Planning: Potential Solution for Logistics SaturationBy Alejandro Salas | Fri, 03/29/2019 - 05:00
Q: How successful has Onest Logistics been in generating business among Tier 2 and Tier 3 companies?
A: We are about to start our first project in this segment with a muffler company in Toluca but we are still not at the level we want to be. We built a dedicated team to develop this niche and we brought in two people from Deloitte as collaborators. It has been difficult to penetrate the market because the supply chain is consolidated and companies do not move outside their comfort zone.
There are successful logistics players targeting these companies but most saw the opportunity earlier. We now face the challenge of competing against alliances with automotive suppliers that are four or five years old. Although we are bigger than most of these competitors, our late entrance has made growth difficult. That being said, we still see this segment as a priority for the company and we are constantly participating in industry events to build our presence in the market.
Q: What strategies are you implementing to become more relevant in the automotive sector?
A: We recognized that we lacked the knowledge of companies with years of experience in this market so our first priority was to scout potential clients and learn about their specific needs. We then adapted our offering to the reality of the industry and we learned to present it in a language that was familiar to these companies. Onest Logistics has broad experience in retail but that is a completely different market; we had to transform and adopt the knowledge and language used in the automotive industry.
Regarding our actual operations, we are an active participant in our clients’ demand-planning strategies. Our first step was to link all information related to our processes and shipments to the cloud. We are developing a software to interpret this data and provide insights to our clients based on how often a certain product is sent to a specific location. Demand planning is key for optimizing shipments. Instead of delivering products that only create inventory, companies should periodically track how their products are shipped and dose them according to their clients’ needs.
Q: What role has digitalization played in Onest Logistics’ development?
A: Our TMS platform is already implemented in several of our projects. This system provides great visibility to not only track our shipments but also to alert the client to the exact hour at which they will arrive, helping us and them to make better decisions regarding deliveries. The system has also been a great tool to improve operational security. In 2017, we experienced about 30 robberies. Thanks to the implementation of TMS and improved operational processes, that number fell to seven in 2018.
Onest Logistics has also mapped Mexico City’s streets and the country’s highways by hour to determine risk areas depending on the time of day. We instruct our drivers on what areas to avoid at certain times to minimize robberies. Moreover, we have defined hour limits for departures in the morning and at night depending on previous criminal incidences. Through TMS, we are also constantly monitoring trucks when they enter risk areas and we maintain uninterrupted communication with the driver up to the point when they leave these zones.
Drivers also play an important role in TMS’ functionality. There are several checkpoints that they must register on the platform, sometimes even providing photographic evidence of the truck. We also devised a checklist to make a quick revision of the truck’s integrity once it arrives at a loading or unloading area and if the unit does not comply with all the necessary requirements, we do not grant access to the trailer. These measures have been fundamental for ensuring driver and cargo security and they have also helped us reduce our insurance premiums.
Q: How important has e-commerce become in your business strategy in Mexico?
A: E-commerce has been a growing trend and our operations in this segment doubled in 2018 compared to the previous year. We are now delivering 500,000 orders and invoicing over MX$12 million (US$630,000) per month through our e-commerce operations with the most important brand of fast fashion and leading retailers such as Sephora, Suburbia, Walmart and Marti. We expect strong growth for 2019 as well, although our forecast is for a lower rate of 30-40 percent.
At the same time, we are developing our B2B e-commerce operations. In cases of an emergency, companies can request a spare part online and receive delivery within a 40-minute time frame. Although there is no contact with an end consumer, this type of business follows the same logic and structure as e-commerce.
Onest Logistics is a logistics services integrator with experience in the fashion, retail and e-commerce segments. The company is looking to expand into the automotive sector targeting auto parts suppliers