Opinion: Shortcut to Supply Chain Success
B>By Claude Germain
I>Chief Executive Officer
ube Route Inc.
This can open the door to operational success and, ultimately, market leadership.
With greater visibility into an organization’s delivery operations, company managers can streamline processes and reduce costs, all while improving customer service. The challenge, however, is that supply chain and logistics management is a highly complicated process that involves huge fleets, changing traffic patterns and tens of thousands of varying orders every day.
There are many sophisticated logistics technology systems that can help companies achieve varying levels of understanding in their delivery processes.
Route-optimization packages, transportation management systems, telematics, hand-held tracking services and truck-mounted satellite units are among the many third-party solutions now in operation. Some have worked, while others have been less successful. Those that could provide some level of visibility have been costly to deploy and manage, and carry significant financial risk.
With traditional third-party solutions, organizations must bear the risk of the purchase price, as well as multi-year license fees and maintenance contracts. It also requires a long-term commitment to integrating evolving software with existing technologies, and hiring and training qualified personnel to operate the system.
Even at that, many packages may provide only limited capability. A route-optimization package, for example, may perform routing and scheduling functions but not tracking. Telematics, the integration of wireless communications and computing, may improve driver performance and fleet utilization, but not provide timely access to data — at least not without incurring additional expenses.
Given the expense and complexity involved in deploying traditional logistics solutions, it is no surprise, then, that many operations avoid these risks simply by doing nothing. According to the Logistics Institute at Georgia Tech, two-thirds of companies operating private or dedicated fleets still rely on paper-based, manual systems for route planning and load building.
However, from the moment drivers begin their routes, the realities of the road — including traffic tie-ups and the availability of dock space — will quickly alter even the best-laid plans. Dispatchers using such paper-based systems have little to no visibility into the location of trucks on the road or their delivery status. These setbacks can quickly lead to unnecessary delays, increased costs and poor customer service.
Therein lies the dilemma. You can’t manage what you can’t measure, and you can’t measure what you can’t see. Monitoring the progress of vehicles on the road requires real-time visibility of service times, order status, exceptions and field data. To date, most operations have had neither the financial nor the technological resources to achieve this.
The availability of managed services promises to revolutionize the way fleet managers of any size function.
Consultant Adrian Gonzalez of ARC Advisory Group’s Logistics Executive Council has noted that while some transportation management software vendors are struggling financially, there is healthy growth in the overall TMS market. He attributed this market growth to the increased acceptance of subscription-based pricing and on-demand logistics services.
Unlike traditional technology services, subscription-based, managed logistics systems are charged on a “pay as you go” basis. Outside of minimal set-up fees, there are no capital costs involved. Rather, monthly rates scale up or down based on volume and usage requirements. In other words, an organization pays only for what it uses.
This is a fundamental shift in the concept of logistics technology management, since it virtually eliminates any financial and technological risks for the operation. As such, it provides businesses of any size access to highly sophisticated, leading-edge platforms without incurring capital costs associated with licensing, acquisitions and ongoing maintenance. Functionality and reliability are also guaranteed, with services available anytime, anywhere from any device.
With real-time, low-cost visibility into field operations, any authorized user in an organization can track assets and order status, monitor field exceptions, and adjust scheduling as changes occur. This has proven effective in improving service, reducing costs and ensuring optimal use of resources. In most cases to date, these services have proven to reduce operating costs from 5% to 15% on average.
It is only recently that this type of efficiency has been available to the mainstream market. The ubiquity of the Internet (over which on-demand services are distributed), technological advancements in wireless telecommunications, and mobile Internet applications offered at an affordable price have all been instrumental in bringing this about. In fact, the communications functionality required to make it work can be found in something as simple as a Web-enabled phone with global positioning system technology.
As the transportation industry evolves, competitive pressures demand that companies operate more efficiently without compromising customer service. Having real-time visibility into all aspects of fleet operations at an affordable cost is one highly effective and simple means to achieve that.
With the new breed of on-demand services, businesses of any size can take advantage of these capabilities.
Cube Route offers services to help shippers deploy and manage delivery processes and transportation.
This story appeared in the Nov. 8 edition of Transport Topics. Subscribe today.
