The road ahead

With billions of items being delivered to millions of destinations, logistics is a sector ready to be e-enabled. Sally Nash...

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.

  • tbg.co.uk

    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.

  • exel.com

    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.

  • salvesen.co.uk

    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.

  • tdg.co.uk

    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.

  • hays.co.uk

    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."

  • elogistics.com

    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.

  • translogistica.com

    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".

  • tescodirect.com

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