Kerynn Holtzman, division vice president of customer operations at SkyBitz talks about how the Coronavirus pandemic sent shockwaves throughout the entire global supply chain. Manufacturers, shippers, and carriers were forced to restructure their business model in weeks as freight requests dropped, and the concern for employee safety rose. This article addresses how IoT solutions can drive profitability and have a substantial impact on carriers as the supply chain returns to normal.
2020 began with the Coronavirus pandemic sending shockwaves throughout the entire global supply chain. Manufacturers, shippers, and carriers were forced to restructure their business model in weeks as freight requests dropped, and the concern for employee safety rose. Transportation and logistics make up the most substantial cost associated with supply chain figures, with 77% of transportation costs stemming from trucking. Because of the staggering drop in shipments, the last six months brought some challenging yet encouraging lessons learned from across this industry.
Carriers who tried to meet every shipper request they could get their hands on, while also focusing on the reduction of operational expenses, quickly realized the importance of data monitoring and the overall proper utilization of information. It’s not that they have not implemented these solutions or further, have even realized how to leverage IoTOpens a new window across their operation. The real challenge for many is that to be more profitable during these unprecedented times, carriers need to reduce inefficient data mining practices and focus on continuity of real-time and actionable information between departments and with shippers.
The Role of IoT In Supply ChainÂ
There are several ways in which IoT can drive profitability and have a substantial impact on carriers as the supply chain returns to normal. Since the volatility in capacity and rates will linger for many more months, if not years, carriers need to be able to meet market demand regardless of cost. A couple of ways to do this is to be competitively positioned by leveraging technology to keep margins as high as possible. Offering transactional transparency will also help build a strong network for partners, drivers, and shippers.
While volumes slowly creep back up as consumers are ordering more online, many companies are squeezing the most out of their existing fleet monitoring solutions. Others are expanding into new smart features, such as cargo sensing and cameras within their fleets, or have improved their driver behavior programs through an incentivized, fee-based structure. Driver retention through efficient dispatch processes is equally important as the industry deals with driver shortage due to the greying out of the workforce and the current unemployment rates associated with COVID-19.
The need for experienced drivers has plagued the trucking industry well before COVID-19, but since the pandemic, almost 80,000 drivers lost their jobs. Carriers are now even more determined to improve driver behavior considering the reduction of qualified drivers and the increase in incidents due to speeding. Inefficient driving behaviors not only contribute to high-risk compliance violations but wear and tear on the vehicles, higher fuel costs, and higher insurance premiums, all of which are easily circumvented with proper monitoring processes.
Vehicle maintenance has always been a top priority for trucking companies as they look to right-size their fleet. The larger the fleet, the more critical it is to engage in a preventative maintenance program that allows proper planning when dealing with the removal of revenue-generating assets (trucks) from service for maintenance prior to a field break-down. Since most budgets for the next few years will be impacted by the economic events in 2020, reducing capital expenses by not purchasing new assets will be paramount to most businesses this year. In addition to maintaining a healthy fleet, companies are focusing on better dispatch procedures that maximize the use of the trucks that are in use.
The proper aggregation of data will lead to more streamlined business processes, which will significantly impact profitability across the entire operation, from dispatch and maintenance to finance and human resources. Improving communication and building a strong partnership with shippers will also be vital, and there is no better way to do that than with better data, images, and reporting tools that deliver a more transparent business environment.