Sydney, Australia, November 27, 2012 – According to Ralf Moller, General Manager Marketing, Australia & New Zealand Sales at logistics software company WiseTechGlobal, the growing trend of online retailing is just another example of how expanding technology has empowered businesses. That means that those involved in domestic transport, in any location, must increasingly understand and adapt to the fact that online retailing is changing the manner in which goods are ordered, transported and delivered throughout the global supply chain.
“Today, there are at least 197 billion reasons for domestic transport companies to seriously contemplate how online retailing is changing the industry,” Moller says. “In 12 months’ time, there will be more than 224 billion reasons. That’s the amount of money consumers around the world will be spending online; and it is growing at anywhere between seven and 20 percent per year in developed countries -- even faster in developing nations.”
Moller says that servicing the online retailing market will require transport companies to radically rethink their business models, as online retailing is having a major impact on the logistics supply chain. “To survive this shift, the entire domestic transport industry will have to become more sophisticated and develop ways of delivering greater choices at lower costs,” he says. “In the traditional retail model, consumer items are taken from the port to a central warehouse, put away, then picked and packed for another journey to a regional distribution center, stored again, then picked and packed for yet another journey to a retail outlet. Initial forecasts are never right, so there are further journeys between distribution centers and retail outlets to meet consumer demands. This causes wasted millage, double handling, more picking and packing and increases storage needs – the cost of which is ultimately paid for by the consumer. Until now, trucking companies have had a fairly straight forward job of moving and storing goods according to the instructions of their customers who plan and manage logistics primarily to satisfy their desired stock levels.”
But hold on tight he says - all of this is about to change!
“This online retailing trend is having a massive impact on the supply chain as the logistical shift in the entire domestic transport industry requires the industry to become more technologically sophisticated in order to deliver more goods with greater choices at lower costs,” says Moller. “In the online retail world, each individual purchase is a single consignment from factory or warehouse to consumer. For these online sales there is no need to forecast desired stock levels in numerous retail outlets or determine how best to move the stock around regional warehouses and stores. The logistics planning is now handed off to the transport company, and it’s a much more complex problem to solve. Goods purchased online can now get from factory to consumer far more efficiently than those that are purchased at retail outlets. There are far fewer transport legs and practically no warehousing necessary. There will be less money and less work for transport companies in the retail sector. The new effort that’s being created by online retailing attracts higher rates, and those companies that have the right capability will find this a very lucrative sector. However, to get a piece of these rapidly expanding opportunities transport companies will require far more sophisticated logistics planning and management capabilities.”
Every transport company knows that the key to profitability is optimizing utilization of assets, and that means having fuller loads along the shortest routes, he points out. Keeping utilization rates high in the context of scores of consignments, from scores of regular customers to scores of regular locations can be tricky enough – and typically requires a very capable scheduler. But dealing with hundreds of consignments, from hundreds of new customers to hundreds of new locations on a daily basis and keeping your utilization consistently high is pretty much impossible for the human brain. Keeping track of all these consignments and having to deal with all those customers, many of whom will represent one off and not repeat deliveries make operations far more complex. “These customers are often very needy and they are often not familiar with dealing with large transport companies. The responsibility for planning and customer care around these demanding consumers is shifting away from the wholesalers and retailers, to the transporters,” Says Moller.
So what does that mean for domestic transport providers? For online sales there is no need to forecast desired stock levels in numerous retail outlets or pre-determine how to best move stock around regional warehouses and stores. Goods purchased online can ship from factory to consumer far more efficiently than those that are purchased at retail outlets. But this requires a very capable transport management system, with automated rating, and the capacity to take orders electronically, online and with emerging mobile interfaces. The system will need to be capable of tracking and tracing, capturing signatures and provide a web portal to offer customers with real-time information and realistic ETAs. Automation, accurate business statistics, optimized scheduling and reliable delivery times will all contribute to keeping back office costs down and service levels high. The new labor that’s being created by online retailing attracts higher rates, and those companies that have the right capability will find this a very lucrative sector.
“Countless real life examples have shown that once you reach a level of complexity that would be typical for even a 10 truck operation in this type of industry segment, computer generated schedules and routes are consistently 20 percent to 30 percent more efficient than the best human schedulers in the business,” summarizes Moller. “In the new online retailing environment, that can be the difference between a great success and going broke.”
Ralf Moller is the General Manager Marketing, Australia & New Zealand Sales at logistics software company WiseTechGlobal, which operates the TransLogix and CargoWise software brands. He can be contacted on 02 8001 2200.
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