Single-minded focus

Single-minded focus

John Preuninger, president and chief operating officer of Management Dynamics Inc., plops a copy of a chemical manufacturer's 2003 ocean transportation contract on the table. The document is 54 pages, small type and single-spaced. To Preuninger, it's a nasty piece of business that he wants to change.

Management Dynamics began 13 years ago as an independent computer firm supporting IBM products. A chance assignment for China Ocean Shipping Co. inspired Preuninger and his brother, James Preuninger, the company's chief executive, to focus on ocean transport.

The Cosco job came just before ocean shipping reform pried open the competitive potential of the business. With service contracts set to become less standardized and more complex with the demise of conferences and the advent of confidentiality, the brothers saw an opportunity they couldn't pass up.

Looking at the hefty contract on the table, John Preuninger sums up the task at hand. "You can't manage this process with text documents. It's beyond the scope of what's reasonable."

Today the East Rutherford, N.J., firm has established a solid niche in the ocean tariff and contract management business. Its flagship product is Rate Explorer, a searchable database of rates contained in tariffs or ocean contracts. Its system is an ASP model - meaning that all of the information contained in the 10,000 contracts it manages is housed in its computers and accessed remotely by users. It handled 60,000 contract amendments last year. Its core customers are ocean carriers and forwarders, but it's branching out to shippers.

"Contract management (automation) is useful if you've got several contracts and don't have people who are dedicated full-time to their management," said John Fontanella, vice president of supply-chain services for AMR Research in Boston. "If you're swapping people out and moving new people in, it's valuable."

The firm got to where it is today through a circuitous route. In 2000 the Boston-based transportation Internet company Celarix Inc. purchased the company. Two years later the Preuningers led a group of investors to buy it back. Their experiences taught them the benefits of specialization. "Vendors were trying to be everything to everybody," Preuninger said, recalling the tech boom. "Even God couldn't build that much software. You've got to have some discipline."

With that as a guidepost, the company is concentrating exclusively on ocean transport, with no current plans to move into other modes. A customer can get its system installed and users trained in about three weeks, compared to months for complex, enterprise-wide products. Preuninger promises a return on investment of at least four times the cost within weeks of implementation.

Such benefits associated with auto-mating the contracting process are attracting other vendors. Its main competitors are the ocean portals Inttra, CargoSmart and GT Nexus and companies such as Descartes Systems Group, the supply-chain technology developer.

Its database contains the Federal Maritime Commission's publicly available tariff-filing information. The system also can calculate the inland transportation cost, if applicable, and flags accessorial charges and peak-season charges so a user can quickly determine the cost associated with a particular routing.

"We were looking into how to optimize contracts and make it easier for the person in the field to understand them," said Heidi Lindemann, a product manager for ABX Logistics USA. The company started using Rate Explorer a month ago after relying on a largely manual process to handle contracts. It was normal for people to call colleagues in other countries to clarify tariff information.

"It's considerably faster. It takes us five minutes or faster to pull up a rate," Lindemann said.

Twenty-five people in her company are using the system, and the ABX Logistics' Belgium-based parent company plans to roll it out to their European and Asian offices.

Another convert is Philadelphia-based Barthco International. The company began using Rate Explorer in November as an alternative to thumbing through paper contracts. George Cirrilla, manager of inbound transportation, was the keeper of the hard copies, so when someone in the field needed to know something in the contract, Cirrilla got the call. "It helps to see those accessorials. It really jumps out at you, and gives you something to take back to the carrier," he said.