Trucking’s revenue growth bogged down in paperwork

Trucking’s revenue growth bogged down in paperwork

Transportation and logistics companies could save approximately $459,000 per year as a result of process re-engineering and the implementation of mobile technology across workflows, according to a recent survey conducted by Intermec (NYSE: IN). A significant proportion of companies may be missing out on the potential savings, however. The survey also revealed that more than one in three (39%) companies have not initiated re-engineering efforts in the past year and of these companies, nearly three quarters (72%) have not evaluated their existing processes for at least two years.

Commissioned by Intermec and conducted by Vanson Bourne in April of 2013, the survey  sampled 375 transport and logistics managers at organizations of over 500 employees within the United States, the UK, France, Germany, Australia and New Zealand.

Managers reported that they see broadband mobile communications, such as 4G and LTE, as the single biggest future driver of ROI (60%) followed by integrated vehicle telematics (44%) and RFID (38%), but those who have not deployed new technologies through process re-engineering remain significant, according to the survey. Of those who have not automated processes, nearly 40% cited a lack of business need and 33% attributed cost as the key reasons for not doing so.

Consequently, the survey found that 60% of organizations still use paper-based systems to complete tasks associated with pick-up and delivery, and 9% have plans to deploy paper in some form in 2013.

“A lot of companies get so focused on how they’ve always done business –traditional KPI’s (Key Performance Indicators) and so on, that they fail to notice the supply chain is changing around them,” Jeff Sibio, Intermec industry director for transport and logistics, told Fleet Owner.   

“Take e-commerce, for instance,” he illustrated. “Today’s customer has changed. Fewer people go to big box stores on the weekends, they buy online instead. The expectation is that the order will arrive right away, too. As a result, [there has been a huge growth in] next-day and same-day delivery requirements.  The net-net is that a majority of companies are seeing that their paper processes are not adequate to keep up with the velocity of business today.

“[Carriers] used to look at the shipper as the key entity, but today the end customer is more important,” Sibio continued. “The end customer is having more say about how they want their orders delivered and even by whom they want it delivered, in many cases.  They are also looking for more personalized delivery services, such as getting a notice of the delivery time window. Carriers are recognizing this; they are recognizing who is the real customer.”

With customers demanding same-day delivery services, transport and logistics managers have identified operational efficiency as their number one area needing improvement this year, according to the survey findings. Some 44% of companies believe reviewing current workflows and technologies (process re-engineering) is the most effective means of achieving that.

Key to improving operations is the deployment of mobile, location-based technology, an area where managers believe savings of more than $282,000 can be achieved in the next 12 months. However, almost a quarter (23%) of the companies surveyed have yet to deploy location-based technology, citing a number of barriers including lack of need and cost, which is preventing them from capitalizing on these benefits.

“Deploying mobile technology for pick-ups and deliveries has long been seen as a way to improve efficiency and reduce costs, and these findings prove that point emphatically. Ignoring process change simply isn’t a long term option,” said Sibio.

“If you ask [a company], ‘when was the last time you looked at your processes end-to-end?’ and the answer is more than about twelve months ago, then you may be in trouble,” he told Fleet Owner. “You have to look at your current processes versus the best practices [and you have to look beyond your immediate competitors, too]. Carriers will be compared to other sorts of business experiences customers have had that are more pleasurable to them.”

Interestingly, Sibio noted that small- to mid-sized companies may have an advantage when it comes to responding to changes in the supply chain. “They are more agile and tend to respond more quickly,” he said. “It is tougher for huge companies.”

Regardless of company size, it can be useful to have an outside party come in and spend some time looking at your operation, Sibio told Fleet Owner. For example, I recently spent just one day with a 600-truck private fleet, he noted, and identified ways they could realize $2.5 million annualized savings.

“Those “new eyes” could be anybody, he added. "He/she could be your new IT person who never delivered a single piece of freight, but asks “why?”  

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