CF Says B2B Technology, eBusiness Should Focus on Core Customers; VP Brady Says Shrewd Investing is Key to Successful Tech Strategy.

Business Editors, High-Tech Writers

NEW ORLEANS--(BUSINESS WIRE)--Nov. 9, 2000

Transportation and logistics companies must become shrewd investors when it comes to technology initiatives, according to Patrick Brady, senior vice president of sales and marketing at Consolidated Freightways.

"Internet technology continues to deliver an array of intriguing opportunities to the business-to-business marketplace," Brady said at a forum sponsored by the Council of Logistics Management (CLM), an association of supply chain management professionals. "But the challenge for transportation and logistics companies is not discovering good ideas. Instead, the real challenge is determining the technology and eBusiness tools that have the most long-term benefits."

Speaking at the CLM Annual Conference here last month, Brady laid out a vision and policy that was contrary to that of many transportation and logistics companies that participated in the conference. Some 5,000 registrants attended.

"Consolidated Freightways has adopted a web strategy that focuses on serving the specific needs of existing core customers," Brady explained. "We call this policy `Keeping Technology Relevant,' which is executed through a structured business model that directs and guides our technology investment strategy."

The CF Technology Model

"The purpose of the model is to identify specific technology, eBusiness tools and software applications that CF will bring to market," explained Brady, noting that the model has three primary components.

"First, we look at how the technology will build and improve our working relationships with core long-haul customers," he said. "Next, we pursue technology that can generate revenue, such as applications that might open doors to accounts that have traditionally been expensive to serve."

Cost savings is the third part of the equation. "We invest in business processes, transactions, applications and eBusiness tools that can migrate to the Internet," Brady explained. "These web-based, self-serve applications are now delivering efficiencies and cost savings for both customers and our company."

Brady detailed CF's "Keeping Technology Relevant" business model in remarks to delegates attending a seminar entitled "Asset-based Carriers in an eCommerce World," hosted by NIT League President and COO Edward Emmett. Representatives of Freightwise.com, Yellow Freight and Federal Express participated in the seminar.

Brady warned his colleagues against adopting technology policies that attempt to be all things to all customers. He pointed out that there are major operational and structural differences between asset-based carriers and companies that either market on-line freight services or operate in traditional small-package markets.

"Web sites targeted at consumers need different technologies than business-to-business web sites," Brady asserted. "So our business model leads us away from technology used in many business-to-consumer environments. Instead, we favor heavy investment in eBusiness tools and related business-to-business applications."

B2C Different Than B2B

According to Brady, the Internet has broadened many consumer and retail markets. But in the business-to-business sector, the Internet has actually caused a narrowing of market focus.

"Transportation carriers and logistics companies operate well outside the retail environment," he explained. "We're finding Internet use by our clients to be highly specific. We're not creating a bigger market. Instead we're using the Internet to add value to our service."

Brady explained that CF's core customers continue to seek more and more specialized and customized services -- applications that apply to their particular needs and businesses.

"This vigorous demand from our customers has helped drive CF's corporate strategy to pursue technology that most directly impacts customers -- the policy we call `keeping technology relevant'."

The CLM Annual Conference is attended by senior level managers in the trucking, rail, maritime, and logistics industries throughout the U.S. Brady was asked by CLM to participate in the seminar that would "look into the crystal ball" of how technology will influence carriers and related supply chain initiatives.

"We believe CF's strategy coincides with how technology will evolve throughout the entire transportation sector," Brady said. "We believe the best approach is to invest in `relevant technology' that benefits our company's 155,000 core customers, most of which are long-haul shippers."

The bigger picture recognizes that increasing numbers of web-based eBusiness tools will allow customers to conduct business in a self-service environment. "For example, we just brought to market a web site that represents a significant advancement for CF," Brady said. "We have moved away from aninformation-based web site, to providing secure access to critical and valuable data and shipping information while in the CF system. This gives customers greater control in managing their business."

Existing Customers Are Top Priority

"CF's top priority and responsibility revolves around our existing loyal customer base," Brady asserted. "So we will continue investing in capabilities that provide real business value to these core customers while at the same time making cf.com easy to use, friendly, intuitive and designed with our long-haul customers in mind."

CF's "Keeping Technology Relevant" business model has been so successful that Brady urged his colleagues to adopt similar shrewd investment policies that attach specific objectives and audience targets to address the vast array of technology applications that are available.

"For CF, the strategy focuses primarily on eBusiness tools that are relevant for our customers," he said. "Other companies with different objectives will have differing priorities."

But clear objectives and direction are hedges against falling in the trap of investing thousands of dollars in a technological black hole, he said. Investment strategies must be executed within rigid parameters or companies risk investing hundreds of thousands of dollars in technology that few people understand and use, and applications that ultimately have little benefit to either customers or the company.

"At CF, we decided we needed to manage technology and not let technology manage us," Brady concluded. "We were just tired of technology driving change."