If you want a barometer to tell you how well the economy is faring, just take a look at the logistics industry. Figures published in the summer by Logistics UK’s — one of the UK’s leading business groups representing logistics businesses — highlighted what it called “the unsustainable financial pressures that businesses are currently facing.”
Its regular industry tracker found that eight in ten logistics firms believe the current situation is predicted to worsen with the cost of transporting goods expected to escalate further in Q3 2022.
Much of that is being blamed on rising input costs, with the price of bulk diesel increasing by up to 42% in the first six months of 2022, singled out as a particular grievance.
Which, perhaps, goes some way to explain why firms are increasingly turning to technology to help keep a lid on costs.
Digital transformation within physical operations is only just taking off
Of course, a cloud-based telematics solution — rolled out across a fleet of HGV lorries or delivery vans — can’t bring down the cost of diesel or petrol at the pump.
But that telematics solution — employing advanced data processing augmented with artificial intelligence (AI) — can help to cut waste and improve efficiency by helping to plot the most fuel-efficient delivery routes.
Smart tech can also remotely identify wasteful engine idling or other fuel-guzzling practices. And once analysis of fuel data has pinpointed waste and inefficiency, then fleet managers can work with drivers to eradicate this unnecessary cost from the business.
In the US, for example, Samsara’s Connected Operations Cloud has helped thousands of customers improve fuel economy and reduce waste across their fleets, saving in aggregate more than 24 million gallons of fuel a year, or roughly $80 million in cost savings.
That’s what smart connected technology can do. And it’s just one example of the power that digital transformation can bring to an industry that has yet to fully embrace all that technology can offer.
And yet, despite all the advantages of connected solutions, convincing businesses that this is the right step is still a challenge. Or to put it another way, why do almost all drivers have a smartphone in their pocket for personal use and yet still use a pen a paper for work-rested tasks?
The biggest challenge to digital transformation? Pen and paper
For us at Samsara, our biggest competitor in rolling out new technology to businesses and organizations with vehicles and machinery is pen and paper. Sometimes literally.
American Cementing — which operates a fleet of more than 400 vehicles serving the oil and gas industry in the US — managed to bin 13,000 pieces of paper as part of its company-wide digital transformation. From safety checks and fuel receipts to general admin and payroll, the business used to run on manually intensive paper systems.
The shift helped deliver around $60,000 in productivity and time-savings in a year. And the integration with their payroll software saved their back office more than 1,600 hours — all of which were set up in less than two weeks.
Of course, making the switch from paper-based admin to digital processes may not be what everyone thinks of when they talk about digital transformation. But for many businesses in this sector, paper is still part of their business processes.
Indeed, if you were to ask logistics firms and those in physical operations whether they had a digital strategy, in most cases, the answer would be “no.”
Traditional industries have been underserved by technology
The advice for any business in a similar position is simple — strategy first, tech second. It doesn’t matter whether you work in government delivering public services, healthcare or retail, the same fundamental questions apply.
Namely, what are you trying to achieve? What are your business goals? What metrics would make such an investment worthwhile?
Sometimes, the discussion is sparked by a single issue that needs addressing. This might be as simple as knowing exactly how many assets you own, where they are, and how often they are used, as part of real business need to understand your return on investment (ROI).
Which is what happened in the case of Artera, the US-based provider of integrated infrastructure services to the natural gas industry with more than 8,000 vehicles in its fleet. It managed to save more than $1m after it was able to slim down its fleet and maximise ROI.
Similarly, Utah-based Empyre Builders chose to instal trackers on its heavy construction machinery after a neighbouring business had expensive earth-moving machinery stolen in broad daylight. Rob Young, Empyre’s fleet manager, explained:
Because most machines use a single universal key. These machines are easily stolen, repainted, and sold.
Now, live GPS tracking and geofence alerts mean Empyre’s assets are protected.
Whereas equipment was once tracked in a spreadsheet — which relied on information being inputted manually — Empyre now knows the location of each piece of equipment 24/7.
And by tracking engine hour usage data as well, Young is now also able to monitor how the assets are used — and not just where they are — and reallocate equipment to other job sites to cut down on dormant hours.
Digital transformation repurposed for a new industry
On their own — moving from paper to digital processes, improving fuel efficiency, or installing trackers on vehicles — has a benefit to a business. And some of those savings can be considerable.
Put together, however, across an entire business, as part of a broader project, digital transformation takes on a whole new meaning. It changes the very nature of a sector that, in terms of technology, has been left behind in the slow lane.
Rather than providing solutions for standalone issues such as fluctuating fuel costs or recruitment and retention, digitization looks at businesses as a whole, providing data and insights on a completely new level. That isn’t just digital transformation. That’s business transformation.
Digital transformation needs to be led from the front
Three things to consider before embarking on your digital transformation journey:
1. When it comes to digital transformation within physical operations, it shouldn’t be driven by fleet managers looking to reduce spending on fuel. Nor should it be led by the IT department if there is one. Instead, it is up to C-suite decision makers to lead the way to ensure that technology benefits the whole business.
Without boardroom buy-in, digital projects can become siloed and fragmented. By having people at the top of the business driving digital transformation, the whole business can benefit.
2. What are you trying to achieve? Set your goals and KPIs so that you can measure and justify your ROI. You may have a fixed destination in mind — or you may be governed more by a direction of travel. Either way, setting some milestones is a must.
3. Don’t be constrained by established ways of thinking. Digital transformation isn’t just swapping paper forms for digital ones. It’s not just about being more efficient. It’s about harnessing the power of technology and data-driven insights that can change the way a business is run.