Doesn’t IT matter?
For the article in Bahasa Indonesia, you can read it here.
Is it true that IT investment could bring excellent benefit to the logistics industry, or it’s just “a mere trend”? Is IT investment only add more cost components to logistics cost?
This article will expose many general opinions about IT implementation that usually ends with the conclusion “Software/IT implementation is only a waste of time and money.” Then, we are going to provide a real use case of exemplary & right IT implementation that can increase efficiency and, in the end, gives “direct benefit” in the form of US$178,5K transportation cost reduction monthly.
Some business and management experts have expressed their impartial opinion about IT implementation. Nicholas G. Carr writes this at Harvard Business Review:
https://hbr.org/2003/05/it-doesnt-matter
How could this happen?
It’s undeniable that many IT implementation within a company can’t give real value and positive impact. The promise of higher efficiency and unleash more fantastic opportunities don’t match the cost.
If we dig it more in-depth, Many factors can cause the unworthiness of IT implementation within a company, so we can’t generalize all those factors and comes to a premature conclusion that paying for software is a waste of time and money.
What about IT investment in the logistics industry?
Recently, we at ritase.com also face a similar stigma that technology/software will not have a “notable impact” on the logistics industry. Some believe that it’s only a “gimmick” for those who need to follow the digital trend.
Some of the “boomer generation” industry players even strictly emphasize that IT investment especially buying software will only add another cost component, which will increase the overall logistics cost.
It might be right. After all, some of these companies with similar notions might have a bad experience making their IT investment. So they become pessimistic when their logistics division/department needs to go digital.
One example, they might have an experience where they “pay expensive software,” which only assists the administration process. Shifting from a spreadsheet, pen & paper to a digital recording software will not move the needle.
Why?
The administration process only contributes 2.2% of the total logistics cost breakdown. So, when you invest in software that only tidying up the administration part, little to no result can be immediately seen since optimizing the 2.2% part is less useful. Your logistics team will blame the software and conclude that software is only adding to already expensive logistics costs.
However, are the narrations above the absolute truth?
All those bad experiences are not entirely real.
At ritase.com, we had a great experience assisting a multinational FMCG company in digital transformation at their logistics and transportation department.
They use Ritase Enterprise Saas Solution.
From the data, after six months of fully implement Ritase SaaS Enterprise Solution, their blended transportation cost drop ~4,95% per trip!
The company can obtain the direct benefit of their IT investment in such a short time. The efficiency comes from lower average logistics cost. Before, the average logistics cost was US$382. within five months, it goes down to US$362 ($20 reduction or ~4,95%) per trip.
With average monthly trips exceeding 9–10k per month, the total efficiency reaches at least US178,571 per month!
Shippers can achieve that direct benefit within a relatively short time, after trusting all the technology implementation, change management, clear and defined SOP through Ritase’s platform.
Therefore, the right IT investment is proven can offer significant positive impacts, of course, when you choose the right type of software and also the right partner.
How can Ritase Enterprise SaaS Solution help?
We develop a well-analyzed and fine-tuned logistics platform with several key features that directly solve real logistics problems. It results from teamwork between well-seasoned engineers, product analysts, solution architects, data scientists, and subject matter experts in the logistics industries for years.
Some of the critical features of Ritase Enterprise SaaS Solution that are well proven can give positive impacts are:
- e-Quotation and Procurement
This feature is the first step that we need to take to optimize the process. Doing it the conventional way requires you to negotiate manually with dozens, if not hundreds, of vendors/truckers. It is such a manual process that it is very repetitive and cumbersome, yet very crucial.
We provide a portal for all eligible vendors/truckers to fairly and transparently place their quotation/proposals. All the stakeholders within your procurement department would be able to monitor each step with very minimal intervention.
- Assignment Allocation
After you collect all the quotations/proposals from vendors/truckers, our platform can automatically set a transporter assignment based on your preferences.
You can define buckets that separate vendors who have the best price, best performance, and many more. Planners can do assignments automatically by prioritizing these buckets based on your predefined settings.
- Marketplace Bidding
Bidding and spot rate tendering can also give you significant cost reduction. When you face peak volume or when the primary routes need additional truck supplies, you can open the ritase marketplace assignments. Thousands of our verified transporter partners will be able to bid and give you the best price instantly through the spot rate bidding process.
- Load Planning & Appointment
High variable costs, such as overnight costs, can be hidden expenses contributing to the overall logistics cost. Idle time and low utilization might become significant challenges, mainly when you apply a dedicated truck scheme.
Using load planning and appointment, we can manage the loading docks schedule neatly with the timeslot system. Then truckers can book a specified loading dock and come at the designated time. Thus, it can significantly reduce congestion and waiting time both in the loading and unloading area.
All of the critical features combined above give vital evidence in optimizing our client’s logistics cost. Ritase has more features within our platform to tackle challenging logistics issues that might help you get significant value for your company’s logistics management.
“So, when you assume that digitizing your logistics operation is not that important and will increase your logistics cost, probably it’s because ‘you haven’t met the right technology partner.’” :-)
If you would like to get the same competitive advantages as our clients or want to know which part of your logistics operation can be optimized, leave a comment below, contact us via our website, or email us at SaaS@ritase.com.
Thank you!
