Do mobility systems provide value to logistics companies in the local market?
It has become almost passé to note that the future of competition will be supply chain versus supply chain rather than business versus business. As supply chain competition increases, so does the demand for end-to-end visibility throughout those supply chains. Supply chain visibility systems have become increasingly sophisticated and more and more commonplace but, without Logistics Mobility solutions, they are still subject to blind spots created by people and product on the move. This article will examine the use of mobility in the logistics industry both globally and locally, note technical considerations for mobility implementations, describe a local refrigerated logistics company’s mobility implementation, and close with ten recommendations for those considering Logistics Mobility.
Global mobile penetration
It seems, from our perspective in Australia and New Zealand, that every person in the world has a mobile phone. The Wireless World Forum1 places New Zealand and Australia close to the top of the list of world mobile penetration rates. While some countries in Africa have single-figure adoption rates for mobility subscriptions, most of the world has ‘gone mobile’. Almost a third of the people in the world today have one or more mobile subscriptions. By 2008, it is estimated that that proportion will rise to one-half. New Zealand’s penetration rate of 82% and Australia’s of 86% are bettered only by Singapore, Taiwan, and a handful of countries in Europe. Not even traditional electronic bellwethers such as Hong Kong and South Korea have a higher percentage of people using mobile phones.
What is logistics mobility?
Logistics Mobility may be defined as the application of mobility technologies such as mobile phones and Personal Digital Assistants (PDAs, also known as portable data devices) to the logistics industry for the purposes of improving productivity, efficiency, and customer service. As they are sometimes more a hindrance than a productivity aid, uses such as voice communications, SMS and email are excluded.
Logistics Mobility adoption
Logistics Mobility is not new. The earliest sytems date back to 1993, around the time of the production of the first PDAs such as the Apple Newton. Devices were comparatively expensive, unreliable and did not fit in a shirt pocket! Today, Adoption rates of logistics mobility around the world differ wildly, with some countries almost at saturation point and others with nearly to no use of such systems at all. Both Australia and New Zealand are at the lower end of penetration.According to a study by the Aberdeen Group2 mobility technology is considered a key competitive tool by nearly three-quarters of fleet operators in North America. 87% say customer service improvements from mobility have met or exceeded their expectations. It is widely accepted that technology adoption in the supply chain in Australia and New Zealand is many years behind industry best practice in North America and Europe. Surveys then, which point to widespread adoption of particular technologies in these parts of the world, can act as a crystal ball for local supply chain practitioners.
How is Logistics Mobility used?
A survey by eyefortransport3 suggests that the most common usages for wireless applications in logistics are:
1. Track and trace
2. Improving driver communication
3. Route and schedule optimization
4. Proof of delivery and mobile imaging
Return on Investment (ROI) on projects commissioned in these areas was achieved or exceeded for between 81% and 92% of companies. Almost all implementations in Australia and New Zealand have some element of Track and Trace and electronic Proof of Delivery (ePOD). This is necessitated by the mandatory use of the paper Proof of Delivery (POD) document to trigger payment for the provision of logistics services.
The improvements made in driver communication are evident and valuable, but this category of benefit is seen more as a side-effect than a primary project driver.eyefortransport found that the major barriers to implementation were initial and on-going costs, integration of mobile to backend systems, convincing senior management of the business case, and persuading drivers of the benefits.
Few modern logistics companies have large numbers of IT staff and those that do also lumber these precious resources with maintaining PCs, fixing email problems and even looking after the telephones.
It is hardly surprising then, that there is a significant barrier in integration of complex mobility systems to other back-office systems. While other vertical and horizontal industries in Australia and New Zealand such as break and fix field service, merchandising and sales, and express courier services all have widespread adoption of mobility, implementations in general transport and logistics could best be described as sparse.
Low margins and the contractual nature of logistics services contribute to the slow take-up. The paradox is that most contracts also contain continuous improvement clauses, but it is difficult to add a new service into the middle of an existing contract with set margins. Most new contracts, however, contain track and trace and ePOD as a baseline service and so the growth in Logistics Mobility in ANZ is expected to be rapid.
Technical complexitiesThe visible parts of any Logistics Mobility implementation are the mobile devices and the application that runs on them.Though it may surprise the non-technical, the application is actually the simplest part of a mobility system. Almost any programmer can cobble together an application on a PDA. The complexity is considerably more significant in the:
- Networks (GPRS, CDMA, 3G, Satellite, Wi-Fi) and automatic network switching
- Network latency4 in public mobile networks
- Necessity for Occasionally Connected models to allow for patchy mobile coverage
- Peripheral systems to create, schedule, allocate, route and track jobs
- Administration of the system eg. Seeing logged on drivers, audit trails of usage, etc.
- In-field recovery of damaged devices
- In-field update of applications
Logistics service providers should beware the generic software house who throws their hat in the ring to bid for a Logistics Mobility application. They do not know what they do not know.
There are 4 main mobility devices to consider.
Small & light
Small screen space
No touch screen
Tablet PC’s $3,000 – $5,000
Consumer PDA’s $700 – $1,300
Rugged PDA’s $1,700 – $3,500
Higher initial cost
Lower TCO In addition, there are variousforms of in-vehicle devices and other mobile devices such as the Blackberry5 available, but few of these are used widely for Logistics Mobility in Australia and New Zealand.Smartphones and wireless PDAs6 are both referred to as converged devices. A converged device is one that has both phone and handheld computer functionality. The smartphone is a phone first and a handheld computer second. The PDA is the opposite.While the smartphone is a popular device and becoming more so, its usefulness for logistics is limited because of its small screen real estate and as there is no touch screen. Almost all logistics applications will require the ability to take a signature.The tablet PC is an accomplished device which has established its place well in the wider mobile market. Logistics implementations, however, are rarely complex enough to warrant the investment in the larger screen real estate. No doubt, the additional expense of the tablet PC also contributes to its low penetration in the logistics market.
Most Logistics Mobility implementations in Australia and New Zealand are on one of the two groups of PDAs: consumer and rugged.The choice largely comes down to priceversus reliability. Although it’s difficult to generalize in this area, operators with smaller fleets or who are new to mobility are more likely to strongly consider consumer devices. Operators with larger fleets or who have previous experience are more likely to ‘go rugged.While there is a common perception that “rugged devices are as prone to breakage as consumer devices”, this is really only true for willful damage: if a driver truly wants to break a device, it doesn’t matter how strong it is. Otherwise, it’s a fallacy.
Logistics Mobility in practice
There are considerable similarities in Logistics Mobility implementations. Most will follow a cycle of six steps.
1. Create: The job (eg. Delivery, pickup, return) to be carried out must be created electronically. The job is often created in an existing backend system such as a Transport Management System (TMS) or Enterprise Resource Planning (ERP) system.
2. Schedule: While there are wildly differing levels of complexity when it comes to scheduling, this step is primarily to allocate the job to a person, and optionally to schedule when it will occur.
3. Route: As the price of fuel becomes more painful every day, companies are looking to be more intelligent about routing, with an aim to spend less time on the road and travel the shortest possible distance. The Route step is optional.
4. Dispatch: Dispatching concerns the physical action of getting the job to the driver. The job starts in the system in which it was created, is integrated to a Wireless Application Gateway (WAG), and dispatched through the mobile network to a driver’s mobile device.
5. Deliver: This step involves the driver making a delivery or a pickup. The driver will also take a signature and associated details to prove the job was completed.
6. Integrate: Finally, the job status and closure details must be integrated to internal systems such as the TMS, ERP, Track & Trace web site and billing system.The data must also be transmitted to the customer and, optionally, to people who have subscribed to the information.
Case Study – Logistics and Freight Services
Logistics and Freight Services (LAF Services) is a small but rapidly growing refrigerated transport and logistics service provider operating throughout metropolitan Sydney, regional New South Wales and the ACT. Business was flourishing on the word-of-mouth generated from providing a quality and personal service to their customer base, but growth was being hampered by manual paper-based systems. Kyle Williams, NSW Operations Manager at LAF Services, remembers “Our company was constantly knee deep in paper. Daily we would employ several staff simply to sort through returned PODs, check for signatures, and reconcile them against manifests.
This was taking 3 people up to 10 hours a day at the best of times, and over Christmas began to take its toll on myself and my management team. There had to be a better way.” Retriever Communications implemented a mobility solution for LAF Services that integrates the customer’s orders directly, allows them to deconsolidate pickups and consolidate deliveries and runs, pushes dispatch jobs directly to the drivers, gathers status information and ePODs instantly, integrates the information into their accounting system, and sends notifications directly to their customers.
The system has removed paper, enhanced the efficiency of the physical process, removed all transposition errors, and taken days out of the payment cycle for both LAF and their customers. Williams says “With the help of Retriever, we were able to come up with a solution which not only helps our staff do their job effectively, but allows LAF Services to expand without rising administration costs. Using the Retriever System we have been able to provide a highly accurate process to ensure all ePODs are instantly returned to our customers.
This has also allowed LAF Services to manage our staff into other areas of our business, and provide a far greater focus on customer service.”
He adds “Our customers, such as The King Island Group and Manassen Foods Australia are able to track and trace their daily orders and gain access to our delivery performance. This has seen a much happier and stronger relationship form between us and our customers. We now have new contracts lined up and we won’t have to worry about the mountains of paperwork that used to be associated with a new contract. Instead we can focus on better service. ”
With many years’ experience of implementing Logistics Mobility solutions, we offer the following ten recommendations:
1. Use a specialist mobile solutions provider. Don’t get fooled into engaging a non-specialist software writer.
2. Review the total cost of ownership of hardware and at least consider the rugged device.
3. Consider an outsourced or ASP7 solution to avoid complexity and support headaches.
4. Simple is best. Keep the application simple to make training easier and avoid mistakes.
5. Keep the first project manageable. Focus on paper-heavy tasks and quick ROI.
6. Don’t go online. Mobile coverage can be patchy so opt for an occasionally connected model with a thick client that will allow your drivers to do their jobs even when they don’t have coverage.
7. Put something in for the driver. To achieve greater driver acceptance, include something in the application which makes the life of the driver easier eg. Time sheets.
8. Allow time for design. The design phase of a project is the most underestimated. It is usually more difficult to agree the requirement than to build the final application.
9. Don’t allow integration to be shrugged off. Data is useless if it can’t be integrated to internal systems and external customers. Make sure that the solution provider understands how to integrate to your systems.
10. Appoint “tech-savvy” power users to learn the system first, train their peers, and be the first port-of-call for support.
Mobility solutions are not yet widely used in the local market. However, early -adopter implementations in Australia and New Zealand show that local logistics companies can achieve productivity gains and improvements in order-to-cash cycles and customer service that match those of their global counterparts.
About Retriever Communications Retriever Communications has been a world-leader in the provision of Logistics Mobility and wireless field force automation systems for over 10 years. Headquartered in Sydney Australia, Retriever Communications delivers software and ASP-based mobile services to customers worldwide both direct and through a partner network.
About Walker Datavision
Walker Datavision is a leading provider of data capture solutions in New Zealand. In business for 44 years, Walker Datavision offers complete solutions in the fields of software integration, barcoding, RFID, wireless communication, and handheld computers. Walker Datavision is the sole distributor in New Zealand for Retriever Communications products and services.
About the author Drew Seitam is Director, Operations for Retriever Communications and a member of the Executive Committee of the Logistics Association of Australia. T +61 2 9006 8600 W http://www.retriever.com.au/
1 Source: Wireless World Forum, http://www.w2forum.com/ 2 Source: Aberdeen Group, Inc. 3 Source: The Use of Wireless and Mobile Technology in Fleet Operations 2005 – eyefortransport, November 2005, http://www.eyefortransport.com/ 4 The time it takes for a packet of data to get from one point in a network to another. 5 Blackberry is developed by Research In Motion Limited (RIM). 6 PDAs are available with and without radios. To enable a Logistics Mobility Application, the device must have a radio. The most common network type used in Australia is GPRS. 7 An Application Service Provision (ASP) solution is one in which the server software, hardware, communications, network connections and support are all outsourced to an external company, dramatically reducing up-front costs.
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