Verslo žinios, "Transport and Logistics"
June 8th, 2006

Faced with ever increasing competition in the market, transport and logistics companies are starting to look for new ways of organizing their business more effectively and improving the quality of services. Rapidly increasing fuel prices and drivers’ salaries do not allow the companies to cut their fees, therefore, companies need to make sure they attain other competitive advantages – expeditious transport and logistics management, lower administration and communication expenses, safer and more strictly controlled cargos transportation system.

According to Lithuanian National Road Carriers’ Association Linava, in 2005 transport companies’ revenue from transport activities totaled LTL 3 billion.  The increase of the revenue was determined by mergers of the companies, which consolidated their vehicles’ fleets, however, the revenue was approximately 6 percent lower than the increase of the same companies’ costs. The cause for growing transport companies’ costs was a sharp fuel price rise, higher road taxes, and insurance fees, which even further toughened competition, making the companies come to a dead-end: further reduction of tariffs of their services would mean financial loss. 

According to Mr. Gintautas Ramaslauskas, the head of Transport Department of Linava Association, the activities of transport and logistics companies are very receptive to information technologies; these companies work with high information loads, whereas the management of this information requires prompt reaction. The companies, understanding that new technologies have positive impact on their business activities, have been swiftly implementing specialised software, although three years ago, they paid attention only the quantity of computers.  According to Linava, currently 85,8 percent of the companies have electronic communication link, however, two years ago only 61 percent of companies had the same link. Other reason why information technologies are so important is that the companies are rapidly consolidating. The latter statement is supported by decreasing number of transport companies and rising transport activities’ revenues, which in 2005 increased by LTL 2.84 million per company (in 2004 - LTL 2.22 million per company) and up to LTL 224 000 per vehicle (in 2004 - LTL 215 000 per vehicle). “When companies merge, their activities are expanding, they engage into new activities, which give rise to administration expenditures.  “I believe that only the companies using specialised information systems have the possibility to establish themselves and be the leaders in this competitive market, whereas, the companies which failed to implement the systems, are most likely to have loss and will loose their profitability” – says Mr. Ramaslauskas.

Core problems come into the open

More than a few IT companies design transport and logistic information systems in Lithuania. These companies are Alna Software, Būtenta, Integruota apskaita, Labbis, Rivilė and others. However, the problem is that most products are small scope propositions for transport or logistic/forwarding activities, which often function like modules attached to accounting systems. So far there is no integrated system in the country, which would cover all activities and meet the needs of majority transport companies. Therefore, most of the companies, especially large transport companies on their own are trying to design management software tailored to their needs. "For some five years we tried to cooperate with one or another IT company. Eventually, we have designed an information system on our own.  The reason is that it is next to impossible to explain all the nuances of deep-down logistics processes even to the best IT specialist, who is not aware of them,” says Mr. Vytautas Levickas, co-owner of Vylaista and Autospeda transport companies. “It is very difficult to adapt one integrated system, when company itself at the same time is a cargo transporter, forwarder, and a leasing company. This is why we designed certain individual modules ourselves; this has been done by our specialists who are well aware of logistics subtleties,” – says Mr. Vytautas Pelėda, managing director of Transekspedicija UAB.

One year ago, customised software solutions company Alna Software tried to launch to the market a transport and logistics information system, which would meet the needs of most transport companies. “During meetings with different companies’ specialists we have found out that many of them face similar problems, for instance, losses due to missed orders, complicated assessment of journeys’ prices and profitability, overworked managers, prompt information about cargo status etc. However, transport and logistics companies differ in the way they solve these problems,” - says Adrijus Jakulevičius, Alna Software Segment Director.

One of the most frequent problems mentioned by the companies are the orders, which get lost in enormous information flows. „The problem is that sales and logistics managers who supervise between 11 and 19 journeys and vehicles have to operate large information amounts. Failure to answer client’s request in one minute means a lost client, for a company it means lost sales," – says Mr. Jakulevičius. However, according to Mr. Jakulevičius, the registration of requests in the system or having a client database alone does not guarantee that all requests will be answered. A company needs an optimally automated system, so that the managers could quickly calculate cargo profitability, assess risk, and respond to customers’ request, instead of wasting time when entering information manually.

According to Alna Software specialist, the system itself does not guarantee the effectiveness of activity, instead, it just simplifies the administration of even irrationally organised processes. “When designing business process management systems, we follow the assumption that by utilising cutting-edge technology solutions, first and foremost we need to fix and optimise company’s current management processes, only afterwards we design and automate data bases. Only consistent and automated process allows managers to save time, supervise more clients, journeys or vehicles, and make prompt decisions. This is how a company can get real benefit – higher sales volumes or profit“- says Mr. Jakulevičius. Conversations with companies revealed that added value services tailored to provide better service for clients have an impact on sustaining the competitiveness and client loyalty. These services can be automated too. For instance, frequent problems are related to cargo status monitoring and control, which is often the reason why companies lose important clients and credibility. Absence of communication or disrupted communication links among managers, carriers and clients have great impact on business – communication with drivers by phone is expensive, even though, managers spend much time on such communication, often times they cannot provide either exact cargo location or cargo status.

Companies value the benefits of information systems

A couple of months ago, forwarding company Movere started working with a new information system TRIS, designed by Alna Software. “Information system TRIS, which has been customised to meet our needs, helps our company managers to more effectively register and fulfill clients' orders, simplifies communication with clients and carriers, reduces administration costs, and what is more important, increases overall value of services we provide to our customers,” – this is how Mr. Giedrius Keršis, director of Movere company, characterises the advantages of the system. According to the director, prior to the system installation, communication among company’s managers and hauliers would often get disrupted. Only after certain amount of time the company employees would find out that cargo reached destination or got stuck in the middle of the road due to unforeseen circumstances. Therefore, the company could not assure its clients that cargo would be delivered safely and in time; prompt response to problems and solving them was much more of a difficulty.   

Implemented in Movere company SMS communication system, which links clients and customers, allows to automatically control orders’ implementation cycle by SMS and notify clients of their cargo delivery, moreover, it advises drivers of new cargo loading location. According to Mr. Keršys, such automated transportation management and information system has several advantages: it reduces managers’ workload, communication expenses; it also ensures safer and more reliable cargo transportation.  Clients find the system to be beneficial too, for they can promptly receive the information about the possibilities to transport their cargo, they can promptly get timely information about problems and take all necessary steps to remedy or avoid the problems.