Founder & Partner
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Implementation of a Transport Management System
Transport within the pharmaceutical wholesale industry is notoriously competitive. Prices are highly regulated and, legally, product availability must be at least 99%. With payment terms extended as far as practically possible, that leaves only one area for supplier differentiation: transport and ordering service levels.
In an attempt to gain market share, suppliers clamber over each other to offer the shortest delivery lead times, the greatest delivery flexibility, multiple delivery times per day... the list goes on. Such brinkmanship shrinks margins in an already low-margin market – the suppliers huff and puff for relatively little return.
Our client, a leading pharmaceutical wholesaler operating an outsourced fleet of over 1,000 vehicles, wanted change. With the strategic objective of improving the bottom line through cost leadership, and with a desire to innovate in order to improve efficiency and enhance service levels, they engaged OCM.
Naturally, the focus fell upon one of the costliest, most complex, and most customer-facing operations within the transport network: last-mile delivery. In the first instance, a transport tender significantly reduced costs and captured a degree of innovation from the market. But in order to stand out in a fast-moving industry, it was clear an additional, more disruptive solution was required: digital logistics.
From the selection of a transport management system to software integration and process alignment, OCM helped the client use digital logistics to manage complexity, reduce costs, and live up to – and even exceed – rising service level expectations. In this article, we explain how.
Objectives of the transport software project
Objectives are the cornerstone of any digitalisation initiative. They shape the direction of the project and help formulate the technical requirements. Without proper objectives, agreed by the project team and operational users, the digitalisation effort will soon be lost in a maze of head-turning solutions and stakeholder disagreements.
With the cooperation of the client, OCM formed the following objectives for the eventual transport management system:
Digital support for all operational processes: When manual processes interface with digital processes, many of the technology’s hard-fought benefits are lost. Bit-part digitalisation can cause as many problems as it solves. It was therefore deemed essential that the solution incorporate the entire last-mile transport operation.
All sub-systems integrated into one-tool: A fractured technology landscape leads to conflicting systems, poor uptake, increased manual effort, and, above all, frustration. A closely integrated technology landscape streamlines processes and brings data together, improving analytics and empowering decision makers. A key objective, therefore, was that all systems and sub-systems be integrated and accessible through a single tool.
Better customer service: The pharmaceutical wholesale market is competitive and the pharmacies’ expectations increasing. The digital logistics solution should improve service levels; it should make the customer happier.
Cost savings: Simply put, the transport management system should increase efficiencies and reduce costs.
Digital logistics approach
Scrum, agile, waterfall: there are many ways to organise a digitalisation project. With the collaboration of the client, OCM took a robust approach to the digital logistics project, breaking it down into 3 key steps:
Assessment of the staus quo: OCM undertook a comprehensive review of all current processes, digital and otherwise. This gave a detailed view of the ‘as-is’ situation. Comparing this to the project objectives – or the ‘to-be’ situation – the project team could identify the gaps and the transport software that would bridge those gaps.
Realisation: OCM used its extensive knowledge of the market, providers, and prices to help the client select a suitable provider and transport management system. This involved reaching out to potential suppliers, demonstration workshops, and a rigorous tender exercise. Once the transport software and the suppliers had been selected, OCM managed the important task of integrating the systems, creating an integration roadmap, project-managing the integration, and overseeing the testing of the end solution.
Sustainable Integration: For digitalisation to be truly effective, integration should not happen only on a technical level – the solution must be fully integrated into the organisation itself. This includes aligning all adjacent processes with the digital processes and training new users. OCM instigated a ‘super-user’ training structure, whereby certain users were trained to an ‘expert’ level so that they could champion the technology in the organisation, share their knowledge with their colleagues, and act as a point of escalation for any day-to-day technology issues.
The transport management system and its benefits
The tool was comprised of 6 key components, all of which led to a number of qualitative and quantitative benefits:
GPS tracking providing more accurate ETA forecasts, improved comparison of target and actual performance, and the introduction of ‘current location’. This led to better customer service, improved security, a 2-3% time reduction for route completion, and 2-4% fewer billing adjustments.
Multifunctional handheld device capable of scanning delivery barcodes, communicating with drivers for routing purposes, the tracking & tracing of freight, providing proof of receipt, carrying out driver identification at check-in, and performing vehicle quality checks at check-in. The device led to improved traceability of vehicle damages and an improved track and trace system. This reduced the rate of lost freight by 2-4%, which led to higher delivery quality and fewer customer complaints.
Driver efficiency system capable of performing driving style analysis, tracking driver performance against incentive programmes, and disseminating driver training. This led to lower accident rates, higher driver satisfaction (through measurable incentives), lower consumption of petrol, and less wear of parts.
Driver academy conducted through a mobile app. The academy could: streamline employment prerequisite checks, including training & document validation; centrally manage content and languages for the drivers; and enact bonus/malus systems for subcontractors with good or unsatisfactory training.
Route optimisation software sensitive to the company’s targets (e.g. cost, time, customer satisfaction). A cost reduction of 10-15% was achieved.
Instead of comparing individual incoming invoices with routing and payment information, routing data, payment, and billing could be validated automatically and the transaction carried out with little manual input. This lowered administrative effort and resulted in price discounts through quicker payment of contractors.
Outlook and conclusion for last-mile digital logistics
Last-mile transport is notoriously difficult and costly, but, with an appropriate and properly integrated transport management system, it doesn’t have to be. From route optimisation to driver academies, and GPS tracking to better analytics, OCM were able to help a major pharmaceutical wholesaler not only increase efficiency and reduce costs, but improve the quality of service to the end customer. In doing so, a potential headache was turned into a competitive edge. In a logistics market that has never been more competitive, this edge will be vital to the wholesaler’s ongoing success.
OCM offers comprehensive support on your path to digital logistics. We support you in the design of your customised eSCM strategy as well as its implementation, e.g. the selection of a transport management system – also in combination with our comprehensive service offering in SCM & logistics. We would be happy to present our approach and modules in this regard or discuss specific issues and possible solutions based on your challenges.
Founder & Partner
M.+49 160 93882573
Logistics optimisation & Supply Chain Consulting modules
Logistics & SCM Opportunity Assessment
- Benchmarking & maturity testing
- Identification of opportunities & action plan
Transport Partner Management
- Transport partner strategy & professionalisation
- Securing resources and resource training design
- Competition, effective transport tendering, fact-based negotiation
- Transport cost reduction
Freight & Logistics Tender
- Competitive pricing, quality, and performance assurance
- Individual weight-distance matrix
- Efficient warehouse logistics & layout
- Optimised processes & working capital
- Optimising logistics through synergies
- Finding a fair and stable collaboration model
- Distance and route reduction
- Reduce resource & logistics costs
Supply Chain Network Optimisation
- Optimise delivery times, service levels, & processes
- Reduce working capital
Inventory & Order Management
- Optimal order quantity & stock on hand
- Optimise working capital
- Fleet concept tailored to requirements
- Cost optimisation
Supply Chain & Logistics Strategy
- Sustainable maximum value contribution of the supply chain
- Clear objectives, concrete measures
Digital Logistics Management & Reporting
- Information advantages in speed, scope, & significance
- Efficiency through automation, data integration & process simplification
Interim Supply Chain & Logistics Manager
- Rapid response: candidates within 48h
- Matching of requirements and assessment of suitability using logistics experts
- From dispatcher to logistics manager
Short-term staff shortage? Unexpected need for action?