Logistics Workflow Management : A Spot Market Overview
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The Indian transportation industry is continually growing at an annual rate of 15 percent. With over seven million goods vehicles moving around the country, the freight volume has reached 1,325 billion ton-km, a figure that is supposed to double by 2025. We spend almost 14 percent of our GDP on transportation and logistics, whereas in developed countries the spend is around 6-8 percent. However, the industry remains heavily fragmented, unorganized and very rough in nature.
If you try to read the above paragraph again, you would think of problems such as infrastructure, poor road conditions, inefficiencies during transit etc. Such was my thinking about the logistics industry too , and in-order to understand the ground reality, I visited a lot of manufacturing sites and sat with the person taking care of the day-to-day truckload management. To my surprise I saw that this person is totally stressed out; he has a daily mundane working cycle, he is dealing with truckers and transporters over phone/WhatsApp/email and he has a huge pile of documents, which he needs to sign off on so that accounts can be settled. I'm taking an example of a site having 2-3 truckload dispatches; one can only imagine the plight of people working at dispatch sites with heavier truckload volumes.
Before we start talking about software/workflow automation, we need to understand that transactions involving movement of goods are complex in nature and involves a lot of aspects working in disjointed manner. From the loading of goods to the final unloading ,there are a lot of activities that happen in the background -
1. Floating Enquiries to Truckers
Everyday the sales team would confirm the orders that have to be dispatched the next day. For e.g 12MT Iron/Steel Pallets to be dispatched from Yamunanagar, Haryana to Guwahati,Assam. The enquiries are consolidated by the logistics personnel and sent to the empanelled transporters via email/phone call/over whatsapp. Given the fragmented nature of the transportation industry there are cases where-in the logistics personnel would not want to share certain requirements with all transporters, for e.g. a transporter who does not have service in North East region would not be interested in this enquiry.
2. Taking Quotes
Transporters respond to enquiries by placing their best possible quote for a given enquiry. These quotes are taken from the daily spot market and are subject to fluctuations, based on the demand and supply of vehicles for that route. There are several instances where-in the price fluctuations kicks in and the prices go up and down within an hour and the quotes are re-submitted by the transporters .A lot of times transporters take a chance, quote for an enquiry so that they can get the order , but in reality they might not have a vehicle ready for that route.
3. Allocating the Dispatch Order
Once the logistics team gets the quotes from all transporters, he/she decides to allocate the orders to transporters. The logistics team shows preference to certain transporters and more often than not distribute the load equally among them. Once the order is confirmed over phone/email , the transporters try to procure the vehicle from truck owners/brokers and place it at the loading site. A small delay in confirmation from the logistics team can also lead to price variation , due to which the transporters fail to place the vehicle and the dispatches get stalled. This is a common specially during the festive seasons in India, as there is a huge gap between the demand of goods to be moved and supply of vehicles available, as the truck drivers want to spend the festivities with their families and stay at home.
4. Vehicle In-Transit
Once the vehicle reports at the loading site (vehicle non-placement due to various reasons is a very common occurrence) , the in time is recorded and the vehicle is placed for loading. Once the vehicle is ready to move , all the documents related to the movement such as e-waybill, tax invoice, weighment slip (to record the actual weight of goods) are compiled and a copy is handed over to the driver and punched at the loading site.
5. In-Transit Tracking
Once the vehicle is in transit, its whereabouts need to be tracked, either via a GPS feed or in most of the cases the transporters send a daily log of the vehicles in transit with the updated location. In a lot of cases the manufacturers track the whereabouts of a vehicle only when it is delayed than its usual transit time
6. Billing and Accounts Settlement
Once the goods are delivered and the proof of delivery is received by the manufacturer( online or hard copy) , it is now that the transporter submits the freight bill and if there are no disputes whatsoever in the transaction the payment is cleared
All the above activities are either done over email/phone or what I have seen in many cases is complex spreadsheets are used to record the details of the transactions. The invoices /dispatch orders are stored in ERP software for accounting purpose.
The activities mentioned above leave a very key data trail behind it, which is not captured and stored anywhere such as freight/pricing trends, transporter performance, TAT across various lanes. And most importantly, a huge amount of man-hours are spent in performing these tasks. To top it off, given that logistics is not the most transparent industry, there is a huge probability that mal-practices and human errors are not tracked as there is no audit trail of the activities performed by various users. For e.g. a basic dispute may arise between the quoted amount and billing amount by transporter, which results in further wastage of man-hours.
That’s why we need products which can capture the complexities of these transactions and record it under one window. The system needs to be designed in a way such that it facilitates collaboration between the two parties and is easy to use, given the kind of users we are dealing with. A workflow automation system will enable –
1. Data Recording and Analysis
2. Managing Vendor Performance
3. Enforce Transparency
Most importantly, it will cut down a significant number of man-hours which can be utilized in some other way.