Since the global shipping crisis of 2020, software-as-a-service (SaaS) offerings for visibility have become increasingly popular. Michelle Weaver, Senior Vice President of Order Management, talks about the problems customers are trying to solve with SaaS and how to understand the resiliency of your supply chain through an assessment of people, processes, and technology.
Chris Parker: Hello, everyone, and welcome to the Expediters Podcast, where we look at the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today we are talking about visibility software as a service or SaaS. How have visibility offerings changed over the years, and what can one achieve by using this kind of technology? We'll also discuss how whoever owns a mix of the people, processes, or technologies in your organization's supply chain can determine its level of efficiency and resiliency. So, to get a little SaaS-y with me today is our Senior Vice President of Order Management, Michelle Weaver. Michelle, welcome back to the podcast.
Michelle Weaver: Thank you, Chris. I'm excited to be here today.
Chris Parker: And I'm excited to have you over. I'm sorry about that SaaS line. That was really, really cheesy.
Michelle Weaver: Well, if you hadn't said it, I probably would've.
Chris Parker: Well, Michelle, it's been a couple of years, I think, since 2020 that we last had you here. I wanted to know what's changed for you? What's been going on in your world the last couple of years? What's your day-to-day like?
Michelle Weaver: I'll tell you, we're in a much different market now than we were back in 2020. So, my days have changed quite a bit. If I go back to 2020, at the beginning of the pandemic, there were two categories of customers. Most of our customers pumped the brakes on new orders with the suppliers. They just put a hard stop. They were like, "Stop ordering. We don't know what's happening. Nothing can move anyway, shut it all down," as the world kind of shut down. However, there was a sub or a niche of the market that did exactly the opposite. They were some of the lower-price retailers as opposed to the luxury goods retailers. They were lower-price retailers, home improvement companies, and healthcare companies. They took the brakes totally off and could not order fast enough or ship fast enough. So, orders shot up for some with a hard stop for others. But then, a few months into the pandemic, as we all know, we were all sitting at home shopping online, and I may have contributed to that.
Chris Parker: Guilty as charged. Yeah.
Michelle Weaver: Exactly. So, orders came back very, very sharply. It was the largest drop in demand followed by the highest spike in demand in the history of the industry. Suppliers just could not respond quickly enough, and neither could carriers, frankly. They had pulled capacity out of the market, and they were scrambling to get it back in. So, during that time, customers felt that they lost visibility and they just needed to ship something. Like they'd open these orders from their suppliers to say, "Ship me whatever you have," and then they'd try like crazy to make sure they could get space on ships or in planes, but it was very, very difficult to get space. And then when they finally were able to get space, it would make it over to the US or over to Europe where it would just sit because they couldn't get those vessels berthed and unloaded and the ships worked.
And so, the customers felt that they lost visibility, and they lost control over what was going on. And so I think as they've come out of the pandemic, they have been very focused on making sure that that never happens again. That they maintain their visibility, they maintain their control, and if they need to write a big check to do that, then so be it. They don't ever want to live through that again. One of the things that has occurred to me as I've watched so many companies go through this process is I don't know that they really did lose visibility. They just lost accessibility. They lost that control. I mean, every customer has their own story to tell and their own perspective. Absolutely. But a lot of the steps I see companies taking now are to solve a visibility issue; when I think they could see where their cargo was, it was just stuck on a ship. They just couldn't get it to where they needed it to be.
Chris Parker: So today, with this trend of seeing customers seeking out visibility tools, what are the problems that they're hoping to solve now? Do they have control back, or is it still just outside of their grasp?
Michelle Weaver: So, one of the things that we've seen an uptick in or a trend in the market is customers buying a lot of these SaaS offerings to hopefully, they're trying to solve two problems, the visibility issue and also the carrier independent issue. They don't want to feel boxed in again; like I said, they felt very frustrated that they couldn't get the space they needed when they needed it at the rates, they had contracted it for. And so, they want to make sure that whatever tool they're using is neutral, carrier neutral. And so, we've seen an uptick in these SaaS purchases. And the thing that's interesting about the SaaS purchases is that it's just technology. It's not people, and it's not process. It's just technology. And so, when the customer buys a SaaS tool, they still have to backfill those other two needs of people and process.
And so, the customer either needs to pony up the people to chase the data that's missing or is late or is incorrect, fill those gaps, fill that hole. And that's pretty tough to do from a desk in one location when you're chasing suppliers all over the globe or all different kinds of carriers. And I think that that's something that many companies don't necessarily see coming, and it's a bit of a surprise to them once they implement that program. The other part of that is that if you're going to use a SaaS tool, as with any technology or software, the data has to be in a specific format. It's got to usually come in a specific order. It has got to be very, very standard. And if data were that easy and that standard, a lot of us wouldn't have jobs in the supply chain. So, it's a big ask of a piece of technology to solve all of those issues.
Chris Parker: But all the carriers and the forwarders, everyone uses a standard format for relaying this information. So, it is just really clean and easy to do.
Michelle Weaver: No, they don't. No, it's not. Yeah, that's exactly the problem. So, as we've seen this big uptick in customers pursuing their solutions with a SaaS program, they tend to be very, very expensive programs, both in hard and soft costs. Customers have to provide the people to start doing all the work to chase all the data because the SaaS providers don't have any people. They just have the technology. And not only do they not have people in one location, but they also don't have them in any location. In order to have your best chance at getting clear, complete, and timely data, you need to have people close to the source of the data. In other words, close to your suppliers, close to your carriers.
So, they're very expensive programs. They generally take a long time to implement because you've got to get all your carriers and your supply chain partners integrated with them, and they rarely actually end up solving the problem. So yes, they're carrier-neutral, but that doesn't do you any good if the data isn't there for you to see. So we're already starting to see customers leave those solutions after they put all this time, effort, and money into launching them. So it's tough. It's tough for the customer, it's tough for all their partners that have been working on integrating with those SaaS offerings, and the customer still doesn't end up with the problem being solved.
Chris Parker: So, people, process, technology. I feel like in a number of ads that I see, I can see any tech company talking about people, processes, and technology. We, as a forwarder, also talk about people, processes, and technology. It feels cliche. You're saying that there's a lot more to this. This isn't just some nice slogan; the configuration of who owns what or who is responsible for the process, the people, or the technology can really change the makeup of the way a company can succeed with its supply chain.
Michelle Weaver: I mean, honestly, every time you see a presentation on supply chain, it shows this nice linear progression. So, source, order, make, book, move, clear, deliver, report.
Chris Parker: Easy-peasy.
Michelle Weaver: Easy-peasy. And the reality is supply chains are not linear. They're like cobwebs or spiderwebs. They're multifaceted. They're multidimensional, and although people process and technology sounds very cliche, it is absolutely true. You need all three of those to work in your favor in order to have the best chance at success in having a well-managed, highly functioning supply chain. It's interesting as we work with a lot of different companies, every vertical, every industry, every size from the very, very tiny to the biggest in the world. And we've sort of boiled it down to six models or six strategies that companies use in order to manage their supply chain. The first one is they do nothing. They place the order out there, and they just hope for the best.
Chris Parker: The fingers crossed model.
Michelle Weaver: Fingers crossed model. The "I'm sure it'll show up eventually" model can work as long as you don't have a whole lot of restrictions or urgency around time and getting the right thing at the right time. The second is, but I mean, honestly, for companies that have very limited product lines, that can work.
Chris Parker: Yeah, this works for some folks. It's okay.
Michelle Weaver: Yeah. The second is they manage in-house, and this is common, especially in smaller companies where they use their own people and their own processes, and usually a lot of spreadsheets or homegrown solutions. And that can work quite well for a period of time. Eventually, though most companies outgrow that model, it doesn't scale well. And as a company grows and becomes more complex and vibrant, you need better infrastructure to support your ever-growing company, your house.
And then the next one is one we've been talking about where they go for the software platforms or the SaaS technologies. And it is still just technology that you have to link somehow back to the customer's internal technology. So there's still IT work that's required within your organization, and you still need your own people to learn it and operate it. So, it can be a very expensive, difficult transition and model to maintain because you end up having to hire a bunch of people who do nothing but operate in that technology. It is carrier-neutral, provider-neutral, that's for sure. But it's also expensive.
And then the next one is one we've been talking about where they go for the software platforms or the SaaS technologies. And it is still just technology that you have to link somehow back to the customer's internal technology. So there's still IT work that's required within your organization, and you still need your own people to learn it and operate it. So, it can be a very expensive, difficult transition and model to maintain because you end up having to hire a bunch of people who do nothing but operate in that technology. It is carrier-neutral, provider-neutral, that's for sure. But it's also expensive.
Chris Parker: And again, what benefit does being carrier-neutral provide to a customer?
Michelle Weaver: Well, like I talked about earlier, during the pandemic, they were frustrated. Companies were frustrated that they were unable to get the capacity they needed, and they were tied to specific carriers. Customers understandably want the ability to move from carrier to carrier as they need to, as the market dictates.
Chris Parker: And then for us as a forwarder, before we go onto the fourth one here, as a forwarder, what is it like to work with these platforms?
Michelle Weaver: It can be rather difficult, to be honest, simply because they tend to sell very standard connectivity. That's what they market. They market standard connectivity standard integration. And then the reality is when it comes time to integrate on behalf of a specific customer; it comes with very specific specs, customized integration specifications. And so, it's not a quick 30-day or less integration process. Some of them take upwards of two years to integrate, and those are incredibly expensive for all parties involved.
Chris Parker: Absolutely. Absolutely. This fourth one, moving on.
Michelle Weaver: The fourth one would be an outside neutral party or a control tower or 4PL model where someone else's people, the customer's chosen provider, manage the process. This is the first model that takes the customer's people out of the process as well as the customer's technology. And then the key question around here is incentives to perform. So usually, the way that works is the customer hires a 4PL, which is really a provider like an Expeditors or one of our peers, and they're awarded a certain percentage of the freight, and then they also manage all the other carriers or providers that were awarded the rest of the freight to make sure that the data is there and accurate and timely and clean. And so, you're using your chosen 4PL's technology and that chosen 4PL's people to manage your processes. Again, the key question around this model is about incentives to perform and how much freight you are willing to award that 4PL to manage all the rest of the providers.
And then the next one is a lead logistics provider. Let one of your dominant 3PL players manage all the others. And then the last one is a trusted partner. So you just outsource to one 3PL and give them the responsibility and incentives to make it work with their people, their processes, and their technology. And again, that one's also carrier neutral because if you partner with an order management provider as that trusted partner, then they could book with whatever carriers you choose to contract with, but you're using that 3PL's technology instead of an independent SaaS provider. So, there are pros and cons to each of those models. And there are certainly companies where that SaaS platform financially and operationally makes sense. I just don't think that that market is as big as many people believe it is. I think the percentage of customers where that SaaS platform is their silver bullet is actually quite small.
Chris Parker: But a lot of these tools had to have been around before the pandemic, and now we have; obviously, these tools are popular to seek out. So, more offerings are out there. Have they improved upon anything over the last couple of years?
Michelle Weaver: In my opinion, not really. I think what changed after the pandemic was simply the number of customers who were so frustrated by the realities of trying to get space and move cargo during the pandemic that they just felt like something needed to change. They weren't quite sure what it was, but something needed to change the model. One of their six models or strategies that they were using they felt wasn't serving them well, and they needed to find a different solution. And some of that might be true. Maybe the model they were using didn't work well for their organization, but the reality is the market didn't work for anyone during those years. It was miserable for everyone, regardless of the model you were using or the strategy you were using. But there is a great desire to never have to live through anything like that again. So, if there's anything that they can do to ensure that they don't have to live through an experience like that again, that's what customers are trying to achieve.
Chris Parker: Yeah, of course, of course. So, when I hear you talk about people, processes, and technology, I get the sense there's a lot of fragility if one of the three is not done effectively. What do you think strengthens the relationship between these three areas of people, processes, and technology?
Michelle Weaver: I think probably the most critical decision a customer can make is to choose the right partner. They need to find a provider in the industry that supports their goals. Their supply chain goals support their program, and the way that it's structured is strong in all of the geographies where they need a provider to be strong. Do they have their own? Do they have a strong global network? I mean, not every customer imports or exports from multiple countries or even multiple geographies, so they need to find a provider that is incredibly strong in their chosen geographies. And there are different providers that have different areas of strengths and weaknesses around the globe. So I think the most critical decision the customer can make is to choose the right provider, one that has the people in the places where they need them, one that has the technology that supports their processes and that their processes are solid and sound and able to scale. To me, that's what can strengthen the relationship between those three areas; you've got to make sure you've got a good match for your company and for your program.
Chris Parker: And for your goals and your vision, too. Like the road ahead, too.
Michelle Weaver: Exactly. You want a partner that is going to be able to scale with your program's growth.
Chris Parker: Right, right, right.
Michelle Weaver: For a long period of time.
Chris Parker: When you share these six models with customers, what do you feel is a common realization or takeaway?
Michelle Weaver: Well, when I share those models with customers, they almost always blurt out which one they are.
Chris Parker: "I'm a 1! I'm a 3!"
Michelle Weaver: Yeah, some of them. And there are many customers that say, "Oh, we're a two and a three, or we're a four and a five." They might actually employ multiple models in different parts of their organization. But their common realization or their common takeaway, the one I see most often, is the customers really start to understand at a tactical level how important it is to have people in all the places that they need the people to be.
So, they need their provider to have people at origin to help their shippers get a late gate, get equipment, help them with documentation issues, and help them be successful in servicing their joint customer because the supplier, the shipper, and the partner, the provider that the customer chooses to have the same joint customer, right? It's that customer, a destination, that made the decision to hire both of them. And you need those two working together to be successful, to support their shared customer. And following their business rules, creating their documentation correctly and timely, providing the information that the customer needs correctly and timely and in the tools that they expect it to be in, and the technology they expect it to be in. And if that connection isn't there, then the customer's program isn't successful.
Chris Parker: So then, what is the first conversation for customers to have internally with their teams or within their organization to make a plan for themselves?
Michelle Weaver: I believe they need to sit down and work with someone to map out their process flow. What does our supply chain look like? Who are all the players? What pieces of information do they all own? In what order are those pieces of information required to be provided, and how do we get visibility to all of it so that we can actually manage our supply chain and make it as resilient as we can possibly make it? With one map all out, it becomes pretty clear where you can make improvements, where you can shore things up, where you can fill in gaps, what you're doing incredibly well, and then what are you going to do with all that information? How do you continue to evolve your program and improve it time over time, year over year over year, and grow and scale with the complexities of your organization?
Chris Parker: Well, Michelle, thank you so much for joining me today to chat about this, and I look forward to having you on here again.
Michelle Weaver: Thanks, Chris. It was great to catch up with you. I appreciate the time.
Chris Parker: Thanks for listening to today's episode. If you've got questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.
