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Using Information & Communication Technology to Increase Productivity

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Using Information & Communication Technology to Increase Productivity USING INFORMATION AND COMMUNICATIONS TECHNOLOGY TO INCREASE PRODUCTIVITY IN THE AUSTRALIAN TRANSPORT AND LOGISTICS INDUSTRY July 2010 WHO WE The Australian Logistics Council (ALC) is the peak national body for Australia’s freight Transport & Logistics (T&L) industry. The aim of ALC is to positively influence government policy decisions to ensure that Australia has a safe, secure, ARE reliable, sustainable and competitive freight T&L industry. 5 MARCH 2010 THIS SUBMISSION HAS BEEN PREPARED WITH THE ASSISTANCE OF KM CORKE AND ASSOCIATES, CANBERRA. PO Box 20 DEAKIN WEST ACT 2600 P:+61 2 6260 3274 F:+61 2 6260 4978 E: [email protected] www.austlogistics.com.au ©Australian Logistics Council, March 2010 ICT Sub Committee 2 Glossary 3 Executive Summary 4 The Transport and Logistics Value Chain Maturity Matrix 6 We play an essential role in today’s Supply Chains 8 CONTENTS Productivity can be improved today by using existing technology 8 Innovation will continue to deliver significant benefits and service improvements 12 Today’s most efficient supply chains leverage information and ensure collaboration. 22 Any future strategy must be sustainable. 25 The benefits case exists for technology investment across the industry. 28 References 29 Case study Links 29 ICT Sub Committee This Policy Paper was compiled by the Australian Logistics Council’s ICT Sub-Committee. The Council wish to thank Committee members who researched and wrote the Paper and their parent organisations for the resources and time required to complete the Project: Rocky Wood Telstra Enterprise & (Chairman) Government Michael Alf Capgemini Consulting Dave White Peter Blanchard Tradegate Jeppesen Paul Davies Rail, Logistics and Terminals Michael Haines Westgate Ports Pty Ltd Norm Pidgeon The Nous Group Bonnie Ryan GS1 Australia Neil Temperley NICTA Andrew Verden 2 Glossary Acronym Meaning 3G Mobile communications technology – voice and data CBD Central Business District Dedicated Short Range Communications — technology for wireless vehicle DSRC communications EDI Electronic Data Interchange ERP Enterprise Resource Planning GPS Global Positioning System — satellite based location and tracking IAP Intelligent Access Program — used to manage heavy vehicle road usage ICT Information and Communications Technology RFID Radio Frequency Identification — smart tags read at a distance SAP German enterprise software company Sydney Coordinated Adaptive Traffic System — traffic light management SCATS system in use internationally T&L Transport and Logistics, also known as Freight and Logistics XML Extended Markup Language — used for data exchange 3 AUSTRALIAN LOGISTICS COUNCIL Executive Summary deliver predictable and reliable flows of goods and people. Innovation in ICT in the Transport and Logistics Industry Of course, any future strategy must be sustainable and it is clear that the enhancements that have most economic benefit come with efficiencies that will accelerate the reduction of CO2 outputs by the The Australian Transport and Logistics (T&L) industry at both micro and macro levels. This is a industry is the lifeblood of our nation’s economic true win‐win for the broader economy. But there is well‐being, generating 14.5% of Australia’s GDP and more that can be done to enhance the reduction of providing more than 1 million jobs across 165,000 CO2 with innovative ICT applications. companies1. Without it our burgeoning resources exports, our agricultural output, the goods on our The case for investment at all levels from single sub‐ supermarket shelves and our commuters cannot contractors to major corporations is clear — reach their destinations, whether that be China, without it Australia will slowly decline in Tamworth or George Street in Sydney. international competitiveness. Inevitably, the industry must collaborate on agreeing and utilising In order to deliver excellent service T&L businesses open global standards for information gathering need to build excellent relationships with their and dissemination, and both State and Federal clients, manage complex execution processes, and Governments must continue to play their part in manage their own assets and people effectively. avoiding regulation that would reduce the Despite being world‐leaders in the 1980s and 1990s economic value of the available enhancements. Australian T&L companies have failed to secure the productivity improvements that can now be gained The Australian Logistics Council calls on all using existing technologies — information that stakeholders to immediately review the exists today is not being leveraged as it might to opportunities offered by ICT to improve increase the productivity of T&L companies, their productivity in our Industry. It is clear that the customers and the economy in general. Australian Transport & Logistics industry has enormous scope for productivity improvements This failure to adapt ignores innovation and new enabled by the application of technology. To unlock technologies that can deliver significant benefits this productivity bonus: and customer service improvements, including the latest generation of Logistics Management Systems, Government must provide the appropriate Vehicle Tracking and Monitoring, Real‐Time Traffic infrastructure; Information, Routing, Freight Matching, and Industry must educate its disparate Wireless Communications that can ensure the components; and effective integration of all parts of the supply chain. Enterprises must determine where and how they wish to position themselves in the Value In fact, the most efficient supply chains worldwide Chain Maturity Matrix. leverage real‐time information and ensure real collaboration between partners, whether this is Immediate challenge for the industry within a closed‐loop, across the industry, or indeed The immediate challenge is to identify how to use across the entire economy. Impartial industry wide the technologies described in this Paper to support Information and Communications Technology (ICT) business processes across the economy, industry solutions will enhance the industry’s ability to and individual organisations. All parties need to: identify points of duplication in business 1 Australian Logistics Council (ALC) National Strategy for the Transport and Logistics Freight Industry ‐ Enhancing Australia’s processes; Supply Chains 2008‐2015. Page 4 Using ICT to increase Productivity in the Australian Transport & Logistics Industry identify what information is required and To assist this broad change consideration must be where else in the supply chain it might exist; given to moving from the Technology Solutions audit the capability of current hardware and currently in place to current best practice as listed software systems; in Table 1 on Page 21. Future Trends in areas such identify key trading partners; as Logistics Planning Tools, Mobile discuss collaboration opportunities with those Communications, Fuel & Emissions Reductions; and partners; Industry Level Data Sharing identified therein identify quick wins; provide clear signposts to further areas that will identify any potential investment required; provide productivity boosts to the Industry. complete the business case (and get approval); implement and review any changes to process and the application of technology. Importantly, industry‐wide issues, such as standards for the transfer of information, must be addressed. All this should be done with an eye to the Value Chain Maturity Matrix (which appears on Page 6). Each stakeholder or group of stakeholders should plot their position on this matrix, which identifies the potential impact of deploying specific technologies. In general the Industry needs to trend from the bottom left (Internalised and Reactive) toward the top right (Collaborative and Proactive) of the Matrix. Individual organisations should determine the appropriate position in the Matrix that will maximise benefits to their customers, owners and other stakeholders. Page 5 AUSTRALIAN LOGISTICS COUNCIL The Transport and Connected Interconnected Collaborative Logistics Value Chain EDI has been EDI and tactical Sharing of deployed at a information is information that is Maturity Matrix transactional level, used with multiple relevant to all often at the partners and the parties across the In order to deliver excellent service request of the information is value chain. to their clients Transport & customer of used to improve Typically this transport services. efficiencies across includes demand, Logistics businesses need to build all parties transport and excellent relationships with their management clients, manage complex execution reporting processes, and manage their own information assets and people effectively Arms Length Integrated Synchronised Basic EDI is used to Transactional, communications integrate with Schedules and plans Figure 1 displays a maturity model of T&L business with external external parties at are shared with parties, often dual Transactional level external parties to operations. The model can be used to determine keying and enable efficient the ability of an organisation to collaborate across multiple systems planning the T&L value chain. are deployed Functional Engineered Industry Proficient Basic ICT has been ICT at Transport planning deployed in the transactional level, and resource organisation that typically financial optimisation tools enables effective and transport are used to improve management of order internal day to day management is performance activities. used to improve
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