Freight transport faces definitive digitalization to respond to the most demanding customer

Barcelona, April 15, 2018.- The data economy is one of the defining characteristics of our current generation. Data, quality information, and analysts to draw conclusions and business decisions. Here, we always bring professional information to help each reader make the best decisions for their companies.

For this reason, we go to one of the reference technology brands: SAP. We remember his story: In 1972, five entrepreneurs in Germany had a vision for the business potential of technology. Starting with one customer and a handful of employees, SAP set out on a path that would not only transform the world of information technology, but also forever alter the way companies do business. Now 46 years and approximately 378,000 customers stronger, more than ever, SAP is fueled by the pioneering spirit that inspired its founders to continually transform the IT industry.

Next, we publish the reflections of two SAP consultants on the digitalization of freight transport. Your opinions result in new reflections.

Konstanze Werle, Director of Industries Marketing at SAP:  You could argue the transportation industry has been using digital for some time. For close to 20 years, railroads have been tracking railcars using automatic equipment identification (AEI) along the track. Also, Qualcomm started GPS fleet tracking in the late 90’s. Electronic messaging has been around for decades. What is different and why is the recent rise of digital technology having a profound impact on the transportation industry?. The industry is experiencing a collision of transformative technology, higher customer expectations, and an influx of investments. Traditionally, the industry provides shippers with cheap and reliable service using established product and performance definitions and metrics.

There has been little initiative to innovate or invest in technology. The industry was rather stable and, while the players changed, the ways the industry conducted business seldom did.You could also argue the status quo changed in 2005 with two separate events. Walmart pushed RFID and Amazon started Amazon Prime. At first, RFID was considered too early a concept due to cost. But while sensor technology was maturing, delivery expectations were increasing.  By 2017, embedded sensors and two-day delivery were expected.With the emergence of smart products, assets, and always-on “things,” we now have access to unparalleled amounts of information. This – along with the evolution of connectivity, Big Data, analytics, and cloud technology – is enabling us to converge operational and information technologies. In turn, this makes machines smarter and drives end-to-end digital transformation, which allows companies to gain value sourced from data and turn insight into action. 

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Konstanze Werle, Director of Industries Marketing at SAP: These changes established the next critical step: investment.Customers are demanding a greater level of service from their transportation providers, driving a substantial transformation from investment. The industry is recognizing the need to change or become obsolete. The examples are plenty:

  • XPO has been on an acquisition binge since 2013 and has grown into one of the 10 largest logistics companies in the world focusing on all modes
  • UPS bought Coyote Logistics, a non-asset owning, technology-focused brokerage operation
  • Big-box companies made acquisitions in the delivery market, e.g., Target acquired Grand Junction and Walmart acquired Parcel
  • Uber Freight rose out of a broker-experienced leadership team that recognized that freight capacity can be better managed through technology
  • Railroads are now providing customers a menu of holistic transportation service options, which better leverages their extensive rail networks

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Marcell Vollmer, Chief Digital Officer for SAP Ariba: Purpose-driven companies do more than just managing people and resources and shuttling products from one place to another while keeping costs as low as possible. They also mobilize people and resources in a way that builds a healthy, sustainable, and scalable culture. This attention does not just capture higher levels of engagement, passion, and loyalty from their employees, but also the hearts and minds of customers searching for meaning in everything they do, say, and purchase. Take, for example, rising public concern over human trafficking. For many, this issue conjures images of illegal domestic servitude. But at the same time, it is more pervasive in today’s supply chain.  Unfortunately, little has been done legislatively to address this growing social injustice – leaving businesses and their customers in the dark on whether they are contributing to the problem unknowingly.

For Mickey North Rizza, program vice president for IDC’s Enterprise Applications and Digital Commerce research practice, writing this commentary was more than just another assignment. It was a mission of love after spending 25 years studying and guiding supply chains and rising as one of the world’s top executives for leading analysts such as Gartner and AMR Research. “For years, rapid economic changes, stricter regulations, and increasingly deep business networks have been making supply chains tremendously risky and complex,” North Rizza explained. “It takes a business community to drive purpose and abolish slavery in the supply chain. Companies need complete, real-time visibility into every supplier – from those they hire directly to the ones introduced by suppliers – to help bring visibility and awareness, and start the process to ensure that their operations are free from any impropriety and injustice.”

After these analyzes, we bring a colloquium on the different perspectives of the data economy, held at the World Economic Forum in Davos 2018. We also think that it is a good opportunity to listen and write notes:

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