With billions of items being delivered to millions of destinations,
logistics is a sector ready to be e-enabled. Sally Nash
reports
The UK distribution industry has already embraced many forms of
technology over the years in both its warehousing and transport
operations.
Sophisticated barcoding and tracking devices have taken the
place of pencils, clipboards and one telephone in a portakabin.
The influence of the Internet is also present in commercial
vehicles. The UK is about to follow the example of the US where
drivers can get access to the Internet and e-mail as part of an
entertainment and communications package.
Despite this speed of change many small and medium-sized
transport firms are still not ready to embrace Internet technology,
says Stuart Archbold, chairman of Archbold Freightage, a
medium-sized distribution firm.
However, over the last six months, leading distribution
companies have recognised that the Internet and e-business will
play a major influence on the transport and distribution sector.
Many of them have started offering e-commerce fulfilment services
and are looking at looking at using e-procurement within their
organisation.
Gerald Woodgate, from Roadtech Computer Services, thinks the
transport industry is well primed for an Internet revolution.
"The concept of the Internet is not that new, and EDI as a
concept really got distribution firms going. Big companies have
been gearing up for it for some time."
According to road transport IT expert Derek Beevor, the
electronic revolution will create many losers but he predicts that
many firms in the transport sector will be among the winners.
The main driver for this recent explosion of interest in the
Internet has been customer demand - particularly e-tailers
demanding a fast and cost-effective method of home deliveries. The
main supermarket giants have also made strenuous efforts to beef up
their home delivery operations which has also had an inevitable
knock-on effect on road transport. Retail analyst Verdict has
warned that the success or failure of Internet retailers will be
their delivery systems.
Chris Elliott, the European marketing director at software
company Manugistics, says, "The last few years have seen the larger
haulage contractors change the focus of their businesses. By using
sophisticated software, these companies are now able to add value
by passing on their knowledge to customers. They have become
virtual service providers [VSPs]."
Elliott believes that the catalyst for change was the
ever-decreasing profit margins being made within the logistics
sector. They realised that in order to compete and survive they had
to offer more to customers.
"The downsizing of fleets owned by these VSPs has highlighted
this. It is pointless having a large quantity of assets tied up in
trucks when it can easily be outsourced."
A lot of logistics firms are playing a wait-and-see game with
many of the technologies involved, such as Wap (wireless
application protocol) phones.
"There is scope for Wap phones in road transport but there are
still a lot of question marks," says Dr John Trowriss, a lecturer
in logistics and transportation. He believes that they could be
useful for drivers to get real-time information on traffic delays
but wonders whether some of the hyped-up uses - getting stock
market prices, travel prices and online gambling - would be as
relevant. The latest use of a mobile phone in transport is tracking
consignments via satellites and receiving short messaging service
(SMS) text messages over the mobile phone with details about a
consignment's location or arrival.
Another recent development has been the rash of new Internet
exchanges or marketplaces which have sprung up. These are designed
to improve freight efficiency by matching the transport needs of
manufacturers and retailers with the spare capacity in road
transport vehicles.
Companies such as Just2Clicks, E-logistics, Freight Traders and
Translogistica promise to give road hauliers a larger choice of
customers by offering an electronic auction system where
manufacturers/retailers advertise their loads and logistics firms
bid for it.
Generally, distribution firms have mixed feelings about the
trend, particularly regarding security.
Beevor, who works with one of the UK's main trade associations,
reckons that the systems are unworkable and that, "nobody is buying
it". Describing one of the current systems he says, "They are
saying 'give us your bank details' and we'll take 4% from you for
any transaction."
Despite these minor glitches the Internet's love affair with
road transport looks set to deepen. The potential is enormous, as
Cap Gemini consultant Erik Van Dort points out. He urges hauliers
to take e-commerce on board or face being sidelined by their more
forward-thinking rivals.
What can road transport firms use the Internet for?
- Communicating with staff and customers. Leading distribution
player Christian Salvesen reckons that it communicates
electronically with 70% of its customers
- Picking up back loads. One of the bugbears of the industry is
empty running - the inability to pick up a load on the return leg
of the journey. It is estimated that around 30 per cent of vehicles
could be taken off the roads if lorries were always full
- Securing warehousing contracts and longer-term distribution
contracts. Some Internet sites are beginning to offer more than
just spot-hire loads
- Sourcing prices for fuel, rental equipment and other
services/products
- Recruitment. There is an acute driver shortage at the moment
and this way companies can access sites specialising in driver
recruitment
- Helping customers track loads - express carrier Business Post
has launched Home Serve, where customers can find out where their
consignments are via the company's Web page. International hauliers
also use the Internet to track their vehicles through Eurotunnel.
This is useful during the many French drivers' blockades
- E-commerce fulfilment operations - linking in with e-tailers
and retailers' supply chain systems to offer a complete
distribution service
- Transactions, billing and estimates
What are the leading distribution firms doing with
e-business?
Tibbett & Britten Group
Launched its second e-commerce fulfilment venture in April
initially for housewares and gift firm SF Cody. Tibbett &
Britten is running the on-site call centre which handles customers'
telephone and e-mail enquiries. Both on and off-line inventories
are held in a single location. The group already has a number of
e-commerce operations worldwide including Track One Logistics,
which specialises in the warehousing and delivery of online sales
of music, videos, books and computer games.
Exel (formerly NFC)
The largest distribution firm in the UK has just launched Exel
Direct, a business-to-consumer fulfilment and home delivery
service. Exel says its aim is to help retailers, e-tailers and
manufacturers open up new distribution channels - such as Web,
catalogue and phone. "We are dedicated to providing one-stop
e-commerce and supply chain solutions," says the company.
Christian Salvesen
Has no special e-commerce operation but says it is well poised
for growth in home shopping arena. The company "has one of the best
IT systems in the market", says chief executive Edward Roderick and
has vast experience of communicating electronically and of
item-picking in warehouses. Roderick also believes that its shared
user operations - where vehicles and warehouses contain a variety
of customer products - will enable it to capitalise on any
opportunities arising from e-commerce.
TDG
TDG has set up a special division dedicated to the growing
number of dotcom Internet start-up companies. David Hindson, TDG's
IT and marketing director, says the main problem in working with
dotcoms is growth. One customer has moved from 35 orders a week to
over 4,000. TDG points out that unlike normal retailer/manufacturer
relationships with third-party contractors, dotcoms expect to take
on a greater share of the risk. "We might lose money with them for
the first six months while they build up their sales," says
Hindson.
Hays Distribution
Richard Tilley, head of IT solutions, says, "Hays is developing
e-commerce business solutions for procurement and fulfilment and
these are focused on the B2B arena where the benefits and
opportunities to reduce the cost of the supply chain are greater,
allowing clients to concentrate more on their core B2C activities."
Hays has recently introduced an Internet ordering solution for a
medium-sized leisure retail company.
New entrants to the market
E-logistics - £2bn in two years
E-logistics was launched at the beginning of the year in a blaze
of publicity. Its aim is to move £2 billion worth of transport
within two years.
But just how is it going to achieve that? By bringing together
the needs of shippers and hauliers in the form of a "reverse"
auction. Shippers with loads to move can advertise their work over
the Web site and transport firms can bid.
"E-logistics is committed to being the leading global Internet
service for the logistics industry," the company claims.
As the issue of security has emerged as a growing concern among
hauliers, E-logistics has made all the right noises on this issue.
It gives a payment guarantee, which means that the risk to the
haulier is eliminated.
"Our aim is to make the E-logistics site every logistics
professional's favourite business tool," says chief marketing
officer Tim Meadows-Smith. "It should provide in one place a
comprehensive range of information, a place to discuss with and
learn from fellow professionals and a place to do business - better
informed than was ever possible before the advent of
e-commerce."
Translogistica - a logistics marketplace
Launched in May, Translogistica is an e-business marketplace
that enables shippers (retailers, manufacturers or wholesalers) to
issue invitations to tender for their European distribution work
via the Web.
Shippers will receive responses to their tenders and will be
able to use the systems analysis tools to help them choose the most
suitable provider.
The service is aimed at shippers who issue, or logistics
providers who respond to, simple or complex long term invitations
to tender for transport services. This market is estimated to be
worth around $160 billion in Europe.
"This is not a bulletin board, simple electronic freight spot
market or load matching service," said Tom Wahnsiedler,
Translogistica's chief technology officer.
The marketplace has been developed in conjunction with IT
services company CSC and is set to roll out fully in the
autumn.
Tesco - direct to the home
Tesco has been rolling out a nationwide "Tesco Direct" home
shopping scheme via the Internet which is co-ordinated via the
local store and distributed in a new fleet of vans to customers'
homes. Customers order via the Internet, the information is fed
through to a local store which then arranges for the products to be
picked in-store and then delivered in a "Tesco Direct" van.
Although the home shopping aspect of the Internet has grown
enormously for Tesco, the retailer sees even more potential in the
B2B market, where suppliers of - tomatoes, for example - can
advertise their wares over the net and Tesco can put in a bid for
them or alternatively Tesco can put up its own bid, saying "We need
2 million kg of tomatoes - can anyone provide them?" "The potential
is incredible but we haven't got a platform for B2B yet," says the
spokesman. In the future, managing the supply chain will become
even simpler because refrigerators will be able to track the
barcodes of products that are empty, send the message to the store
and log it on the customer's shopping list automatically. Tesco is
also using e-mail to communicate with customers. "We can ask
customers what the service has been like, tell them if we have
launched something new or if we have any special deals. We can even
warn them if their delivery is going to be late!"
In May this year chief executive Terry Leahy, said, "Customers
know and trust Tesco and that gives us a real competitive
advantage. Thirty percent of our customers shop nowhere else online
which means Tesco is driving the use of the Internet." Leahy claims
that Tesco is "the world's most successful e-commerce grocer".