Automation is a key way of reducing transport costs in the future explains Tim Fawkes of independent transport management experts 3T Logistics (www.3t-europe.com).
The logistics industry is fertile ground for the effective application of new technology and automation. From the emergence of routing and scheduling software in the 1980s, to the recent introduction of end to end web based transport management software, the implementation of appropriate technology can improve customer service, whilst significantly reducing costs for shippers.
One of the few benefits of the past seven years of economic difficulty is the fact that many businesses have been forced to re-appraise and streamline their processes in order to survive, with technological innovation a key part of that survival.
The emergence of software as a service (SaaS)
The internet has created a platform for systems solutions that utilise new forms of technology which can be used to create a competitive advantage. However, whilst the logistics industry relies heavily on the internet, its real value is as an enabler. The enterprise based systems and installed software which once seemed cutting edge are being rapidly replaced by cloud technology, enabling the use of web based software as a service (SaaS) which is instantly accessible and easy to use. This ability to access relevant information from any location on a range of devices has been a key driver for change.
Communicating delivery times
Traffic congestion has long been problematic for the industry – and will inevitably continue to be so as the demand for shorter lead-times adds to the pressure that shippers face. Whilst vehicle tracking and telematics have been used for over 20 years, it is only recently that these systems have yielded information of real practical use, including the critical and necessary link between vehicle tracking and customer consignments. Integrating carrier and transport management systems can also facilitate the availability of real time delivery information across a multiple carrier solution for all types of carriers, not just those with web tracking technology. This plays an important role in communication levels and service delivery for customers regardless of carrier.
So what are the key benefits of the new generation of web based systems?
They can provide a platform for collaborative solutions between large numbers of different shippers using a carrier network approach across their businesses. This can help reduce as much as 10% of transport cost whilst improving service levels.
Utilising state of the art technology, the companies that develop web based systems are constantly updating and refining them to stay on top of a highly competitive and fast moving market. It is a different approach to the older legacy based, enterprise based software solutions.
Lower systems fees results in less complacency as, developers are kept on their toes in order to stay ahead of the ever-changing and advancing technical revolution.
Having developed our own transport management systems in-house for over a decade, at 3T Logistics we have now adapted our SaaS system (known as SOLO), so it is accessible entirely through a web browser. Not only does this solution offer improved functionality, but users also have access to a broader range of transport expertise. If a client already has some in-house transport expertise, this can be utilised in conjunction with the SOLO system to facilitate the management of transport processes more efficiently. It also removes the need to outsource their entire logistics operation.
These web based systems are able to offer a full transport management functionality including integrated order receipt, optimised transport planning, electronic carrier communication, despatch scheduling visibility, online PODs, automatic carrier invoice control and business intelligence reporting. The best software should offer the ability to manage and optimise multiple carriers’ tariffs, to consolidate orders and to audit carrier invoices. Doing this can ensure the system delivers significant savings in both time and cost. In isolation, this approach can save in excess of 10% of transport costs (after fees). In addition, a successful transport management system should be able to reduce administration by over 50%, whilst providing management information which can help clients understand service costs and help drive a continuous improvement process.
Value for money
This return on investment is essential to the decision to implement a new systems solution: systems must offer real and tangible immediate savings. Although companies should be prepared to take a long term view to fully appreciate the potential for savings, set up fees need to kept to a minimum or be repaid over the length of the contract. Now the recession is officially over, companies may take a longer term view on investment in new technology to ensure that systems are implemented properly and deliver the expected level of return. We’ve found that cutting corners to shoehorn a system into a business only results in potential disappointment. Most people appreciate that time savings help reduce costs, but these need to be tangibly realised e.g. when people can be moved into alternative positions, avoiding the cost of redundancy or involved in more added value revenue generating activity.
The most forward thinking and proactive companies have already stripped out inefficiency to create a lean and scalable operation with automation key to productivity improvements. This lean approach, combined with a willingness to invest in technology, is crucial to both survival and growth within the logistics sector. The key is the return on investment, so if considering automation and technology, take a long term view to determine what it could mean for your company and customers as the economy picks up speed, or be prepared to get left behind.