by Fronetics | Aug 6, 2014 | Blog, Logistics, Marketing, Social Media, Strategy, Supply Chain, Transportation & Trucking
Keychain Logistics has made two bold promises. The company has promised truckers that they will never drive empty again and has promised shippers that Keychain will improve their bottom line.
Can the company deliver on these promises?
Who is Keychain Logistics?
Keychain is a leading transportation provider enabling businesses to directly engage carriers, track shipments, and monitor its logistics needs online.
According to Bryan Beshore, the company’s founder, Keychain grew out of the idea that a technology driven marketplace could operate with significantly lower overhead than a manual, human powered brokerage:
“My initial contact with the industry was in 2000. I have researched, analyzed, and thought about the industry ever since. Keychain is a product in understanding the fundamental efficiency problems the third party logistics industry has faced for a long time.”
Beshore goes on to point out that while building a technology company is tough, building Keychain was easier than anticipated:
“With Keychain it was a natural process and easier than I had imagined. I believe the reason for this is twofold: the challenges this industry faces are huge, and the solutions we are building to meet those problems are really fun to solve. Because our work directly affects the wallets of our users (increased pay for drivers, better rates for shippers), we are effectively helping people create better lifestyles for themselves and their families, and that’s really rewarding.”
The company was slated to be built in 2007; however, the timing was not right given the low proliferation of internet-connected mobile devices (500 million). Beshore waited. In 2012 he decided to move forward with the launch of the company (the number of internet connected devices reached 8.7 billion in 2012).
How does it work?
One can draw a parallel between Keychain and Uber – the company removes the broker and connects truckers directly with shippers therefore enabling truckers to focus on driving and shippers to focus on selling products.
Keychain is a marketplace for truckers to book commercial shipments directly with shippers. The company’s technology matches owner operator drivers (and small fleets) with shippers who rely on Keychain Logistics to find the ideal carrier for their freight.
The core of the company’s platform is their network of ten-of-thousands of carriers throughout the US who are connected 24/7/365 via Keychain’s iOS, Android, and Windows phone apps. Keychain can instantly communicate load opportunities to independent owner-operators, 97 percent of whom operate in fleets of 20 trucks or less, and small carrier fleets.
Too good to be true?
One of the biggest challenges the company has faced is that it is perceived as being “too good to be true.” Beshore:
“The transportation industry is traditional and technologically far behind. Because of this, the inherent challenge to sharing our offering is overcoming the “too good to be true” bias. While many of our potential customers have wanted a product like ours for a while, they either don’t know how to articulate it in a Google search or are skeptical that tech companies like Keychain are committed to solving their problems.”
Solving immediate need
Keychain has been working to overcome the perception of being too good to be true. It has been talking to current users, and has honed in on developing a solid marketing message. The message – we can solve your immediate need.
Not expressing the full-vision up front has been a challenge when Keychain reaches out to companies with whom they have little or no relationship; however, they have found that solving an immediate need is what gets companies excited.
What immediate need(s) can the company address? According to Beshore: “For shippers, this is getting them access to trucks, sometimes within just minutes of our first contact. For drivers, this means getting them a paying load when they’re stuck at a rest stop, are far from home, or simply need a line-haul out.”
Leveraging social media to grow the company
The company has found that one of the best ways to use social media is for listening. Rather than spend time and money putting together and distributing sales literature, the company searches for relevant industry hashtags (i.e.: #trucking) to see what people are talking about, and more importantly what they care about. By using social media this way, Keychain is an audience to users instead of the other way around. This has enabled the company to shape their offering with a solid understanding of what people want from a transportation provider.
“From phone calls to interviews, crowdfunded campaign partnerships, and beyond, social media has certainly helped us grow our business,” says Beshore.
Can they deliver?
Can Keychain deliver on their bold promises? Their customers believe so. Here is what three customers say about the company:
“With Keychain I no longer have to waste hours on logistics. Their platform makes it easy to quickly enter shipment details and receive the most competitive rates available.” Marc DeVidts, Double Robotics
“Keychain gives us instant access to thousands of reliable carriers nationwide. It’s the most efficient and cost effective tool we’ve found.” Nathan Brown, Reclaimed American Hardwood
“Within minutes I can enter my shipment details and Keychain handles the rest. Annoying phone calls and exorbitant broker fees are over.” Ad Sachan, Treeline Woodworks.
by Jennifer Hart Yim | Jun 12, 2014 | Blog, Data/Analytics, Strategy, Supply Chain
This article is part of a series of articles written by MBA students and graduates from the University of New Hampshire Peter T. Paul College of Business and Economics.
Regularly tracking your relationship with your suppliers and their performance toward your expectations is critical to ensure the success of your business. One mechanism for tracking this is the supplier scorecard. A scorecard is in essence a report card for your supplier. Supplier scorecards when used effectively can help maintain a healthy supply chain and will benefit both parties. If not used effectively supplier scorecards can damage the supplier relationship and hurt both businesses.
Effective scorecards should use meaningful metrics. If it doesn’t align with business goals then it shouldn’t be measured. Easily measured variables of no importance will just cause clutter; they could also cause a supplier to focus their performance in areas that do not matter. If the metrics are not clearly defined and understood by the suppliers then it will be hard for them to adjust their performance in these areas. Another consideration is there may be things that are important to you which your suppliers have no way of measuring or attaining the performance you are asking for.
As with all business to business relationships communication is critical for maintaining and improving supplier performance. To ensure suppliers meet your needs you should communicate to them from the offset how their performance will be measured. You can even tie bonuses and penalties into their performance scores. You should be mindful that your relationship with your supplier should be collaborative; as you grow so should they. You should share the results of your scorecards with your suppliers on a regular basis and shouldn’t wait until a review to raise a concern. Another important aspect of communication is sharing your business objectives and performance data with your suppliers. This can help them to better shape their business to meet your needs as your business fluctuates.
It is important when evaluating suppliers to have a good process in place for tracking important metrics. When possible it is best to use accurate data that is understood by both you and your supplier. If you use fuzzy metrics which are subjective then improvements become difficult to measure and target. Also, tracking metrics throughout the scoring period will help to ensure the data is accurate and your scorecard reflects actual performance.
When dealing with different suppliers it is important to make sure the metrics you are evaluating are relevant to each supplier. As a result it is not recommended to use a one size fits all approach to supplier scorecards. Another thing to keep in mind is that you may be sourcing from the same supplier through multiple locations. It is important to track each of these on its own scorecard to help your supplier learn where they are doing things right and where they are falling short of your expectations.
Where I work we have several strategic supplier partnerships. The way we manage supplier relationships is through quarterly business reviews with each of our partners. In these meetings high level representation from both companies is present. We share with our partners our business results and forecasts in addition to any major company news. After sharing this information we review our scorecard process with the suppliers, show a score card comparison, take a detailed look at each rating, and then provide an overall summary.
Our scoring system looks at aspects of quality, delivery, cost, support, and inventory management. With respect to quality we look at hard numbers like failures out of the box and returns from our customers. We take into account both product quality and process quality. When it comes to delivery we measure on-time delivery, missed shipments, and lead times. Some of our customers have long term fixed cost agreements so this metric isn’t required, for others the cost fluctuates; we measure whether or not their costs are in line with our expectations. Support has several levels including technical support, order support, and special cases. Inventory management tracks how well they are able to maintain some inventory on hand for us.
Our scorecard metrics used to be scored on the basis of a five point scale from far below expectations to far above expectations. After running through several of these scorecards we determine that it was not likely to get exceeds expectations because the only time expectations could be exceeded is if our demand was well above our forecasts. Since this goal wasn’t something attainable by a supplier of their own action we adjusted our scorecard to have only three levels, from below expectations to meets expectations.
The scorecard comparison is unique to the supplier and it shows the ratings for each of the metrics for the current review period as well as four prior quarters. We display this in a color coded matrix so that it is easy to see where each metric is improving, staying the same, or regressing from period to period. For my employer these quarterly business reviews give us frequent touch points with our suppliers. This helps us to identify issues and areas for improvement to strengthen our supplier relationships and our business.
Throughout this article I have hit on several best practices with respect to supplier scorecards. I want to stress that this is just a tool. The fact that you have a scorecard system in place should not prevent you from acting immediately if issues present themselves. After all, this should be a collaborative exercise which will benefit both your company as well as your suppliers. In addition it is important to solicit internal feedback from interested parties. Supplier scorecards should be used to make decisions about whether or not to continue supplier relations or to pursue alternative suppliers.
Mike Cleary is a Software Quality Assurance Engineer at Empirix pursuing his Masters of Science in Management of Technology from the University of New Hampshire. He has over ten years of experience in testing IP and telephony solutions across a variety of platforms. In his current role he is responsible for not only ensuring Quality in the E-XMS solution but other administrative tasks such as lab configuration, VM server, and perforce administration.
by Jennifer Hart Yim | Jun 5, 2014 | Blog, Manufacturing & Distribution, Strategy, Supply Chain
This article is part of a series of articles written by MBA students and graduates from the University of New Hampshire Peter T. Paul College of Business and Economics.
By now we have all heard the story of GM’s faulty ignition switches that are being linked to thirteen deaths and thirty one front-end collisions. The ignition switches in car models: Chevy Cobalt; Chevy HHR; Pontiac G5; Pontiac Solstice; Saturn Ion; and Saturn Sky, lacked the torque specs required by GM engineers. Heavy key chains, bumpy roads, or an accidental knee hit were all reasons reported that could cause the ignition switch to rotate to the off or idle position. Once this happened, the driver would lose control and the air bags would fail to deploy if a front end collision occurred. A total of 2.6 million vehicles were recalled, of that 2.2 million were in the United States. For this type of recall, GM was not requiring vehicles to go back to the manufacturer or be disposed. Rather, a more robust key ignition was distributed to all authorized GM dealerships and customers were told to bring their cars to the local dealership and a new ignition switch would be put in for them.
Despite the massive recall and all the negative publicity that goes along with such an event, GM still posted positive numbers in their quarterly earnings. GM posted an operating income of $0.5 billion for 1Q14, which is included the $1.3 billion recall-related charge. Furthermore, GM controlled approximately 17% of the U.S. market share. After the ignition switch incidents started to gain traction, GM swore to reorganize their global engineering department, and they did. So, if GM’s sales profitability is surviving, their negative press contained, and their market share intact, what exactly went wrong?
Two-thirds of General Motors automotive costs in 2014 are from supplier sourced parts. However, this was not always the situation. Back in 1999, GM underwent an extensive effort to disassemble their vertical integration in hopes of reducing overall costs. At this time, Delphi Automotive was owned by GM, but separated during the same year. For decades, GM was Delphi’s only customer, and even when Delphi executives knew GM was going to make them a public company, they were only able to move 22% of their business to other customers. When GM officially made Delphi a public company, 82.3% of their shares went to GM shareholders. That means that only 17.7% of Delphi was sold to public investors. In order to survive as a company, Delphi had to start making cost reduction decisions. To do this, companies often lay off employees and make cheaper parts, Delphi was no different. Now during this same time period, GM executives were focused on focused on costs reductions and were driven by numbers, hence the selling off of Delphi. It should be noted that if a company sells off their single largest parts supplier, fully aware that the move may cause the supplier to go belly up, there will be some strained relationships. Delphi was now thrown into a position where they must compete with other parts suppliers for GM’s business. An important part of the deal GM made when selling off Delphi was to keep all current supplier contracts. In addition, GM gave Delphi the opportunity to match any competitor’s bid until 2002. The earliest model of a recalled GM car was 2003.
Strained supplier relationships are not ideal for business, but should not affect the quality of a product, such as an ignition switch. Let’s fast forward to 2008. Delphi had declared bankruptcy three years prior and GM was beginning to pull them out of their financial burden. A contract was found between GM and Delphi that was drafted in 2008. The document is a little difficult to follow, but there are a few interesting lines in Section 5.09 Product Liability Claims. It appears that, GM said they would share the blame with Delphi for any claims against them. However, GM would not be held responsible if one of Delphi’s parts, or a part made for Delphi by a third party, fails. The contract continues on to say that GM would pay any legal fees if a claim was made against Delphi, but Delphi must defend GM through a potential lawsuit. This contract was drafted and signed in 2008, during which Delphi was bankrupt, so it appears they had little negotiating power.
This raises concerns specifically about the ignition switch specs. It came out that GM officials knew the ignition switch they purchased from Delphi was not up to their standards. After some more research, an email transaction between Delphi officials in regards to the plunger, the vital part that holds the key slot in place with a spring, and the ignition switch. At the end of the document, the original engineer drawings are attached. From the technical drawings it can be seen that Delphi did in fact outsource the design specs, and possibly the manufacturing, for the plunger design. Another document, that was preceding the email transaction, appears to inform GM that the plunger part was changed and the responsibility of the supplier is “closed”. This could have been a legal move meant to save Delphi if any claims were made related to these parts.
After all of this evidence, where does the blame lie? It would appear that GM used their powers to force Delphi into a contract that held them responsible for any claims against their products. While Delphi did warn GM that the torque requirement for their ignition switch did not meet GM’s requirement, it is unclear whether or not a verbal warning will play into the legal battle. This case is currently ongoing, and it will be interesting to see how it plays out.
Connor Harrison holds a B.S.M.E and MBA from the University of New Hampshire.
by Fronetics | Jun 3, 2014 | Blog, Marketing, Social Media, Strategy, Supply Chain, Transportation & Trucking
Many companies within the logistics and supply chain industries are stuck on the social media starting line. The reason – “they can’t get past the word ‘social’ and the perception it creates.” The reality is that social media is a tool that can be utilized to create value and grow your business.
Over the next four weeks I will be providing examples of companies within the logistics and supply chain industries who have moved beyond the social media starting line and have realized the business value of participating in social media.
Using social media to move freight
Transportation logistics is vital to the supply chain and logistics industries. For companies within these industries; however, transportation logistics can prove to be challenging to navigate and can prove challenging to the bottom line.
MercuryGate International Inc. and Con-way Inc. are two companies that have used social media to turn transportation logistics on its head – they use social media to move freight.
TweetLoad
Con-way Multimodel, a division of Con-way Inc., launched TweetLoad™ in 2010. TweetLoad enables carriers to access available loads from Con-Way Multimodel via Twitter. Carriers who follow @ConwayTweetLoad on Twitter are able to see the latest available shipments as well as links to additional information on the company’s link board. Load information is updated on Twitter every 15 minutes, meaning that carriers who follow @ConwayTweetLoad have real-time information on available loads.
Figure 1: Conway TweetLoad
Bill Graves, president, American Trucking Associations (ATA): “With this novel use of Twitter, Con-way Multimodal is leading the industry in maximizing the best features of new technology to improve their processes. This is a great example of how innovative transportation companies can make it easier for carriers to do business with them, which will be a benefit to our industry overall.”
View a YouTube demonstration of TweetLoad at www.youtube.com/watch?v=0zL7h7kTU1M.
Freight Friend
In 2011 MercuryGate International Inc. launched Freight Friend. Freight Friend is a free relationship-based full-featured load and truck internet posting service for shippers, brokers and carriers. Freight Friend creates a private network between transportation partners, and utilizes technology to automatically identify appropriate matches. The combination of the technology utilized and the relationship-based nature of Freight Friend allows companies to have real-time visibility to book trucks and find freight with companies they trust.
The Freight Friend concept is shown in Figure 2.
Figure 2: Freight Friend
“FreightFriend is perfect for carriers, shippers, brokers, 3PLs and freight management firms who only want to share information with companies they trust. They can keep their current information in one place, knowing that friends – and only friends – will have constant access. While public load boards fill a real need, they come at a cost – a lot of unknown companies bidding to carry the freight. Private boards are often useful too, but they’re inconvenient to carriers with multiple clients asking them to check their bid portals. FreightFriend solves the dilemma with a single service where carriers can easily communicate with all of their clients and brokers can find available capacity from carriers they trust.”
Freight Friend is fully integrated into MercuryGate’s TMS and Carrier Management System (Carma). Freight Friend is also available to integrate with other TMS providers.
by Fronetics | May 25, 2014 | Blog, Logistics, Marketing, Social Media, Strategy, Supply Chain
Some companies within the logistics and supply chain industries have chosen to participate in social media while others have not. Why have some companies chosen not to participate while others have decided to participate? What social networks do companies within the logistics and supply chain perceive to provide the most value to their business? What challenges do companies face with respect to social media?
Fronetics Strategic Advisors aims to gain insight into these questions and more. We are conducting a survey on social media within the logistics and supply chain industries. The objective of the survey is to learn about the participation and use of social media within the logistics and supply chain industries.
The survey is aimed at companies within the logistics and supply chain industries, and takes only about 5 to 10 minutes to complete.
This survey is confidential. Responses will be reported in aggregate and no individual- or company-identifiable information will be shared with anyone.
If your company is part of the logistics or supply chain industries please take the time to take the survey.
