Digitalization and its consequences for retailers and FMCG companies
Digitalization, big data, and predictive analytics – these terms have become very familiar in logistics departments everywhere. But what about retail and FMCG – are these industries embracing the brave new world of logistics 4.0 or do they still need to catch up? Their progress is documented in a recent study by Germany’s RWTH Aachen University in cooperation with Transporeon Group. It’s called ‘Everything 4.0 or just hype? Key trends in transport logistics1’. We asked Reinhard Vogler, Key Account Manager, Transporeon Group, to talk specifically about current levels of digitalization in retail and FMCG delivery.
Q: Mr. Vogler, what are the biggest supply chain challenges in retail delivery today?
Reinhard Vogler: In principle, everyone involved in retail supply suffers from a poor communication process. The retailer or FMCG company itself often cannot understand when ordered goods will arrive at the warehouse and won’t know which carrier will deliver them. Only 12% of retailers surveyed in the ‘Everything 4.0 or just hype?’ study reported knowing the planned arrival time of all trucks at the warehouse. We're not talking about real-time information here; only 5.5% of surveyed retailers know actual arrival times1. On-time delivery is usually the responsibility of the company that provides transportation services to the retailer – often this is the supplier of the goods. For fresh food deliveries, this is no easy task as many carriers have to struggle with long waiting times for each delivery.
Q: How can digital solutions help to resolve these challenges?
Reinhard Vogler: Two key solutions enable largely smooth communication within the framework of retail deliveries – they are time slot management and transport visibility. With the cloud-based digital Mercareon platform from the Transporeon Group, there is a time slot management solution specifically for retail deliveries. This system enables transparency and effective planning of incoming goods. The retailer can more efficiently prepare for trucks arriving in the goods receivable area, coordinate the ramps, and deploy the required personnel. Meanwhile, the carrier knows when to arrive on site to avoid long waiting times. With this saved time, the carrier can move swiftly to accept the next transport order.
The same efficiencies apply to the collection of goods from the supplier. When picking up fresh food and other items from origin, the carrier can depend on time slot management to maximize resource utilization, increase productivity, and reduce waiting times.
Q: Now that consumers can track online orders, we are all very familiar with the concept of transport visibility. How does better visibility help in retail delivery?
Reinhard Vogler: The principle is the same and is becoming indispensable for retailers and FMCG companies. The keywords are ‘customer service’. Transport visibility that includes real-time tracking means that the company responsible for transportation services to the retailer knows where the truck is at all times and can react effectively in the event of a delay. This may be just a matter of picking up the phone to inform the customer – the retailer – of the delay.
Q: So that’s better customer service through transport visibility. Can this data be used for further analyses?
Reinhard Vogler: Yes, indeed. Arrival and departure times, as well as loading and unloading times, are made available on the digital platform to all parties on request. These new levels of transparency and access for everyone to a uniform database allow discussion about quality at eye level. Retailers can keep incoming goods events under control; suppliers have the necessary data to improve customer service and to monitor carrier performance; and carriers receive valuable key figures and information to ensure they comply with deadlines, whether for individual vehicles or for external fleets.
Q: We are hearing a lot about big data and predictive analytics. What will the digital supply chain look like in 2020?
Reinhard Vogler: In principle, processes along the supply chain will be more standardized in the coming years than they are today. Digitalization is now reality in transportation and logistics, bringing great benefits to all involved. Big data and predictive analytics are set to increase these benefits exponentially. Transporeon is already working on customer-specific solution packages which will include a wide range of new products including index-based price information, forecasting models, and individual benchmarking.
Q: That sounds very theoretical. Can you put things into more concrete terms for retail delivery?
Reinhard Vogler: Yes, I can give you two tangible examples. One of the products that our development department is working on at full speed concerns the calculation of an ideal time slot for retail delivery. On the basis of the approximate transport time from A to B – let’s say from the fresh food supplier to the retailer’s warehouse – a suitable arrival time is calculated by the system and suggested during the booking process.
Another of our pilot projects leverages big data analytics and this product is already available for selected Transporeon customers. Called the Connecting Load Agent, it uses a variety of algorithms to check which carriers have available capacity in a specified location and on a specified day of loading. The shipper can then invite these available carriers to bid for their order. In times of fluctuating capacities, this enables a win-win situation for everyone – shippers and carriers alike. Shippers can find available capacities in the right place and time, often receiving more competitive bids as these co-located carriers can opportunistically use these orders to reduce empty runs.
Q: To what extent are retailers and FMCG companies already using big data?
Reinhard Vogler: According to the study ‘Everything 4.0 or just hype?’, there is still a lot of catching up to do both in retail and FMCG. Only 41% of retailers include existing data in their future planning. In the FMCG industry, only 47% use data in this way. Given the huge potential of big data to improve forward planning and operational efficiency, many more companies should be using much more big data in order to close knowledge gaps and to make retail delivery even more efficient.
About Reinhard Vogler
Reinhard Vogler joined Transporeon Group as Key Account Manager in Central Europe in March 2018. Prior to this, he worked for several years in the freight forwarding industry and in various positions throughout Germany. During his dual studies (Berufsakademie Mannheim), he gained fundamental insight into the freight forwarding business and also worked as an operative dispatcher. In recent years, his focus has been on sales orientation as a tender manager / key account manager and, most recently, as sales manager at a well-known network freight forwarder.