Lack of data strategy reduces the efficiency of transport companies

Whereas for many companies in transport and logistics IT is primarily a pitfall that makes the small margins even smaller, a smart use of data can certainly also earn money. This is apparent from a new report from Panteia, commissioned by Transport and Logistics Netherlands, TVM insurance and ING bank.

Panteia investigated the opportunities and threats offered by further automation and the use of big data by companies in transport and logistics. In a sector with very small profit margins, smart use of IT and data can secure and even increase margins. Investments in digitization often have a counterproductive effect, the study shows.

Investments in IT often result in efficiency gains for a company – and thus an advantage over the competition. But this profit often leads to lower prices. Because if the competition eventually buys similar systems, prices fall throughout the sector. While all those companies did make a substantial investment in a new system. The result: smaller margins, across the board.

Insufficient use of data
According to Panteia, this is because companies are still insufficiently using the data generated by the sector’s automation. The researchers therefore argue for a data transition in the sector, for example by investing in automation and data analysis with a long-term vision (including hiring or hiring IT specialists), by ensuring that all IT systems can be linked and by to think openly about new services and products.

Once a company has the capacity to analyze data, that data can be cashed in different ways. For example, through process optimization. Connected systems can replace a lot of manual work and make the process more efficient. Good data analysis can also help companies in price negotiations with their customers. When a carrier can show exactly where he is incurring costs, he is stronger in price negotiations, according to the report.

Improve profitability
A good data analysis can also improve the profitability of a company by adjusting the business model. With the right data, a carrier can see which activities make the most profit. He could, therefore, specialize in those activities and drop other activities that would not benefit him. Companies can also earn money directly from data by selling the raw data, or by processing the raw data and then reselling it.

This is a translation from an article originally posted on Supply Chain Magazine on 20-12-2018.