Murphy: How are mobility solutions impacting your customers and the solutions you provide?
Oginz: It is a big impact because we are no longer talking just about point solutions where you try to solve one specific need. With mobility, everything can be connected and you can do all kinds of things, from signature capture to making a business process truly paperless. But that means you need a strong overall strategy and that requires a lot of holistic thought. Plus, changes are happening so quickly, a mobile strategy can encompass maybe three years, at most. It's challenging because you can't just single one thing out and say that is what we will do. You have to put a lot more thought into it.
Barnett: If you look at the various applications that can be used − from reefer tracking to tire pressure monitoring to lane departure to electronic driver logs - these are disparate systems now, but as we look at applications that are being written to run on mobile platforms, we are seeing a convergence that is radically different than all these point solutions. For example, we can take routing that an Ortec solution provides and bring that into our mobile application; or we may use it to power compliance applications − we can have best-of-breed solutions that work together on one mobile device.
Nischan: From a risk management perspective the benefits are enormous. We are talking about reducing risk, reducing crashes, complying with the new CSA safety enforcement initiative and preventing crashes and losses that affect an organization's profitability. Using mobile technology in a creative and efficient way, companies can realize savings in fuel and reduce driver turnover because it's a technology that drivers find useful and that applies to what they do. It improves safety because drivers are freed from dealing with interruptions that are associated with crashes - and this reduces negligence and some big settlements that we have seen coming out of civil suits. Punitive damages are something that a company needs to pay out of its bank account - it's not on the insurance company − so there are tremendous opportunities for savings. And that is money you can reinvest in your organization to enhance growth, add new technology, upgrade equipment and so on.
Favors: From a service standpoint, mobile platforms and technology allow us to optimize scheduling so we can service more customers with a smaller workforce; from a logistics management standpoint, it gives us the opportunity to get real-time updates from that installer who is at the customer site performing service. So I know real time what my inventory looks like and when my run rates exceed forecasts, which lets me kick off supplemental orders and manage my business more effectively.
Nischan: To build on that, from a cargo and equipment perspective, look at the benefits of using the geo-fencing capabilities of mobile technology. You know where your product is and that helps prevent theft of equipment and cargo. That is an enormous benefit because such thefts result in business interruptions and costs.
Murphy: Tell me more about geo-fencing.
Oginz: With a handheld device you can put a geo-fence around locations and when you break this fence it sends a message to the cell tower that essentially says, "I arrived or I departed." It's an automatic message. Also, if you have a proof-of-delivery signature to capture, that's an event-driven process. So now you have more points of data. One of the most interesting applications of this is in instances where a driver breaks the geo-fence on arrival but is not be able to unload for an hour, which is when he scans the unloaded freight; in that case, there are detention charges. So a carrier may say, "I showed up at your location and had to wait an hour." If those charges are contested, he has the validation. All this data is now turning into useful information to support fact-based conversations, using those different data points.
Barnett: Another practical example of the use of automated data capture is to see if you are ahead or behind on your route. You can take a route planned by Ortec, for example, and look at it versus the actual and understand if you are in compliance with the route you are supposed to follow.
Oginz: That is a great point. Our systems are all about compliance. I can come up with the best optimized route, but if it tells a driver to make a right and go to this location first, but he makes a left and goes somewhere else, my savings are out the window. You need a compliance tool.
Nischan: And don't forget maintenance costs - decreased tire wear and engine wear means lower maintenance costs, so that's another avenue there where savings go directly to the bottom line.
Oginz: Look at all the things we traditionally did with paper or phone that now are accomplished by multiple business processes enabled by mobile. It is incredible to have that real-time visibility.
Barnett: Yes, and the technology is so prevalent. Eighty-six percent of truck drivers now have cell phones and 44 percent have smart phones, at least in our market. The use of smart phones will go over 50 percent this year. If you look at the shipment of smart phones quarter over quarter, the growth is exponential. The major vendors in this marketplace are selling their solutions like never before. We clearly are enabling a new kind of worker, but that being said, truckers are not new to this - CBs were the first social network − so truckers were connecting via mobile solutions many years ago, way before other workers. Satellite tracking is another example. I feel lucky to work in an industry that has been adopting mobile technology for more than 25 years.
Murphy: So drivers have completely embraced all this in-cab technology?
Oginz: When we first started introducing GPS on trucks there was the old view of "big brother watching me" and a lot of push-back, but that is gone. Drivers are accustomed to this technology and to using these tools and they know it benefits them in the long run.
You know, I used to own a trucking company and I could talk to my drivers, but they wouldn't necessarily tell me the truth, so the automatic aspect of data capture is very important. Now, there is no misinformation. It's an exact science - you know where everyone is at any given moment.
Nischan: And from an hours-of-service perspective, electronic logs provide supporting data and can move drivers and companies in the right direction in terms of complying with the rules. So, going back to risk management, if a motor carrier is involved in a crash that it did not cause, attorneys will look at the driver's qualifications, the hours of service, maintenance performance − and when all of these parameters are tied to mobile technology, you are able to show not only that you were not negligent, but that you were complying or exceeding minimum requirements. That lessens the chance that you will end up paying a huge settlement, which could mean a savings of $10m to $20m.
Barnett: Look at the new CSA regulations. Right now there are more than 64,000 companies and 930,000 trucks that have an alert status or are over the threshold in the current BASIC (Behavioral Analysis Safety Improvement Category). So we see companies proactively looking for ways to enhance their safety program. One of the ways to address unsafe driving is by looking at speeding. It's a simple example, but you can look at how fast a truck was going down the road and compare that to the posted speed limit. Hard braking is another example that can show if drivers are following too closely. If you take this kind of electronically collected data, you can empower fleet managers so they can talk to drivers about their behavior and that will really help them better their CSA scores. It is the same with fatigued drivers. Five out of 10 violations are due to form and factor errors that can be eliminated if you use electronic logs that can be empowered by a mobile device, which has to be connected to the engine of a truck to be compliant. That is a powerful way in which mobile devices can solve problems with fatigue.
Nischan: This impacts driver retention as well. The average cost to hire and train a driver is $6,000, so if you can enhance driver stability and encourage their use of technology and information, you are going to keep drivers longer term, which goes to the bottom line. This is of particular importance right now because the industry is facing a driver shortage that will only worsen with the aging workforce. The average driver today is 50 years old.
Murphy: What other trends do you see happening in logistics?
Nischan: I think it is amazing that in these economic conditions we are in driver shortage that will only get worse. Companies need to be creative in attracting employees and retaining the best talent. When you use good trucks that ware well maintained, well routed, optimized and using technology, you are creating a package that will attract a driver. Drivers want to work for a well-run organization that is stable and going to be around for a while. This goes to retention. The next most important thing after hiring a good driver is keeping a good driver. Drivers will jump companies for a little more money but offering good working conditions and up-to-date technology will add stability. I think mobile solutions can help with both hiring and retention.
Oginz: What I think is exciting is the increase in accountability. If a driver reports that the tires are bald, it is on the company to make sure this driver does not get a violation for bald tires. We now have the visibility and accountability to make things better.
Barnett: We are in regulatory storm and fleets are under huge pressure from the rising cost of fuel and labor. It is extremely expensive to run a fleet, and then to be facing a looming driver shortage is hard. We need to have solutions that address the needs of that driver to stay connected to home and family and office and to ensure that they are safe and compliant. At the same time we have to squeeze every single penny out of our fleets, which means looking at every drop of fuel, ways to reduce idle and ways to reduce wear.
Nischan: It's often been said that the best way to earn your first million in the trucking industry is to start with two million. It is a tough, tough business, so it is important to take advantage of these opportunities to enhance that bottom line.
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