Telematics changing the future of logistics

TU-Editor

---

12th November 2015

The American firm – they of the big brown delivery lorries – has actually become part of aeroplane engine maker Pratt & Whitney’s manufacturing effort.

Next year, in New Hampshire the logistics specialist will open a 600,000ft² distribution centre, in which it will assemble, test, and ship out the more than 270,000 parts its customer requires to build its engines and all, naturally, tracked by telematics.

For Pratt & Whitney, this is an elegant solution to a thorny problem – as demand grows for its products, it has ramped up manufacturing capacity. As a result, it now has five factories as opposed to the single one it operated only a few years ago.

So UPS stepped in to take at least some of this manufacturing out of its customer’s hands. This frees up valuable capital and resources Pratt & Whitney can use to do what it does best – design and sell those increasingly popular engines.

This supply chain outsourcing is only one of a number of ways technological advancement is changing the relationship between companies and the transportation fleets that get their goods to market.

Manufacturers aren’t the only companies that need to make sure their materiel gets to the right place at the right time. Thanks to an intense focus on the delivery side by ever-growing online retailers like Amazon.com, customers that purchase goods online expect to get them quickly. That’s the norm with the retailer’s Prime service, which offers free, two-day delivery on a dizzying range of products.

That’s still not good enough for Amazon.com. The company offers same-day, and even one-hour, service in a very limited number of markets. It’s also invested heavily in drone technology, in the hopes that it’ll one day have the clearance to move its merchandise through the air via the small flying machines.

With these innovations from Amazon.com and others, customers are increasingly expecting the stuff they buy remotely to make it to their front door in a hurry.

That presented problems for American electronics retailer Best Buy. The company was a big box retailer moving its goods the old-fashioned way – on-site, through a network of big stores. It had an internet presence, of course, but this was essentially an alternative outlet. Customers ordering online had to wait several days for their goods – a long time, in this Amazon Prime world we now live in.

Best Buy reduced costs dramatically by introducing a “ship from store” solution. The name describes the game – the retailer started to utilise its store warehouses as distribution hubs for the surrounding area. This not only shaved delivery time, it also reduced idle time for the company’s trucks, and made better use of the stores’ warehouse space.

This helped juice Best Buy’s sales. In the first quarter the company was able to implement ship-from-store in all of its 1,400 retail outlets in the US, online comparable sales shot up by nearly 30% on a year-over-year basis.

It’s not just the big guys who are benefitting from the technological advancements sweeping the logistics industry. New Jersey-based US Supply provides products to local contractors and plumbers in its region. Not long ago it centralised its logistics operations in one location instead of at the 12 branches it operates. It also implemented a web-based, integrated route planning and delivery system built by Descartes, a logistics software provider.

These systems have, of course, been on the market for some time. What’s new about them is their scope and power.

US Supply’s system not only helps the company plan the most efficient routes, it analyses and monitors the performance of the drivers, records proof-of-delivery information in real time, and offers a host of other, complimentary functions. It’s so useful that it’s helped this modestly-sized firm save more than $400,000 in annual costs and average a near-perfect 99.6% in-time and complete delivery record.

If the current advancements are transforming the logistics efforts of the world’s companies now, we can only imagine how much they will affect future operations.

Take 3D printing technology, for one. The ability to essentially craft any object localises a company’s transportation efforts even more. No longer will it have to spend money and time shipping an obscure part from a distant warehouse, or obtaining it from a third party (paying a likely costly price for doing so). Instead, it can simply fire up a 3D printer and quickly make what it needs on the spot.

These are busy, exciting times for any company involved in the transportation of goods. Corporate fleets won’t look or function the same in five years’ time, let alone the next decade or century.  Get ready for more than a few revolutions in this facet of business.