E-commerce is booming. According to the research firm Statista, 230 million Americans will make an online purchase this year, spending a combined total of more than $474 billion. Market research firm eMarketer predicted that Amazon will account for more than 80 percent of the market’s overall expected growth this year, a clear confirmation that customers have grown accustomed to “the Amazon Effect.” How do these increasing expectations and pressures affect logistics behind the scenes?
In the age of Amazon, customers want quick and agile delivery that’s trackable, traceable and predictable. Buyers—whether industrial or consumer—expect a parcel to be delivered in just two days in many cases, with only a few clicks of the mouse.
Expectations of fast delivery are increasing across the board. According to 2016 research from Deloitte most consumers consider “fast shipping” to imply that the product will arrive within two days. Yet research a year earlier indicated that consumers considered a three or four-day delivery window "fast shipping." Deloitte’s observation is that customers “want it now.”
Telematics Help Alleviate a Strained Supply Chain
The trucking industry faces a serious driver shortage. According to the American Trucking Association, America's truck fleets are short more than 50,000 drivers. Those who do take to the road are subject to monitoring by electronic logging devices (ELDs), and their Hours of Service (HoS) on the road is regulated by the Federal Motor Carrier Safety Administration.
Driving time is limited to 60 hours within seven consecutive days or 70 hours within eight consecutive days. The general rule is that a driver is limited to a 14-hour shift and can drive on the road for 11 hours of that shift before taking 10 hours off the road. The requirements vary for other conditions such as interstate driving.
Buyers want their delivery fast (two days or thereabouts), but they don’t want to pay for fast delivery. B2C consumer behavior is now reflected in B2B customer behavior—and the expectations that come with it. With too few trucks, too few drivers, and too few available hours to deliver parcels and packages, shippers are seeking more sophisticated supply chain technology solutions to make their supply chain more efficient.
An increasing number of supply chain solutions today leverage telematics to unlock new datasets that provide new visibility into the transportation industry and their complex distribution systems. The ability to extract and use this data to route and plan deliveries is the secret sauce for shippers, third party logistics providers and transportation companies to boost delivery time in the age of the Amazon Effect.
Wireless telematics systems are ideal when shipments are dispersed or fragmented. They allow different parcels to be tracked with unprecedented visibility and control. Wireless capability has advanced telematics into a very healthy and growing technology niche that supports buyer demand for two-day and short-term delivery. Further, it has the ability to offer supply visibility to the end customer and afford accuracy and real-time delivery windows.
Supply chain telematics provide accurate visibility for accounting and fulfillment purposes. If a shipper is delivering clothing to a retailer, there are typically balance sheet considerations. When the retailer receives the delivery the date and time is recorded on the balance sheet and starts the clock ticking for the retailer to pay the invoice. Visibility also helps when the retailer receives products when customers are most eager to purchase merchandise. Knowing the exact route of the product delivery, and that it will be delivered precisely on the agreed upon time, smooths the entire delivery operation. Deloitte notes that about 80% of their survey respondents value digitization in fleet management and routing optimization. They predict telematics sales will grow at 16 percent per year for the next decade in response to this perception.
But data extraction does far more than report the location of a shipment, today’s advanced telematics data can help enterprises better model their supply chain as competitive market forces grow. With advanced telematics data, manufacturers can also track the condition of the product. For example, pharmaceutical companies have complex global supply chains in which expensive and sensitive pharmaceuticals are shipped. These shipments are very susceptible to changes in temperature and extreme changes can spoil drug shipments, leading to lost revenue. In addition to inventory loss, physical damage to shipments can create customer service issues that can be avoided with the advanced monitoring capabilities of today’s telematics.
Telematics’ Ease of Implementation
When considering any new technology, its ease of implementation is a key consideration. Wireless telematics is much easier to implement than most hardwired configurations.
Modern telematics for a supply chain seeking two-day delivery with features of visibility and control (as Amazon does) can be implemented in a matter of months.
Shippers and manufacturers, logistics and transportation companies have begun to note the pressing urgency to get onboard with robust telematics and to bring “the Amazon Effect” to their business lines. Two-day delivery can be a reality for those shippers who are proactive and seek the benefits of telematics by investing in the technology that can make it happen.
Smart and forward-thinking firms will embrace telematics to gain an early competitive advantage. Those who do embrace it will not only get packages there sooner but will also get packages into the hands of buyers with the quality that they’ve worked hard to achieve, and at a speed that they and their customers never thought possible.
If you don’t, your competitors will.
Paul Washicko is Senior Vice President and General Manager of CalAmp's Software and Subscription Services Business.