From the industry: A digital platform for changing the outbound sector

Latvian finished vehicle services provider, Fracht SIA, rolled out its Automotive Logistics Control System (ALCS) in 2014 to aid in the distribution of cars for Volkswagen Group brands, General Motors and a number of commercial vehicle companies. Fracht has invested €3m ($3.6m) in the transport management software tool so far and it now handles everything from purchasing, transport scheduling and supply chain management, to route data services, quality control, KPI performance and financial accounting.

The web-based software, which is supported by cloud applications, is designed to better manage the flow of information in real-time by establishing a shared platform for carmakers, transport providers and other key suppliers of services in the outbound sector.

“The system is a kind of mix between ERP II and a professional social network, where users can share their data with specific partners,” explains its founder and board member at Fracht SIA, Renatas Slenderis (pictured).

Enterprise Resource Planning (ERP) is a business process management software that brings together integrated applications to manage a business and automate office functions. ERP II had the added advantage of bringing in customer relationship and human resources management.

Slenderis goes on: “There is a combination of features from classic ERP II, with its strong business rules, complex data entry forms and restricted access to data, and on other hand, experience of modern web applications and social networks where users are able to share information with their partners in simple and usable way.”

Optimised, automated, efficient

Fracht says that more than 80% of its business processes have been optimised and automated with ALCS, with some impressive gains in efficiency.

“Our reaction time from ordering to execution has been decreased up to 20 times,” says Slenderis. “Fracht increased the transportation of vehicles from 6,700 units in 2010 to 70,000 in 2016 [and] turnover increased seven times without increasing the number of employees. Moreover, we can still grow annual transport of vehicles to up to 300,000 with the management of two dispatchers.”

Since it was introduced, more than 180,000 new and second-hand vehicles have been moved using the software by Fracht and its Lithuanian subsidiary, Fracht UAB (the split has been around 65% new and 35% used).

“Small and medium transport companies, including Vytaro Transportas, Autoriba and Autofastas, to name but three, are cooperating with us through ALCS,” says Slenderis. “About 265 transport companies are using ALCS on a regular basis although our network in total includes 1,289 transport companies and more than 5,000 auto transporters.”

Moreover, larger European transport providers such as Frikus, Hoedlmayer, STS, and Wega-A are using it in a limited capacity as an exchange module to purchase loads on a spot basis, find orders or get information on loading and unloading.

Those finished vehicle transport providers, big and small, are using the ALCS system right the way across Europe and the company is looking further afield for global applications. According to Slenderis, the system supports ten languages, including Chinese, Russian and Spanish, so ALCS can be implemented in a number of regions around the world.

Overcoming the obstacles

In developing the system, Fracht ran into some familiar problems faced by those seeking a more efficient outbound logistics process. Fundamentally, creating a shared platform, or connected supply chain, that serves all parties means open access on one level but maintaining secure integration between OEMs and the logistics and transport providers on the other. Fracht also had to think about keeping ALCS friendly enough for users so that training in the system could be kept to a minimum.

Balancing the mix of ERP functions with social network technology meant that user friendliness was also matched with data security.

The company has also made adjustments to the system as it has developed it. For example, during the trial of the system GSM (mobile) applications the company originally designed came up against some resistance from drivers who did not want to use smartphone apps. Most of the drivers were above 50 years of age and not savvy with smartphone apps in their work. Second, often rough working conditions meant that using a smartphone was inconvenient. Fracht solved the issue by simplifying the communication process between the ALCS and the driver using SMS codes.

Emissions savings

Another problem to overcome in the distribution of finished vehicles is the level of empty miles typically run on return legs, when the transporters don’t have cargo, a source of inefficiency. Fracht says that using ALCS could help to reduce those empty miles and the carbon emissions spent. Pairing loads and combining flows is the only way to do this, according to Fracht. That is the reason, says Slenderis, why PSA originally created Gefco and why Renault originally set up Groupe Cat. But even with dedicated services the results will be poorer if processes are being coordinated with outdated manual methods rather than being digitally automated.

“Our system can change this form of co-operation and provide a solution for manufacturers and suppliers based on digitalisation, real time flows and fleet management,” says Slenderis “It means the system is able to combine the flows of different carmakers and provide optimal routing, managing fleet service providers automatically; business digitalisation opens a way to an optimal solution.”

The use of an automated system for transport management has other advantages. For instance, when a driver informs the ALCS that he or she is unloading the last vehicle, the system automatically sends loading instructions for the next trip. Another example is seen in the information sent to a vehicle compound that shows when transporter is in the vicinity.

OEM involvement

What Fracht is looking for now to fully exploit the system is a greater integration with the vehicle makers themselves, which requires their participation in the system.

“After integration with manufacturing and compound information systems, ALCS will be able to accept transportation orders, plan trips and send load instructions to drivers – or, in future, unmanned autonomous vehicles – in a fully automated way without participation from personnel.”

Integration of processes is something Fracht sees as key for the improvement of the finished vehicle transport sector as a whole and something that prepares it for the arrival of the autonomous vehicle.

While digitalisation of processes in the finished vehicle sector has taken off and proliferated in a number of directions – telematics, transport management systems, customer relationship management (CRM), supplier relationship management (SRM), e-commerce – there are still no shared platforms to manage connections between the different systems.

According to Fracht, ALCS connects the supply chain and by connecting the different systems supporting it can reduce empty miles, decrease reaction time, disseminate track and trace data across the supply chain and reduce manual communication and the waste of paper. What is more, if implemented Slenderis says it standardise processes globally, providing a shared multilingual exchange to automate and optimise business processes.

“Customers require speed, transparency, and track and trace, for the lowest price possible and this is where we come to offer our services,” says Slenderis. “We can say with certainty that, without a shared platform in automotive logistics there is no future for autonomous transport!”