10 transformational bets for the freight and trucking industry
17 Feb 2016
By Suheb Siddiqui, Managing Director, PwC Advisory
Winston Churchill famously said, “To improve is to change; to be perfect is to change often.” The trucking and freight industry has warmed up to this advice over the last few years, and 2016 shouldn’t be different. Industry leaders are adopting transformation at a faster pace than before, fueled by a trifecta of influences, as depicted in the following graphic:
Over the last month, we have had five major clients in this sector ask the same question – “Where do we begin and how do we ensure the investment is worth it?”
Following are some key areas that our clients assess as a starting point for their transformation journey:
- 360-degree view of the customer: Demanding customers are driving the need for freight companies to have a complete 360-degree view of each interaction. Trucking companies are looking to invest in an efficient CRM system to automate the sales process, support real time quotes, and provide complete sales team visibility into customers’ shipment issues.
- 360-degree view of the load: Industry juggernauts have made detailed tracking a common expectation. In addition, it has become paramount to immediately track other charges, such as accessorial services, to provide the customer an accurate invoice. Traditional trucking companies are looking to achieve the same level of detail with rich integration of multiple systems and models, such as hybrid ERP and high velocity IT.
- 360-degree view of finances: Too often there are still disparate financial systems to track terminal level costs, fleet costs, and corporate P&Ls. Freight companies need complete visibility into their costs and margins by customer, product, region, line, manager, etc. However, many freight corporations lack “single source of truth” data for performance management.
- Pricing: Freight companies are being asked to price loads in a flexible manner (pricing by mile, dimension, day/week/month, weight break, etc). Too often legacy technology, not business, prohibits creative pricing that could create value for you and your customers.
- New generation technologies:. Internet of things (IoT), big data, and platform as a service are revolutionizing the capabilities that can be built cost effectively. With the drop in sensor costs, IoT can enable tracking of every freight piece, asset, and employee in real time. The huge amounts of data generated by these devices are now being handled effectively using Big Data technologies while Platform as a Service offerings can be used to build applications that easily provide this information to users.
- Operational improvements: Market leaders are dipping their toes into operational improvements, driven by new technology such as automated guided vehicles (e.g., driverless forklifts for horizontal transport and full case picking applications). The vision is to next automate ship to shore cranes, and eventually graduate to quasi-autonomous vehicles. While all these efficiencies are years away from being mainstream, industry leaders are experimenting to avoid being left behind.
- Back office efficiencies: Margins have to be defended and eyes are always on back office costs. Smart investment in technology (financial, procurement, and human resource systems are great examples) can help keep these costs in check.
- Inorganic growth: In this rapidly changing environment, industry leaders are also fostering a culture that continuously scans to identify new competitors and understand how they are (or are not) meeting customer needs. Freight companies need to develop the ability to identify gaps in their products and capabilities and acquire companies that close these gaps and create new opportunities.
- Nimble capacity management: It is critical to develop a nimble and flexible network with the agility to manage surge capacity and large variations in demand on a daily, monthly, and annual basis. This will also enable effective management of supply chain disruptions, such as bad weather. Companies also need to evaluate localization trend.
- Workforce optimization: Organizations need to better manage recruitment and retention of front-line facility staff and drivers, particularly given the well-documented driver shortage. Among the models being considered are those that provide flexible employment.
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