Challenges in Truck Procurement: Reasons and Solutions
Logistics and Supply Chain is the backbone of any country. It’s what enables trade and commerce and plays a significant role in a country’s GDP. In order for any country to become more self-reliant we must strengthen the demand and supply chain cycles across industries and empower every stakeholder. And work towards this has already begun. We see many provisions being made in the economic package dealt by the GoI, which will help increase the efficiency of all sectors and ensure quality.
The Indian logistics industry is worth close to $200Bn with road freight being the most used mode of transportation, accounting for over 60% of total freight transactions. No matter the size of the industry, it still faces major challenges like lack of trust, no visibility into transactions, no standard communication, broker commissions and more. These challenges lead to severe inefficiencies in a company’s end-to-end supply chain operations. Let’s take a look at one of the crucial issues the industry is plagued by today – vehicle/truck procurement, the first step in a logistics transaction. We will also delve into a few ways of how technology can help solve this issue.
There seems to be a complex series of events that have caused a shortage of trucks in the industry over the years, with the requirement of logistical support growing exponentially, the broken links in the chain have to be repaired with the utmost urgency, as the process for the procurement of trucks, reduction of TAT at inbound and outbound or factory, and their influx into the industry must be streamlined. However, this poses some challenges, which need to be mitigated first. These challenges are as follows:
Lack of Visibility
The primary challenge in freight management that needs to be resolved is asset utilisation. Companies require ease of ascertaining truck availability and ensuring they’re properly assigned and utilised. However, to do that, there needs to be a major increase in visibility of the concerning trucks and the consignments being loaded.
Secondly, in the absence of real-time updates that are imperative in the case of an unexpected event such as natural disasters, route deviations, or accidents, the visibility of trucks gets further obstructed. More importantly, this absence means an abundance of untraceable vehicle TATs (Turnaround Time) and no clear ETAs.
In short, the visibility of available trucks and their movements is what propels efficiency in supply chains.
Lack of Consistent Pricing
Pricing of trucks for inventory movement depends on various factors like fuel prices, driver payments, route to travel, distance to cover, warehousing and storage costs, etc. These costs have pushed the industry into having no consistent pricing. Furthermore, freighting charges on select routes tend to be higher when there is a shortage of the required transporters or contractual suppliers.
Manual Workflow and Lack of Structured Communication
The Achilles heel of the industry is its lack of automation, digitisation, and other modern-day advancements. Most industries still rely on age-old manual processes of calling up fleet owners for trucks and diary entries, for truck placement and scheduling. This leads to increased vehicle TAT at the factory or storage facilities. Transport companies still have to make numerous calls to their brokers or fleet owners for each transaction. Prices are set on a call with no visibility on which truck or driver will end up picking the shipment.
This laborious process delays getting the vehicle up and running, and increases room for errors like vehicle number/driver number and name etc. leading to a ripple effect in the supply chain. This increases the costs for all stakeholders as well. However, automating the entire process and opening up reliable and efficient communication channels can significantly make a positive impact on business.
Overcoming The Challenges: The Solutions
The challenges faced by the industry at this point, though severe, are correctable. However, the industry is bound to benefit by putting together teams and adopting measures that simplify procedures and streamline tasks and requirements to maximise efficiency. There are a few solutions that may turn out to be game-changers for the supply chain industry.
Improving the visibility of vehicles for frictionless freight management with consignments and journeys plays a vital role in the truck procurement process. It has a direct impact on the efficiency of your supply chain operations. It not only gives you an indication of where your vehicles are but also adds visibility of products. This can help in the reduction of TAT in terms of loading, transit, and unloading points and help you plan your next load and reduce empty miles. Freight Tiger, having worked towards optimising internal networks providing end-to-end visibility, helps regulate oncoming dispatches and reduces unnecessary miles travelled, improving asset utilisation.
Indenting is the industry term for the vehicle procurement process by which companies place vehicles/trucks for their shipments. As shippers/consignors have multiple contractual logistics service providers/transport companies, it is necessary to ensure that the indenting process with their contractual LSPs is simple and fast. Technological advancements in the logistics industry have made this process completely digitised. Many shippers and consignors have sworn by this digitised process as it helps them drive placement efficiency and meet SLAs through proper indent management.
Freight Tiger’s vehicle procurement product – FT Fulfil has shown results of a 47%+ increase in SLA compliance and INR 3L+ monthly savings on freight costs for one of India’s largest FMCG companies.
To know more about how Freight Tiger solved vehicle procurement challenges for one of India’s largest FMCG companies, get the comprehensive case study now
The pricing structure and availability can be publicly accessible, enabling enterprises to dodge the delays caused by truck procurement. Freight bidding applications can be brought in effect, which will help streamline the business and help in making decisions tailored for requirements at an open and transparent cost. Using effective procedures such as the Digital Freight Network that enables spot bidding would tremendously enhance the ease and accountability of this procedure.
Every industry has its share of challenges to overcome, but when an industry that has a direct impact on trade and commerce, and plays a big role in the GDP of a country confronts challenges, the consequences cause ripples across the entire world of trade. In the quest to find solutions to these challenges, organisations like Freight Tiger provide a TMS transportation management software – a platform that caters to every step of the logistics journey coupled with on-ground experts to help customers meet their SLAs, improve customer experience for their customers improve efficiency, margins, and OTIF.