Some technology providers say inbound leads have increased during the coronavirus disease 2019 (COVID-19) crisis, while others say demand has slowed as shippers wrestle with short-term considerations. Photo credit: Shutterstock.com.

Shaken by the coronavirus disease 2019 (COVID-19) outbreak, logistics managers should appraise their next freight visibility investment steps through the lens of five key questions that describe their current capability, inventory levels, and cash position.

The global pandemic underscores the need for cargo owners to know where their cargo is, so they can either slow down, reroute, or in some cases accelerate shipments to adjust inventory to the new reality of two-speed cargo demand — one speed for essential items and another for non-essential goods. But before altering existing investment plans, logistics managers need to consider a few variables, technology logistics specialists and cargo owners tell JOC.com.

Shippers need to determine whether they are:

• Already in the middle of a project;

• Satisfied with visibility they are getting via a third-party logistics provider (3PL);

• A shipper of essential or non-essential goods;

• In a comfortable enough cash position to accelerate a project that might have been scheduled for later in the year; and/or

• Sitting on enough inventory and free human resources to work on a process improvement.

More broadly, the COVID-19 crisis has surfaced an existential question for shippers: is this the time to stop, pause, or accelerate visibility initiatives?

That question is pertinent because many of the drivers for investment in logistics software are coming into starker view during the current pandemic. But amending or expanding an ongoing technology project can be difficult even in the best of circumstances, let alone during a time of crisis. In times of heightened disruption, logistics teams are likely to be fully occupied with solving unforeseen supply chain issues and shippers’ technology support teams are likely to be managing critical infrastructure, business continuity issues, and remote work plans.

There is no universal approach to technology strategies and spending in the still-evolving COVID-19 crisis, according to a range of shippers that spoke to JOC.com. Logistics software providers similarly said that while there’s an intrinsic need for what many standalone visibility solution providers and 3PLs are selling, shippers aren’t necessarily in a position to make strategic decisions right now.

“I think it’s a combination of ‘I can’t think about that right now, because my inbox is on fire,’ and at the same time it’s really showing you where your gaps are,” Audrey Ross, logistics and customs specialist at Toronto-based Orchard Custom Beauty, said during the TPM20: What We Missed: The Road to El Dorado — The State of Logistics Technology webcast March 26.

“It’s very evident. Now that I’m stuck working from my couch, I think, ‘What are the things I could automate? Why was I doing things that way?’ It’s a weird moment; I don’t have time to think about it right now, but you also try to think about what is possible when things get back to normal.”

Carlos Valderrama, senior vice president of customer success at the supply chain design software provider LLamasoft, said demand for visibility products has shifted rapidly during the pandemic.

“We have a number of customers that have had low impact from COVID-19 where they are accelerating or increasing some of the work with us,” Valderrama said. “On the other hand, we have customers that are heavily impacted, and some of those have delayed ongoing work due to resource bandwidth on their side or financial pressures. For some of those heavily impacted, we are doing some rapid response work in goodwill with them when and if possible.”

Visibility connecting logistics to the C-level

Shippers specifically highlighted the importance of existing visibility capabilities in enabling more real-time reporting of inventory and in-transit stock to their executive teams.

At one home improvement and agriculture product retailer, for example, the supply chain team has gained more prominence among executive leadership during the coronavirus pandemic, the company’s senior vice president of logistics said, due in part to an existing focus on execution at the production and purchase order level. “People like our investor relations team are now interested in the [visibility] information because of the heightened questions and media attention.”

Similarly, the director of global logistics at a footwear manufacturer and retailer uses 3PLs for inbound ocean visibility, augmenting that information with its own manual data to create analytical reports for upper management. The system isn’t “built for an exception like this; it’s built for steady eddy. It’s working for the majority [of our volume],” she said. “It’s more [a question of], ‘How do I turn that data into an executive update in a way that executives haven’t had to think about it before?’” 

A vice president of supply chain at a furniture retailer said his visibility provider “has jumped through hoops” to help during the COVID-19 crisis, producing custom reports whenever requested for him to share with his executive team.

“It allows us to see what inventory is on the water,” he said. “Without it, we’d be relying only on what our 3PLs tell us.”

The director of international logistics for a manufacturer of packaging products said his company’s existing ocean visibility solution has more than proved its worth during the pandemic. “We’re using it religiously, and it’s holding up really well. It’s helping us keep track of container issues in China, like discharge, gate out, and gate back in,” he said. “Business leaders are asking for greater visibility.”

A fork in the road

Despite the apparent benefits of visibility solutions during times of disruption, there’s no way to generalize whether the crisis will compel shippers to prioritize projects or slow them down.

The logistics vice president at the home improvement retailer said the coronavirus has “tested our workforce policies and procedures more than our supply chain visibility,” adding that the ongoing pandemic “hasn't changed our investment thesis in visibility, but rather serves as an example of disruption that strengthens an already existing business case.”

“We already had visibility as a priority prior to COVID-19 as part of our roadmap for digitizing the supply chain,” the shipper added. “We see it as a useful planning tool, a feed for synchronizing and aligning capacity and labor more effectively.” Visibility also helps the retailer share resources “across our logistics nodes, versus having some of our capacity locked into only servicing a single [geographical] node.”

The furniture retailer, meanwhile, said COVID-19 has forced the company to examine a range of ongoing projects, technology-related or not. “We’ll look at capex [capital expenditures] across the board. We had a project on the analytics side, and just yesterday we were talking about accelerating it. Some will be accelerated; some have slowed down. I don’t think we need to cancel any of them.”

The logistics director at the packaging products manufacturer, which uses different systems for transportation, visibility, and enterprise resource planning (ERP), said the company has had to prioritize moving freight in the short term and dedicate less time to strategizing around technology implementations.

“My team’s focus is 100 percent on execution right now,” he said. “Hopefully this will shift back in the next [couple weeks], but we’re focusing exclusively on getting product out on the door, on ships, and to the customer.”

The footwear manufacturer and retailer told JOC.com it has no plans to prioritize investment in visibility or analytics tools due to the crisis, preferring to lean on its established partnerships with 3PLs and carriers across modes instead. 

“Certainly visibility matters with the coronavirus, because we need to know what’s in transit, what’s in network,” the shipper said. “But it’s not enough to say, ‘Let’s go invest heavily in a reporting tool or metric tool.’ We will manage through the exceptions and work with our partners, and the partnerships we have with carriers, whether it’s parcel, over-the-road, or even ocean.”

The footwear maker said that amid the COVID-19 crisis, the ability to act on the information a visibility product provides to shift inventory around the globe is as important as the data itself.

“It’s on a global scale, not just the US,” the shipper said. “So I have to think about what freight I have in transit and whether there is any risk at any of the [destination] ports. We’re using the 3PL and then pulling in market intelligence to layer into that, and then adding some manual data. [The cargo is] in the network, but is the destination going to even be able to receive it? And how do we manage those exceptions?”

Software demand unsteady

Some visibility providers have told JOC.com inbound requests for their products have spiked, while others have said their pipeline of shippers customers has slowed considerably. 

“We have had over 100 inbound opportunities in the last month alone,” said Rob Garrison, CEO of the Dallas-based global logistics software provider Mercado. “I just hired two salespeople, and we have completely reconfigured our messaging in line with what we are hearing. Two basic themes are peace of mind through risk mitigation and pain elimination through operating efficiency.”

Using the 2008 financial crisis as a historical marker, COVID-19 could eventually be a boon for logistics software providers if it similarly pushes companies to examine their supply chain vulnerabilities.

“We expect by the end of May, companies will be back to full planning versus reacting mode,” Garrison said.

Valderrama said LLamasoft has seen a 54 percent increase in web traffic and more than 10,000 visits from 400 companies to its “COVID-19 Response Center” pages. 

He added that LLamasoft is “standing up virtual war rooms” to analyze various supply chain scenarios during the coronavirus pandemic. Those scenarios include shifting from store to online orders, identifying alternative capacity or supply, analyzing shifting demand and redeploying inventory or resources, and managing domestic transportation capacity hot-zones and contingency options.

Other providers say the appetite for technology investment during this time is largely vertical- and geographic-dependent. 

“Our salespeople in Singapore and Tokyo are a bit more bullish right now, because they are past the peak,” said Brad Klaus, CEO of the global transportation management software provider Haven. “Our pipeline in Japan is rapidly growing, while in the US, it’s slowed a bit. Our people in Asia are calling it ‘back to business-minus,’ so if business was an ‘A’ before COVID, it’s now at an ‘A-’ level.”

Klaus said shipper technology investment cycles are generally slowing “because people are still figuring out how to deal with this. The time they might have spent evaluating a TMS [transportation management system] is now spent managing” their supply chains in the midst of the pandemic.

Klaus said he sees three use cases where investment in logistics technology is accelerating: shippers that realize they have an acute need for visibility they currently lack; companies with teams that now must work from home and were previously reliant on a system not set up to handle working remotely; and firms that see a future in which they must reduce their workforces and automate more logistics processes.

But the demand for visibility is also still highly dependent on the product being shipped, he added. Someone selling paper and pulp into Italy, for example, likely has their head down managing higher than normal demand, while an automotive supplier might have seen business drop to zero and thus may have time and bandwidth to tackle a transformational project if the capital remains to invest in such software.

More specifically, Klaus said adopting a standalone visibility tool, where resultant data could be pulled into existing workflows, is likely more digestible now for a shipper than implementing a TMS, which requires a total operational reshaping.

Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.