The transport and logistics industry in the region is making technology investments that span the entire length and breadth of the enterprise. Pallavi
Sharma speaks to industry experts to find how roles have changed and how deployment challenges are addressed at these organisations.
The trade and export industry, one of the bastions of the global economy,is heavily dependent on an exceptionally robust transport and logistics sector.
The Middle East in particular, has established itself as a trade hub leading to a boom in the operations of the transport and logistics sector in the region.
Over the last few years this industry has had to cope with the demands of globalisation, an economic recession and ever increasing competition and regulation.
According to experts, it is during this period, that organisations in this region have turned to information technology and associated solutions to help them develop and organise strategic, efficient global logistics networks that focus on integrating the previously disconnected elements of product sourcing, production and distribution.
“Nowadays, there is more focus on doing more with less and a real shift towards adopting lean practices in IT. There is also a drive to transform capex to opex to provide more flexibility and scale in order to meet business peaks and troughs,” says Praveen Sashi, head of IT at DHL Express.
Alexander de Oliveira, director of ICT and group projects at Transguard Group adds, “The sector in the region has also been impacted by the issuance of the Strata Law by authorities in 2007, which has resulted in increased competition and price sensitivity. These factors have forced companies to look for improvements in operational efficiencies through investments in industry specific systems such as computer aided facilities management (CAFM) and freight management. Today, even the market in the region is more mature and customers look at organisations that comply with industry requirements as those that can promise the best services.”
In a sort of natural progression, both the role of IT and the role of the CIOs within these organisations have witnessed a significant shift over the last few years.
“Technology is no longer just needed to enable the delivery of the shipment. Today, the industry uses every tool in the book to source the right products, track shipments and warehousing details, and provision efficient distribution and delivery. Customers demand and expect information transparency and visibility right from procurement up until delivery, and none of this would be possible without investments in the right software and systems,” adds Sashi.
Sashi says that the need to invest in the right technology platforms has been especially felt in the air transport industry.
“The air express industry is perhaps one of the most heavily regulated areas of business and this adds a degree of complexity to the management of supply chains. Often times, this sector needs industry specific solutions, like automobiles or generators; other times it is the customer that asks for certain demands to be met in the case of fragile goods or urgent delivery,” Sashi says.
“The process of customs clearance is another challenging area from an automation perspective. For example, we have to synchronise our information with the movement of the package across our network (more than 228 countries in which we operate, some of them with multiple customs authorities),” he adds.
Oliviera looks at IT from a different perspective. According to him, IT is part of an organisation’s long term strategy, bringing together all the disparate elements of a trade exchange like the shipper, the receiver, the shipping agent, the customs or import authority, the warehousing officials and the distributions agency.
Rebecca Braverman, senior director global market development of consumer products, retail and distribution at QlikTech says it is the CIOs who ultimately have to make the right investments to establish a scalable and secure infrastructure across all levels of the organisation.
Keep in mind that the CIO has to cater not only to the requirements of the organisation, but also to a rapidly growing tech-savvy workforce that uses a host of independent devices to access the internet at remote locations. The workforce now expects headquarters to provide them flexibility of using these same devices to access and work on enterprise information.
“Today, there is a clear understanding that to survive and thrive in the tougher
competitive environment organisations need to focus on making the right investments to enhance the existing IT infrastructure. All of this has resulted in an
increased IT budget over the last few years,” says de Oliviera.
He adds that the Transguard Group’s IT strategy is based on the foundation of working with the right strategic partners.
“Finding strong technology partners whose experience and network we can leverage to our advantage is of utmost importance. This not only significantly shortens RFP processes but also simplifies the process of knowledge transfer because the partner knows our organisation, the culture, the people and operations,” he says.
“When we evaluate any IT project, it must meet one of three criteria- make money, save money or reduce a risk. Currently we are putting a lot of effort on projects that will improve operational efficiency or are related to business continuity,” adds de Oliviera.
When working out an IT project, de Oliviera and his team prefer options that allow for the organisation to leverage the capabilities of cloud technology. “Our first option is for all new solutions to be either SaaS solution or a hosted solution. We are also working on moving existing in-house solutions to the Cloud,” he says.
According to de Oliveira, some of the Transguard Group’s recent IT deployments include Oracle’s human capital management system, supply chain management and
financials applications, a call centre upgrade, and cloud-based email solution. In addition to this, the company has also embarked on a paperless office initiative and uses applications like CAFM systems, supported by the latest web technologies and handheld devices that allow field staff to be connected to the head office systems in real time.
Sashi says that in a bid to sustain the organisation’s ability to grow and compete, DHL Express UAE has made a concentrated effort to align its IT strategy and underlying investments to its overall business strategy.
As a result of which, in recent years the company has focused on investing in processes, tools and employee development. Sashi, unwilling to reveal any vendor names, says DHL Express has made investments in the domain of business applications such as CAFM, infrastructure and e-commerce. “On our infrastructure front, we’ve fully virtualised our servers and 70% of our desktops, significantly reducing the costs associated with energy, storage and support,” he says.
“We have implemented ISO20000, the international IT standard that demonstrates excellence in IT management. This is because we believe this is key to delivering great service quality. We have placed immense emphasis in updating our IT infrastructure to support service improvements and our continuous business growth. For example, recent migration of international telecoms to VGE (Vodafone) MPLS cloud was a step towards this direction. We were also the first to pilot and successfully implement desktop virtualisation and rollout managed print services company wide.”
At CNME’s recent Sustainable ICT Conference 2011, Vaibhav U Bhatt, infrastructure services manager at DHL Express UAE shared the details of the company’s recent managed print service program with the audience.
According to Bhatt, the team not only devised a policy to engage the entire organisation in their bid to green but also made sure that they enforced the policy. As a result of these policies decision makers were able to define, measure and improve service levels for print, copier and scanner services.
Following the enforcement of the programme, DHL Express UAE reduced their carbon footprint by 60%, electricity and power consumption by 42% and wastage of paper by 25%. Bhatt announced at the event, that following the success of the program in the UAE, the initiative is now a work-inprogress across several other countries that DHL has a presence in.
So what are the challenges associated with these deployments?
Sashi says that since technology is primarily managed by the IT guys, who understand the need for an implementation and it’s impact on existing operations, the formidable challenges normally lie with dealing with the business end of the plate.
“The initial challenge is proving the ROI for stakeholders buy-in and this is closely followed by managing resistance to change. I believe that ‘time to market is another critical factor in the logistics industry, especially when responding to immediate requirements stipulated by customers, industry or even regulatory bodies,” he says.
“The technology initiatives within an organisation must be seen by business users as one that compliments the overall strategy. For example, we always insist on conducting a pilot when considering new technology deployments – this provides an opportunity to evaluate the pros and cons of technology initiatives within the business, minimise risks and gain stakeholder confidence before making any capital commitment,” he says.
According to de Oliviera, he and his team dealt with the daunting task of change management by simply making the users feel involved right from the procurement stage till go live, through meetings and regular training sessions.
“Business users always find it easier to cope with change when they see business or personal value in the deployment. So we try and communicate the advantages of the technology investment to their job responsibilities, time management and overall growth. Also, we make sure the implementation is done in phases, so as to give the users the time to understand the extent of the deployment and how it will change operations on a day-to-day basis,” de Oliviera adds.
Transports and logistics organisations in the region continue to do commendable work to improve workflows and significantly improve customer service. However, there is still room for more effort from the vendor’s end.
“There are a lot of good practices in the market. Yet in general there has been an increase in ‘hype’ because vendors and service providers tend to ignore what is realistically possible and go about promising the world. Especially when it comes to
cloud computing technologies, a lot of the true potential of this technology cannot
be achieved without the right provisions in terms of infrastructure and regulations.
I think vendors need to be honest in their approach and manage expectations in a more realistic and uniform way,” says Sashi.
Industry experts also say that vendors need to do more to help address the lack in local support and availability of skilled personnel. With a qualified and reliable pool of resources available in the region locally, there is no doubt that at least part of the fears associated with complex IT deployments could be addressed, to expedite the growth of this industry and the underlying IT sector even further.
As Sashi and de Oliviera both conclude, “2012 will no doubt see more innovation from organisations and vendors, as businesses look to make investments that help them cope with ever increasing competition and stringent regulations that are only recently have begun generating interest in the Middle East.” The story for IT in transport and logistics is only just beginning and there is still a long way to go.