Emerging Technology Helps Reduce Costs, Improve Service Levels and Increase Revenues
GENOA; Oct. 29, 2002 –European companies are increasingly benefiting from telematics, an emerging market of two-way, wireless voice and data communication for the transmission and reception of location-specific information, according to a pan-European survey of more than 120 logistics companies released today by Accenture and Iveco, one of the leading truck manufacturers.
Seventy-five percent of respondents said they expect telematics to play a vital strategic role in their company’s future success. More than half (60 percent) said that the use of telematics has already helped their companies reduce transportation costs, and 85 percent said it has helped improve customer service levels.
The use of new technologies to track and trace products being delivered across Europe and better manage unexpected events in the delivery chain has helped some freight companies improve their profit margins and increase revenue streams, according to the survey. Nearly three-quarters of respondents (74 percent) said that telematic systems had somewhat improved profits margins, and 47 percent said it had helped them increase revenue streams.
“Telematics is opening up new opportunities, new revenue streams and increased cost efficiencies to the European freight industry,” said Gavin Chappell, a partner in Accenture’s Supply Chain Management practice. “New technologies are enabling companies to react more quickly to real-time information, enhance their planning abilities and, as a result, better manage the delivery process.”
In addition to the business benefits, other factors likely to drive the adoption of these new technologies include:
Greater emphasis on security in today’s global environment, since telematics offers the ability to identify products in transit and guarantee load integrity New legislation, because telematics can help ensure driver compliance with the European Union working time directive New pay-per-use business models such as road tolls
The survey also found that there is significant demand for electronic signature capture and transmission; nearly half the respondents (48 percent) said they expect their companies to adopt the technology within three years. In addition, 70 percent of the respondents indicated that they value digital-image and other online applications that support proof-of-delivery (POD) and goods-in-transit (GIT) claims and back-office reconciliation; 30 percent said that these applications have “high value” to them.
Survey findings also indicate that voice communications, which currently account for more than 90 percent of company communications with their drivers, would account for less than 60 percent of such communications within three years, being surpassed by full-text (GPRS) and satellite-based systems.
In the area of “track and trace,” the survey indicates a trend toward greater sophistication and detail, leading to pallet- and SKU-level monitoring. Nearly all the respondents (95 percent) said they anticipate using some level of track and trace technology within three years; 68 percent of respondents indicated that this technology would be predominantly Web-based.
However, although companies recognize the business benefits of telematics, the current high cost of the technology is holding many back from implementing it. In fact, 90 percent of respondents in the survey said that the high cost is a serious obstacle to investment, and 89 percent said they want greater clarity on the return on investment.
“Telematics and the use of real-time, always-on technology is transforming the future of the supply chain,” added Chappell. “While costs are still a barrier to investment, they are starting to fall and will continue to do so, strengthening the business case for telematics. The supply chain winners of tomorrow will be those companies that recognize that the game is changing and start to put their strategies into place.”
Between July and September 2002, Cranfield School of Management and CSST, on behalf of Accenture and Iveco, interviewed logistics directors with operational responsibility in 122 freight companies across Europe: 27 from companies in France; 26 from the UK; 25 from Spain; 24 from Italy; 12 from Germany; seven from Benelux; and one from Sweden. For the purpose of the survey, “telematics” was defined as: “The convergence of wireless communications, location technologies, and in-vehicle electronics. It enables companies to provide value-added services to consumers, interact with customers in new ways, create new business opportunities, reduce costs and improve efficiencies while delivering superior products.”
Agip Petroli and Fiera di Genova also contributed to this survey. Agip Petroli heads the sector of Eni dealing with procurement sale, shipping and refining of crude oil and with storage transport and sale of oil products. Fiera di Genova is an organizer of leading exhibitions and events in the fields of transport, maritime and pleasure boating.
Accenture is the world’s leading management consulting and technology services company. Committed to delivering innovation, Accenture collaborates with its clients to help them realize their visions and create tangible value. With deep industry expertise, broad global resources and proven experience in consulting and outsourcing, Accenture can mobilize the right people, skills, alliances and technologies. With more than 75,000 people in 47 countries, the company generated net revenues of $11.6 billion for the fiscal year ended August 31, 2002. Its home page is www.accenture.com.