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January 3, 2017

Over the years, the transportation industrys billing rates have not kept pace with the rate of inflation. This scenario puts transport companies under tremendous cost and margin pressure. To better manage the bottom line, transport and logistics companies must adopt newer and smarter ways of managing the supply chain. This includes intelligent and integrated systems that can talk to each other. Today, every enterprise wants to provide a personalized experience to its customers by giving real-time responses and on demand fulfillment. While much of the buzz around the Internet of Things (IoT) is around electronics or wearables technologies that drive adoption of a highly personalized and smart lifestyle — the IoT also has the potential to impact the logistics and supply chain function.

Intelligence is the new competitive differentiator for transportation and logistics companies. Thanks to the advent of analytics, artificial intelligence, and the Internet of Things (IoT), the adoption of smarter processes such as predictive models for demand estimation has become easier. Besides improving safety levels, these smart approaches also result in better fleet utilization, optimized warehouse space, and improved customer experience.

Intelligence is about Conquering Complexity

Most businesses today operate in complex and fiercely competitive markets. Intelligent transportation enables businesses to cut through the complexity, and build lasting customer relationships, by being sensitive and responsive to changes in the supply chain. Simply put, intelligence in transportation is the ability to sense or accurately predict changes, and auto-respond with appropriate actions and changes. Examples include automated re-planning of routes based on GPS updates, or re-scheduling deliveries based on changes in customer preferences.

Demand Prediction is Important

Dependent on events such as cultural festivals, product launches, and e-commerce marketing promotions, demand in the transportation and logistics sector is cyclical in nature. Success depends on the efficiency of the analytics-to-business intelligence process specifically, the ability to scientifically predict demand, by correlating past trends with future events. On the operational front, to stay competitive, transport companies will need to implement a series of proactive and reactive steps such as smart fleet positioning, timely staffing, and efficient demand management.

Crowdsourcing has Great Potential

Staffing scalability is another critical success factor for logistics and transport companies worldwide. The American transportation sector, for example, constantly faces driver shortage. The ability to quickly ramp up and ramp down resources based on demand, helps improve operational agility and profit margins. For instance, Uber has experimented with delivery of food as well as providing courier services, essentially letting companies crowd-source the delivery function. Although crowd-sourcing has not yet caught up in developing markets, it has great potential to optimize staffing, and is being increasingly adopted by last mile delivery operators. With tight security and robust verification processes that make impersonation difficult, crowd-sourcing offers great potential for intelligent logistics.

Tech-based Logistics: The Game Change Opportunity

Drone based deliveries and self driving vehicles are emerging trends to watch for. By automatically picking up and delivering standard items from warehouses, drones can revolutionize last mile delivery. Similarly, self-driving vehicles can be a viable option for automated truck movement, and warehouse to warehouse inventory transfers. With such technology based logistics, most companies, especially e-commerce portals, can now assure customers of deliveries within 24-48 hours. No wonder, these companies have invested in development of logistics software applications for both – desktop and mobile platforms. With e-commerce on the rise, tech based logistics is the new emerging opportunity for transport companies.

Integration Drives Intelligence

Intelligent transportation is driven by integrated systems and applications that automate the transportation life cycle end to end including procurement, shipping, and payments. These enterprise applications form the nervous system of an intelligent transportation function, enabling it to adjust and respond to changes appropriately.

Going forward, in-transit visibility is one area that will witness greater adoption and impact of the IoT. Cloud based GPS and Radio Frequency Identification (RFID) technologies will enable in-transit visibility, through identity, location, and other tracking metric information. RFID will allow data to be transmitted to a cloud. The package will be tracked with GPS, which can also help analyze traffic scenarios and driver details, and suggest convenient travel routes. All of this will provide visibility of an item throughout the process – from the manufacturer to the retailer. Transport professionals can simplify shipping and delivery, ensure accurate and timely delivery prediction, and monitor other details related to an in-transit product.

The transportation function has many stakeholders, and thus, many disconnected solo parts. Products are handled and transferred internally between manufacturers, suppliers, distribution center, retailers, and customers. These varied, individual connected points demand a more agile and interconnected supply chain. Therefore, agility and adaptability are crucial factors for an enterprise to remain attractive to customers.

Big Data Plays a Big Role in Demand Prediction

Analytics and Big Data present a bright future for the transportation sector. With the right set of analytics tools and processes, logistics companies can accurately predict demand. Its important for these predictions to be based on data from internal as well as external sources. While enterprise CRM, ERP, and data warehousing systems are good sources for deriving insights from past trends, social media should be utilized as a source of customer sentiment. Its time for logistics functions to take note of this important source of customer preferences and business intelligence.

The Future of Logistics: Not a Cost Center, but a Business Intelligence Hub

With rise of ecommerce, mobility, and social media, customers are spoilt for choice, and expect fast delivery. The logistics and transportation industry can deliver on these expectations and elicit customer delight. Most companies however, view logistics as a cost center. Its time to change and disrupt this cost center line of thinking, and get into value creation mode. Viewing transportation and logistics as a strategic function, and bringing it under the business intelligence ambit, could be a good start.

For businesses of all industries and sizes, intelligent logistics can be a value differentiator that enables companies to stay ahead of competition. It has potential to usher in newer levels of operational agility, service levels, and inventory optimization. Are businesses intelligent enough to face this new wave of change? These are exciting times, and itll be interesting to watch transportations evolution from operational to strategic, and from manual to smart.

Ramesh Nayak heads the Logistics Center of Excellence in TCS Business Process Services (BPS) unit. He has over 22 years of experience in the logistics industry. He currently focuses on business development of TCS logistics BPS offerings.


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