Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

3 Signs that a Trucking Company is Keeping Pace with Technology

3 Signs that a Trucking Company is Keeping Pace with Technology

Trucking Technology

In order to extract every drop of competitive advantage from your investments in technology, you need to make sure that service providers such as trucking companies are on the same page. Even the shiniest of new technological tools underperforms if your provider does not fully contribute to its usage. Conversely, a carrier that is on the cutting edge can help you keep up with the latest advances.

Identifying these providers is not easy, however, given the number of innovations and the frenetic pace of change. Moreover, supply chains are becoming more complex, putting more pressure on buyers to ensure that transportation partners can respond to complicated shipping scenarios.

A recent report on IT in trucking from business intelligence company, EFT, provides a useful summary of where things stand on the technological front in the industry. EFT surveyed more than 200 industry respondents for the report. It’s interesting to see how the leaders of these organizations are translating marketplace dynamics into an investment strategy.

The findings affirm the importance of technology as a way to keep pace and hopefully differentiate in the industry. Only 5% of fleet IT budgets decreased from the previous year against 57% that increased.

Findings like these, coupled with TMC’s market experience, point to three key indicators of how well service providers are responding to the IT challenge.

Input

A carrier’s ability to provide all of the data input shippers need to manage complex transportation networks is a gauge of their technical sophistication.

The supply chain planning tools that are critical to effective management feed off the supply/demand information provided by trucking companies. And as networks have to flex with complexities such as multi-stop routings and more stringent delivery windows, the timeliness and accuracy of this input becomes even more critical.

This is especially important in inbound freight management programs, where manufacturing operations are reliant on the flow of incoming goods.

EFT asked respondents to indicate where they are investing the most money in technology over the next 18 months. About one-third of the companies flagged TMS technology, closely followed by mobile device applications and EDI systems. Lowering costs and increasing customer service were the chief incentives for making technology investments.

Investing in better ways to collect, marshal, and disseminate the data that customers are thirsty for should be a top priority for transportation service providers.

Output

Meeting shippers’ requirements for operational data is only part of the story; tech-savvy trucking companies also use the latest technology to field data output from shipper customers.

Again, increasing complexity is a central theme.

Distribution methods such as crossdocking, breakbulking, product mixing, and the use of modal conversions, add to the complexity of freight networks. While these techniques cut costs and streamline the supply chain for shippers, for transportation service providers they represent a highly challenging asset management problem. Transportation companies that are not investing or are underinvested in this area are at risk of not being able to support highly complex customer requirements while maintaining profitability.

Little wonder, then, that some 40% of respondents in the EFT study indicated that they will invest in route and schedule optimization technology over the next 18 months, the top investment option. This technology also scored the highest on where respondents are seeing the greatest return on investment (ROI).

Big Data

The third indicator of a provider that is actively pursuing technical excellence is their involvement in harnessing the benefits of Big Data.

From the provider’s perspective, turning Big Data into the Big Differentiator is still a tough nut to crack.

Seventy-six percent of respondents in the EFT study said that Big Data has at least some importance for their fleet. But the 40% that see it as “somewhat important” reflect a strong element of uncertainty. Translating Big Data into meaningful data appears to be one of the main sources of doubt. According to respondents, the most important feature of a successful Big Data strategy is the right metrics.

Still, Big Data is key to managing the growing complexity of supply chains and achieving closer integration between shipper and service provider. At the very least, a carrier needs to be developing ways to leverage Big Data’s potential for storing and analyzing data.

Service providers that lag behind in their adoption of new technology should raise a red flag for shippers. For example, in the EFT study about one-third of respondents say that upgrading legacy back office systems is a priority. Shippers should be wary of trucking companies that give a high priority to just catching up with new technology.