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Logistics and shipping: enabled by IT

IT usage in the logistics and shipping industry is 100%, wherein it facilitates all the functionalities of this business—from pickup to trace and tracking to delivery of consignments, says Nivedan Prakash

IT is considered as the backbone of the logistics and shipping industry. It is a great enabler in this business, without which most functionalities of the industry cannot work seamlessly, without which it would be relegated to the status of just another unorganized sector.

Industry experts believe that IT not only acts as a support system but also as a strategic weapon. Today, IT is involved in each and every step of this business—right from the time a consignment is picked up from a customer’s place till the time that it is delivered to the consignee. Throughout the process, the help of IT is taken, including for bagging, transportation, and clearance.

According to industry players, without IT, they will not be able to work at all as it is embedded into their businesses. The latest technologies are being used in this industry for better performance, reliability, availability, manageability, and scalability.

In developed countries, logistics and supply chain management (SCM) have matured and the technologies are already in place, whereas in India, the industry is still in the process of adoption. By far, the present IT requirements in the Indian logistics and shipping industry are Track and Trace, Warehouse Management System (WMS), Transportation Management System (TMS), ERP and Scanner implementation, Automatic Conveyor Belt system, and Scan based Auto Sorting tables and process.

The notable emerging technologies that will help in making a difference would be Warehouse Control System (WCS), Standard Interfaces (EDI standards) for B2B transactions, Web Services, RFID, and Telematics.

S R Mallela, CTO, AFL, said, “In this industry, the emerging trend is to get the information fast and to operate the network in a cost optimum manner. How cost-effective network reach can be, how do you manage the network operating cost, and how to optimize the cost and improve the yield are some of the major requirements. You should have a centralized data center, where you will capture all the information and run your business accordingly. Therefore, IT requirement is a must for this industry.”

“The growing trend of technology usage in this business is how we can facilitate business processes to improve the speed of pickup and delivery services. The trend which is catching up in the logistics industry per se is GPS tracking for the fleet, RFID technology to track shipments, and sophisticated track and trace for the customers including options like SMS-based or e-mail-based tracking. These are the trends largely seen in the Indian logistics industry,” said Prasad Dhumal, National IS Manager, DHL Express India.

Shirish Gariba, CIO, Elbee, believed that there are two to three IT requirements in this industry. The primary one is to centralize the application and Web-enable it. Secondly, lots of the companies have started looking at mobility as a solution. So, there is demand for applications that can be pushed to PDAs or other handheld devices with scanners, depending on the company requirement and profile. This is essential to expedite data capture on the field. “Thirdly, since the industry is growing rapidly and the customer requirements are exceedingly high, I think that there is a large scope for CRM solutions. Fourthly, people are doing bits and pieces of RFID, which is on the agenda but not very high because the whole ecosystem is not yet ready. These are some of the IT demands this industry is looking for extensively,” he added.

ERP—a basic requirement

Industry players claim that ERP has become a basic requirement. It’s like an application and not necessarily SAP or Oracle. However, most companies in the Express Cargo industry in India use custom-built software to take care of their requirements. It is essential that the software should be integrated with various functions.

Mallela said, “Today, many logistics companies have customized their products to cater to their needs for an end-to-end solution. This [home-grown] ERP can be associated with any of the general ERP systems. Like finance and HR are general things, so we can have a package of Oracle Financials or SAP or some other package, which may be integrated with this ERP of logistics. This means there is no need for the logistics package to have a financial module. We are running with an ERP that we have developed on our own in 2002 called AGRANI. We are using this ERP with improvements day by day. We are adding additional features as and when the need arises and changing the architecture accordingly. Otherwise, we won’t be able to work efficiently.”

Mrinal Chakraborty, GM–IT and OPS, DTDC, stated, “It is true that ERP is a basic requirement but an ERP system for the courier industry is not available right now. Meanwhile, ERP in parts is being implemented at various logistics firms.”

Dhumal, however, differs on this aspect. He said, “Not many logistics companies are using this technology as of now. Logistics companies have their own home-grown system that is integrated into their systems. It’s not a must now but in a couple of year’s time it might pick up. We have started looking into it and we have gone ahead with the module. We have implemented SAP for financial operations, PeopleSoft for HR management, so we are growing into this module.”

RFID technology

Analysts and industry experts feel that RFID is a much needed technology for this segment. Today customers want to be able to track their shipments. RFID is a mobile technology, wherein customers can keep tabs on a particular shipment. Besides time, position or destination of the shipment, if a shipment is carrying chemicals then you can also keep track of configurations and temperature etc. using RFID. In short, you can keep an eye on the journey of a shipment. As time goes by, this technology is going to be crucial for the logistics industry.

“As far as DHL is concerned, we haven’t started much of it because air express shipment movement is primarily between countries and this kind of technology has not been equally adopted by all countries. In DHL, it’s still in the research mode and some of our business units in Europe are using RFID for tracking their vehicle movements,” said Dhumal.

AFL has conducted a theoretical study of RFID and its utilization factors. Mallela pointed out that with the help of RFID, they can rapidly locate a shipment. He added, “Since we are the custodian of somebody’s material, it is a prime duty for us to secure that material in a proper manner and also be able to inform them of whereabouts of the package at any point of time. The problem is that we deal with so many packages that the cost of using RFID technology is not feasible in the current environment. If it becomes cheaper, only then will we be able to use it in our system.”

Although RFID is a talked about subject, it is yet to make any impact on this industry in India. It is definite that in the near future RFID usage will become a hygiene factor.

Currently, the government sector and especially the retail industry, are using RFID. It is being used for heavy cargo, but not for normal courier shipping. Mallela added, “These days, RFID is being used quite frequently but in India, we haven’t yet received greater efficiency from it. It is only because of the cost factor that RFID is not being used widely. However it’s going to come in a couple of year’s time. We are evaluating such technologies but are yet to come close to any of them.”

RFID vs. bar codes

It is often said that the evolution of RFID technology would affect the practice of using bar codes in this industry. Although RFID is expensive when compared to bar codes, for big players it will definitely emerge as a preferred technology over bar coding when the technology becomes more standard widely used and prices fall. For big players, RFID will be a prominent technology as compared to bar coding.

However, at the lower level, bar coding will remain as the predominant technology because it’s not only about shipment tracking, as there are other things that a bar code can do which RFID has not been able to cater to.

Chakraborty commented, “Bar coding is still a champion technology when comes into Unit Pieces. It is the technology which continues to govern the game. Also, the cheapness of bar code technology is another advantage over RFID.”

Mallela stated, “RFID and bar coding have completely different connotations. A bar code is a small strip of a number which you are sticking to a consignment but with RFID, you can incorporate more information into it. There are even reusable RFID tags which you can use some other time as well. So I think, bar code will continue because of it’s effective advantage. It won’t vanish altogether.”

GPS-GIS Technology

GPS-GIS technology is now an integral part of a logistics firm, in order to have complete control over vehicle movement and location finding.

Telematics, a kind of GPS technology, is the most talked about at present. This is definitely of great help in tracking vehicles and shipments, having information about the expected time of arrival, and monitoring and analyzing the vehicle and route usage.

The way in which GPS technology helps this industry is that it gives the details of the origin and destination of a shipment. During transit, it helps in giving you the exact position of a consignment. You have sophisticated GPS maps and technology available through which you can track the movement, and then you can be proactive to your customers in telling that as to when a shipment will be delivered. With the help of GPS, customers do know before hand the position of their shipment.

Dhumal said, “From our point of view, at various stages you can locate the vehicle; interact with the people in that particular vehicle; and leave any kind of messages. Through this technology, you can even alert the driver of the vehicle about any untoward incident. It also helps in locating a particular address.”

“We have already started using this technology. Truck movements are being tracked by this system so that we know the exact location of the vehicles. We can even re-route our trucks with the help of GPS technology. It also tells us how much time it is going to take for a truck to reach a particular destination. Without GPS, it is very difficult to find out where the package is and it gives you the absolute geographical information,” added Mallela.

E-business scenario

E-business is not yet pervasive. From an express mode point of view, yes, there is usage of e-commerce. From the heavy shipment perspective, it has not yet taken off. That said, in the future, this is going to be a big thing because the Web is becoming more powerful and all the B2B or B2C consumers want to do online transactions.

Dhumal pointed out, “For us, we have a set of e-commerce tools wherein customers can send requests, trace their own shipments, and get information about various DHL services.”

Chakraborty added, “We have provided our customers with on-line consignment printing facility and integrated tracking with their ERP systems and offer many value added services.”

Mallela, however, asserted that there is scope for e-business and not e-commerce, “Using the Web, our key customers can derive stock reports. We are going to incorporate in April this year, a delivery mechanism through mobile technology, wherein the driver will be given a delivery sheet that will contain the details of the destination of a package. After the delivery, the information will be uploaded in our system so that the users will be able to use the Web for track and trace. It will show you the status of the shipment.”

Other technologies

Besides the above discussed technologies, this industry relies upon three applications—WMS, SCM, and TMS. SCM is not a single entity, as it involves both WMS and TMS. WMS is for managing warehouse and once the material is coming in, it will let you know how to stack it, where to place the material and also how to retrieve the material at a faster rate. WMS is simply about managing space properly.

TMS gives you an idea about the pickup point and delivery. It helps in the loading pattern of any material and gives a productivity boost. It also informs the warehouse manager about the arrival of any package in advance so that he will be able to plan accordingly. In this way it saves a lot of time and is cost-effective to boot. So for any logistics provider, there should be WMS and TMS.

G S Ravikumar, CIO, Gati, commented, “In the Indian logistics industry the TMS is the most critical software followed by WMS. SCM is gaining popularity and is not used much at this juncture. TMS is used by all logistics companies, most of them are home grown applications. WMS is used only by logistics companies which have a large warehouse at multiple sites and carry a large SKU. Emerging ERP systems have these entire integrated in one. Gati uses state-of-the art WMS and TMS systems which are tightly integrated.”

Similarly, there is another technology called Warehouse Control System (WCS) that has evolved in the developed countries. However, it is at a very nascent stage in India. WCS tells you how best to utilize a warehouse.

nivedan.prakash@expressindia.com