The digital transformation process in transport & logistics is something companies are going through. Some Ukrainian enterprises treat with the caution of innovation, but the cost-saving benefits force implementing improvements immediately. Today we will talk with an expert in the logistics field Alena Kraschina, who has implemented digitalization in a number of enterprise logistics companies. Alena shared her experience where she managed projects directly and implemented TMS systems. She also shared results the enterprise companies gained after the digital transformation process.
Please, tell us about yourself and your experience in logistics.
I have been working in the field of logistics for over 13 years. During this time, I collaborated with Ukrainian retail chain companies such as “ATB”, “More Piva” (Hop Hey), “PROSTOR”. In the last two companies, I hold the position of the head of the transport department and deal with the processes related to the delivery of goods to the chain’s stores, managed own and hired vehicles. Also, my area of responsibility includes everything related to optimization algorithms for improving manual planning. For 7 years of work at ATB, I had the opportunity to immerse myself in all areas of transport and warehouse logistics processes, as well as take a key part in the TMS implementation, choosing a system, developing requirements, and implement it within all distribution centers. I have created and implemented routing algorithms into the system, which allowed us to plan routes automatically and reduce the time spent on manual planning by dispatchers. We continuously expanded the core features, applied third-party services integration, created additional reports, and carried out additional optimization scripts. I trained more than 150 key employees on using this system (Top-staff, middle-staff, system control staff).
How long did it take to implement the TMS system?
The time spent on implementing depends directly on the distribution center. There were centers with complex routing, the specificity of which required not just system implementation as well as the configuration and applying significant changes of the business processes. Some warehouses were launched and implemented in a month and setting up the routing algorithm lasted more than six months. For some regions, it could be faster (1-3 months). The duration actually depends on the regions, the number of vehicles, and the company structure. I have implemented more than 10 projects in transport and logistics, within which I launched cross-docking projects, supervised the launching of new warehouses and distribution centers. I transferred selling points there, arranged logistics processes, such as transferring transport to the region. I also was a decisionmaker on what types of transport we will transfer, calculated costs and regions, in which region should this warehouse be opened. I’m still working on similar projects for the current transportation company.
How has the transport market of Ukraine changed today?
10 years ago in Ukraine, all the routes were calculated in the mind and on the calculator. Logisticians memorized the vectors of the route directions and built these routes completely subjectively. There were paper maps on which we put points – this is how the logistics were presented. It seems to be optimal, but on that real numbers, you couldn’t rely on. The numbers were memorized and the routes were built from the head. Just imagine, one distribution center of a medium-sized company could load and send vehicles to more than 30 directions. Moreover, all this was built based only on the experience of a single logistician. In 2011, a wave of digitalization came to Ukraine and allowed companies to automate core processes. Hopefully, we received routing optimization tools and began testing automation to opt for the best solution. We saw various systems with a “magic button” that instantly places hundreds of orders for hundreds of cars. At first, it seemed like something fantastic, but we saw a variety of working examples and immediately applied automation.
When a company increases the volume of shipments, it is impossible to manage and track everything accurately. We needed to automate document management, order management, transport management. When there are already 300 vehicles in your fleet, and it is necessary to plan and carry out the shipment “today for today”. Then you can’t remember the exact location of each vehicle, or which one does not have special equipment or some vehicle leaves without a trailer. Such factors were difficult to manage, and many companies wanted to simplify them. Automation helped to exclude manual planning and difficulties in route management. It also minimized and then eliminated the influence of the human factor on the cost and route planning. We established operational processes, started logistics management, received required data about the dynamics, kilometer driven. We got clear reporting which did not require 10 people to proceed and summarize the results.
When do the entrepreneurs decide to automate logistics in the enterprise?
There are several reasons for this. The first is when the volume of cargo turnover and the number of own vehicles is too high for daily processing and manual control. When logisticians do not have time to draw up these routes, send the route planning to the warehouse, arrange all transport on time to deliver the goods to locations. When there are more actions needed than people available, and there is a need to recruit more staff. Someone had to bring it faster, someone cheaper, and someone else according to some parameters. Therefore, none of these route-planning itineraries can be called optimal. The main task of transport logistics is to deliver the goods on time, without loss of quality, and load the car with a high load factor to avoid idle runs. In managing a large amount of data, automation is needed, because it is difficult to control everything and there is a shortage of really highly qualified specialists.
Second, when managers see that the routes drawn up in their enterprise are not optimal. Possibly, there is abuse on the part of gliders or drivers. When it is impossible to control how drivers manage fuel and how much this mileage corresponds to the consumed displacement of fuel. Of course, you may manage each driver, but this is a manual factor that requires more people.
The third is when you want to be able to improve the company’s performance and reduce logistics costs. Without accurate and complete reports, there won’t be intelligent optimization. Reducing the cost of document management, which also takes time. When there are many cars and many orders, it is required to move to a new level.
What is the difference between providing transport logistics when there is one site of shipment and when there are several?
There is no difference. If business processes were set and worked smoothly then no matter how many warehouses you own. Either one or more than twenty in different countries and regions. All of them should operate only following such algorithms. Then, based on this business process, which really works in all regional warehouses. And when the manager understands why it is needed, you can implement the system. It will work according to one pattern, scheduled algorithm, optimization criterion. The best thing is if a series of optimizations can be applied that will reduce staff. Just to make a logistics center in one region at one distribution center. Then will be one manager who controls the execution of all processes. This greatly facilitates the ability to monitor and exercise control, implement adjustments, change processes and make sure that everything goes well.
If the product groups are different, then the business applies an additional criterion. But it also means that the processes are carried out in the same way. If you have a set of these criteria, you follow these principles. Moreover, properly configured business processes even before the total digitalization help to reduce cost and get revenue faster.
What are the main criteria for logistics companies to opt for a service provider when applying digitalization?
It all depends on the company. If this is primary logistics, where the standard types of stores, goods, simple routing. Then ready-made solutions are considered. There is no need to buy additional server equipment or adjust a complex tech solutions. In such logistics, routing algorithms include 2-3 key parameters: reducing delivery costs, reducing mileage and fuel, and a number of simple logistics processes. But, for enterprises with complex systems, different types of equipment, different temperature regimes of warehouses and orders, various regional warehouses, and cross-docking warehouses would be better to develop custom solutions. Then you need to write the system from scratch, taking into account the basic algorithms that have already been developed and add additional settings to them.
What results does the company achieve through the digitalization?
Each customer can customize important parameters and mange the logistics processes. Custom TMS development allows to manage primary information automatically. All the required data about the vehicle fleet, about the cargo, about the time windows of clients, and many other parameters are systematized in the TMS. Controlling the other parameters allows to reduce spends. Planning in the system is carried out in such a way that the cost obtained during planning is minimal and leads to a minimization of the cost of transportation and more efficient use of transport. Managing logistics based on the reports received from the transport planning system, you can see detailed analytic and much more. This speeds up processes, allows you to store and accumulate data. In addition, logisticians can monitor online the status of the itinerary and violations, track deviations in time and along the route. And more importantly – synchronization of the work of the logistician and the driver to track and correct the route in real-time.