Technology Broadens Horizons for E-LogisticsMon, 09/01/2014 - 12:16
“In the past, logistics would normally take a backseat to innovation, especially at a time when a global approach to logistics was not commonplace,” says Christian Speit, Country Manager for Dachser de México. “But the wave of globalization has created a need within logistics companies to be flexible all around the globe.” This has proven to be particularly true as automotive companies branched out, leading to logistics becoming more sophisticated in emerging markets. Globalization represents a particular challenge for Dachser as its automotive solutions have become a vertical commercial product, rolled out on a worldwide basis, with Mexico taking pride of place as its “commercial lead in the Americas for the automotive business.” The expansion to emerging markets also began to see manufacturing and procurement strategies evolve within the automotive industry. “A new model came into being, preferring flexibility, lean management and quick decision-making, to which logistics also had to adapt,” says Speit, adding that this is how Dachser seeks to position itself in the market.
As a family-owned company, Dachser’s goals have differed somewhat from public companies in their approach to adapting to the industry’s new needs. For Speit, Dachser is not “seeking to be one of the largest companies in the market. It wants to be a true alternative to clients by providing them with tailor-made solutions.” Dachser has identified an area of opportunity in the links between Tier 1 and 2 suppliers. According to Speit, logistics remain a challenge in Mexico “due to a deficit of infrastructure and a comparatively high level of bureaucracy.” Interestingly, these barriers have allowed logistics companies to take advantage of the growing need of automotive companies to entrust all “their logistics to one source” to circumvent these barriers. Dachser found that its one-stop shop approach demanded an integration of services only achievable through technology. Therefore, the company designed an in-house IT system to align all operations. “Dachser’s new focus on e-logistics allows for more visibility throughout the logistical process and provides the chance to be more productive,” adds Speit. It has also prompted a faster adaptation to trends in the automotive industry such as the rise of intermodal transportation. “E-logistics has become a key component for intermodal solutions, since it tackles the new logistical challenges of combining different modes of transportation.” E-logistics allows for a better tracking of purchase orders, parts and pieces which is paramount for the automotive industry, given the staggering number of pieces in transit at any given time. Dachser’s advanced IT systems allow its clients to track and trace their products in real-time through GPS. The advantage of intelligent logistics is that they can help the client’s balance sheet by reducing inventory costs and making the most out of warehousing space through improved inventory control. “Dachser views e-logistics as the future,” says Speit. The challenge of applying e-logistics to automotive companies in Mexico is the lack of compatibility between various software programs, or in some instances, the lack of specific software being implemented in companies’ operations. However, according to Speit, more and more companies are running on software such as SAP so it has become easier to exchange information via Electronic Data Interchange (EDI). “Companies have to make a real commitment if they truly want to use e-logistics. I have often seen companies express their appreciation for the track and trace system but they do not actually implement it.” One unfortunate side effect of e-logistics is the “removal of personal interaction” which, according to Speit, is “something most successful logistics businesses depend on.” To address this and maintain a balance between technology and personalised service, Dachser has invested in a dedicated Order Management System (OMS) team that is able to operate the systems and invest in “human capital that can help Dachser develop its product and approach potential clients in a personalised way.”
Despite such challenges, e-logistics has not only improved the efficiency of automotive companies but has also opened up new areas of opportunity. The growth of automotive entities in the Bajio region, especially in Guanajuato and Queretaro, has created a niche market of “many companies that export smaller quantities of goods to Central America,” comments Speit. Speit says its one-stop shop approach allows Dachser to help customers in a range of services from “sending one truckload to Tennessee to shipping many containers from Malaysia to Mexico.” As logistics companies such as Dachser progressively expand their services, it hopes automotive companies will outsource their management tasks, allowing logistics to play a larger role in not only managing the supply chains but in their design and planning. This offers Dachser the possibility to offer yet another of its key services: contract logistics. Dachser occupies first place in Germany and ranks third in Europe for contract logistics, but for Speit this service “would be challenging to apply to the Mexican market because it requires specific investment and knowledge.” Although the transfer of knowledge would be challenging, Dachser’s future strategy is to amalgamate this new service to its existing portfolio in the Mexican market.