purchased by Harry S. Gaples from the Hanson Trust, which had acquired SCM by that point, and an independent Kleinschmidt was back.
The decision in the 1970s to switch to EDI proved pivotal to the company’s future prospects, says Johnson. That shift led the company to the railway and electronic communications businesses. Carriers and third-party logistics providers became a target audience about 35 years ago, he notes. The company also counts customers in warehousing and distribution, retail and consumer product goods, manufacturing and materials, and several other industries.
Today, Kleinschmidt is known for its ability to integrate disparate software programs from various vendors into a smooth, functioning system.
“We’re not an off-the-shelf integrator,” Johnson explains. “We’re really a service-based organization … Most of our work is one-off, it’s the stuff most people don’t want to do. We sit in the middle between the shippers and the carriers.”
Kleinschmidt is ultimately responsible for making sure your TMS system works with the shipper’s or broker’s system.
“We are the technology company that makes the transition from one technology to another,” Johnson says. “A lot of companies like to claim they make it easy for companies, but we really make it easy. We’ll work with your technology and we’ll work with your customer’s technology. We suffer the pain.”
Now led by CEO Dan Heinen, the Kleinschmidt leadership team is preparing the company for its next century, and that means dealing with all the startup companies seeking to eliminate the middlemen such as Kleinschmidt. The company has recently undergone a top-to-bottom rebrand and repositioning in order to pivot from a legacy value-added network to a full-scale EDI, API and data integration provider that engineers custom solutions for freight transportation and beyond, Johnson says.
“There are companies out there trying to kill EDI through API integration,” he notes, “but there will always be companies [that use EDI and they will have to be connected].”
Blockchain is another disruptive technology that Kleinschmidt, a member of the Blockchain in Transport Alliance (BiTA), is preparing to deal with. Many companies, Johnson notes, are working on blockchain strategies and even blockchain-enabled solutions, but they are probably not working on those solutions together. He sees Kleinschmidt being able to play a role in facilitating that future.
“In the way that the industry is non-standardized right now … there is no standard for blockchain,” he says. BiTA is working with over 400 companies to address this, which is one of the reasons Kleinschmidt joined. “We feel there will be a need for someone [to connect blockchain users].”
Kleinschmidt is working on its own blockchain-related projects as well as new EDI projects and several efforts Johnson is not ready to comment on yet.
“We’re not a legacy company, but I think many see us as a legacy company,” Johnson concludes. “And it’s a problem when startup companies [enter the space] thinking they can standardize everything. I think some of them will be up for a rude awakening.”
And chances are good that it will still be Kleinschmidt piecing it all back together.
