A simple transformation
As far as challenges in the transport industry go, whether local or cross border, there are two which are deemed to have the most impact – those that relate to the value and sustainability of the transport business and those that present operational issues, states NOMALANGA NKOSI, GM for Business Marketing at MTN Business.
If we consider the value and sustainability of each, it’s interesting to note that transport companies receive pressure from both ends of their business. Firstly, there are price pressures from clients who want ever more efficient transport operations and lower prices (especially the large principals that are the lifeblood of many transport companies, and have the clout to demand annual improvements in pricing and efficiency), and, secondly, cost pressures from rising diesel/fuel prices and lower productivity. Transport companies are, therefore, being squeezed from within, and their businesses are seemingly becoming less and less valuable, as evidenced by the drop in share prices for most large logistics groups over the past few years.
On the other side of the coin is the operational structure of the business. Key operational challenges relate to kilometres (the distance trucks travel and the loads carried per kilometre), hours (time drivers spend driving, time spent travelling, standing, loading and SLAs with customers), and litres (fuel consumption per ton per kilometre), as these are the metrics that most influence the performance and profitability of a transport operation.
Transport businesses generally manage their fuel very well as it is the single biggest cost contributor. However, often this is done only on litres per kilometre as they don’t have the systems to instantly merge that with data on loads carried. What’s more, issues such as standing time (especially with regards to crossing borders) and loading time, can impact greatly on the profitability of a specific contract or customer. For example, Company A has an SLA with its Customer B that states that the loading time at any of their distribution centres will not exceed 2 hours. However, in practice, Company As trucks stand and wait and then load for more than 4 hours on average. They then aren’t able to complete all the stops they were supposed to for that day and have to hire in additional trucks to complete the scheduled loads – thus escalating their costs, and the contract then quickly becomes unprofitable.
So what is the solution to these constant challenges? The answer is, in fact, quite simple – field visibility through mobile applications. Mobile apps integrate multiple tools for real-time data collection, collaboration and task completion. Putting everything transport businesses need to hand.
Mobile technology offers an enormous amount of value to transport businesses, and such technology becomes a way to distinguish your business from that of your competitors, and also a mechanism to integrate your processes and systems more deeply with those of your customers.
If you consider that the challenge at cost level is to improve efficiency and productivity, then mobile technology offers real-time field data that makes this possible through a hand-held device, specialised software and a cellular network.
As a result, the last bastion of inefficiency – performance out on the road – can be systematically tackled as ePODs, live updates from the field, and customer notifications of events as they happen, all become a reality. This allows management to identify areas of inefficiency in travel time, standing time and loading time as well as operational errors such as misrouted cargo, as they happen, and address them in the field, rather than only once they’re back at the distribution centre. Customers get better service and are able to address problems as they occur, addressing one of the single biggest complaints from the customers of transporters – the lack of visibility of their goods being transported and delays or problems that affect their SLAs.
Being able to accurately monitor time spent standing (in traffic or crossing a busy border), or loading by having the GPS and date/time field data available in real-time is thus key to measuring contract cost and profitability as well as feeding back accurate reports to customers to correct problem areas or renegotiate contract parameters.
Unfortunately, very few transport companies have access to accurate field data and rely heavily on data input from drivers or customer operational staff, which leads to disputes and paralysis in resolving problems, with each side often having a different version of events. Having accurate, electronic GPS-based field data solves this problem, leads to better customer service and service recovery and a more factual view of joint problems. This also allows for a more accurate metric to measure litres per ton per kilometre, since it allows management to track how much fuel the fleet is using in relation to the loads carried over a particular distance.
It is evident that with the right mobile application and backing of a tier 1 service provider, transport businesses can keep their offices, employees, inventory and fleet connected at every moment of every day. And as investments in mobile applications and technologies increase through 2011 as organisations begin to ramp up both business-to-employee (B2E) and business-to-consumer (B2C) mobile spending, simplifying, streamlining and improve the running of the overall transport industry will become that much easier.