Case Study. Telematics at SMEs. European Commission

Transcription

1 Case Study Telematics at SMEs European Commission

2 THE PLATFORM If transport continues to grow at the same rate as the economy, this will become both an economic and an environmental problem. lncreasingly congested roads are as much a disadvantage to European business as they are to society at large. The bestlog project, initiated by the European Commission, will establish an exchangeplatform for the improvement of supply chain management practice across Europe. OBJECTIVES To improve logistics practice and logistics education To raise the overall standards of practice across Europe To set high standards for logistics education and practice To create economic growth and job opportunities as a result Achieve a better match between EC policy and business decisions SOLUTIONS & ACTIVITIES European platform for sharing logistics best practice Online directory of logistics best practice case studies Online directory of European logistics education opportunities Benchmarking on line for European companies European conferences to share logistics best practice Web forum, award directory, media directory, and more lndustry workshops

3 Telematics at SMEs PROBLEM DESCRIPTION This example of good practice should be of special interest to SMEs in the road transport business, as it provides solutions for cost reduction and performance improvement. Rising fuel expenses are a cost factor of increasing importance in the transport business. Furthermore, customers increasingly expect frequent status reports on their shipments, particularly in digital formats. As the price for transport services is dictated by the market and cannot be influenced by SME suppliers, their main sphere of influence is on their own costs. Objective data was missing to permit the measurement of trip mileage, fuel consumption and other cost drivers. Using telematics generates the necessary data with ease. This was the reason for Sieber to decide to monitor its trucks with telematic systems. The company expected to reduce overall fuel consumption as well as to continuously monitor wear and tear on truck components. High investment costs used to scare off SMEs from purchasing telematics systems. SMEs are very careful to avoid mistaken investments. If telematics solutions do not pay off through reduced fuel and maintenance costs they represent a poor investment. Drivers may feel controlled and mistrusted if their every move is monitored by telematics surveillance tools. This could result in decreased motivation, and might even lead to increased turnover of driving personnel. Rising fuel expenses are the driver for investments in fuel-saving technologies - even for an SME. Sieber - a Logistics Service Provider - uses telematics solutions in order to reduce the fuel consumption of its truck fleet by monitoring the driving style of its staff. The company engages the collaboration of the drivers in the improvement process. As the drivers were truely convinced of the programme, this project resulted in a nearly competitive contest of the drivers to be the driver with the fewest wearout and lowest fuel consumption. COMPANY FACTS Company name: Sieber Transport AG Location: Switzerland, Berneck Industry/sector: Logistic Services Company size: Medium (SME) Employees: 350 Turnover: not published Services/products offered: Transport services Warehousing Further case related logistics figures: 170 trucks on fleet 30,000 sqm floor space

4 THE SOLUTION These arguments did not stop Sieber from introducing telematic systems in their truck fleet. The decision was not only supported by the expected cost savings, but also through the firm s intention to improve the negative image of road transport in Europe. Sieber therefore decided to implement the product of a reputable telematics service provider. Drivers and Sieber s repair shop staff needed to be integrated within the new system. The telematics tool provides monitoring of the trucks and analysis of truck performance, and allows direct communication between the despatch department and each driver to enhance order processing and optimise route planning. Dare to invest Road transport has the reputation of being a climate killer and environmental polluter (ignoring the fact that road transport is indispensable in Europe). Sieber wanted to improve its reputation and decided to invest in technology to save fuel. Despite the aforementioned risks, Sieber therefore implemented telematics in its trucks. To receive the desired results they invested in the system of an established telematics provider and installed it into their trucks. Integrate the employees In order to avoid conflicts, employees were integrated into the process of telematics implementation at an early stage. This reduced possible negative effects to a minimum, and even led to cooperative teamwork during the installation phase. Drivers had the chance to get to know the new system and dispel fears of being monitored. Rather they came to understand how the system could help them perform better. The involvement of all types of personnel and their interaction increased communication and made the common goal of the telematics system clear to everyone. The drivers even felt motivated and challenged to achieve the best possible fuel reduction figures.

5 Civilised interaction between management, instructors and drivers with the aim of achieving the common goal of fuel consumption reduction can be seen as one of the most important success factors. It helps Sieber remain competitive and every driver now feels that he can really be part of the project, and support it. As Sieber is aware of the negative image of road transport services, it is interested in improving this perception. Further, fuel cost savings have a direct positive effect on overall operating costs. The savings and performance advantages save from 1.5 to twice the amount spent on the implementation and maintenance of the telematics solution. CHALLENGES Challenge 1: Selection of adequate telematics system provider: every SME has to evaluate a telematics provider appropriate for its individual needs. It is especially important that the provider and the user SME communicate on the same level. Challenge 2: Tailoring the system to the company s needs: as every SME has its own needs and requires customized telematics it is important to have a supplier capable of adapting to these requirements (concerning the hardware and software required and the system interfaces). Challenge 3: Implementing the new system with regard to operational efficiency and countering employees fears: As employees are often scared of changes, and especially of the monitoring tools provided by telematics, it is crucial to communicate the rationale for the solution effectively. Challenge 4: Data handling and analysis, and employee education: In order to use the system efficiently it is important to provide training for the affected employees (concerning the use of the data and associated business improvement activities).

6 LESSONS LEARNED AND SUCCESS FACTORS The technology allows better service levels and fewer accidents if used correctly. Investing in technology to reduce fuel consumption is worth the expenditure. A collaborative climate between the telematics provider and the LSP is elementary. Do not save on education and communication while implementing telematics solutions. Christian Sieber The telematics provider should be capable of understanding SMEs concerns, while the SME needs to be open to new technologies. As an LSP-SME, choose the right product for your needs. As a telematics provider advise your customer wisely and only offer the systems he needs and is capable of using. Train your employees in new technologies. Personnel have to buy into the rationale of telematics and have to be capable of handling the telematics system. IT implementation, especially with telematics, increases the transparency of drivers behaviour. Therefore early and intensive involvement of drivers is the key to success. Appoint someone in charge of providing feedback to the drivers in order to achieve improved driving performance. The technology only provides the tools; people have to make the difference and understand and execute the suggested actions and improvement measures for sustainable driving. Implement a culture of continuous learning. Every employee must understand that he\she must contribute to cost savings and environmental improvements.

7 THE BENEFITS Economic ++ Telematics monitors the driver s driving behaviour. Conversation between workshop personnel and the drivers helps to improve driving styles. Sieber drivers have saved at least two litres per 100 km. The savings achieved, from reduced fuel consumption and reduced component wear, e.g. on brakes, are 1.5 to 2 times the cost of system implementation and maintenance. SUSTAINABILITY Environmental Continual monitoring allows Sieber to adopt optimized truck service intervals. This leads to less pollution and consumption of natural resources as the trucks achieve the same performance as before but with reduced consumption of replacement parts. Besides saving fuel through optimized driving techniques, telematics technology also helps to optimise route planning, leading to shorter journeys, hence to less fuel consumption. Social The truck-drivers are more relaxed, and can thereby offer a friendlier service. Sieber furthermore has the opportunity to inform customers of possible delays at an early stage. Employees feel better integrated with the company s objectives, and more important to their achievement. They feel themselves to be important elements in the success of the company. As the cost structure of Sieber is now improved and drivers are less easily replaced due to their increased knowledge, they can concentrate on their job and need not worry CHALLENGES about their job security. Driver loyalty has accordingly risen to a much higher level. TRANSFERABILITY Transferables Country Telematics for road transport offers great cost benefits while reducing negative environmental effects. The costs of the installation of telematics tools is quickly repaid in fuel savings. This makes the solution applicable to all types of road haulage in all countries. Company size does not influence the transferability of this good practice within the road transport sector. ++ Sector o Company Size + Limitations Telematics nowadays is mostly applicable to road transport, with limited transferability to other transport sectors. Company size only limits transferability in terms of the financial resources available for the initial investments. ++: very high, +: high, o: neutral, -: low, --: very low

8 Contact Resources Network Design Warehousing Procurement People Best Practice Topics in bestlog Customer Product Transport Tactical Planning Production Information & Communication System Markets & Strategies Reverse Distribution Structures & Planning Infrastructure Processes & Operations Enablers & Support PROJECT SECRETARIAT Berlin Institute of Technology H90 - bestlog Strasse des 17. Juni Berlin - Germany Phone: Fax: info@bestlog.org Web: European Commission Thorsten, Klaas-Wissing. University of St. Gallen; Christoph, Tyssen. University of St. Gallen, Chair of Logistics Management (2009): BestLog Good Practice Cases. Telematics at SMEs. Published by BestLog Project.. This document, including but not limited to text and photographs, is protected under copyright. The copyright owners admit the use for informatory and training purposes. Any commercial use of the document or parts thereof is prohibited.