Back in 2000, when so much of the industry was still managed with a combination of manual processes and batched EDI files, knowing each vehicle's current location was a challenge. At that time, even for customers of ICL's vehicle transportation management system (who had some of the best information available), data often arrived hours or days after an event occurred. Real-time visibility was still a distant goal in this world, not a reality. Today, advancements in technology have made real-time visibility achievable, if not yet ubiquitous. However, with a high level of confidence, most Original Equipment Manufacturers (OEMs) know the status and location of their vehicles.
If visibility has improved so much, and it has, why does this issue still get so much attention?
Changing Definition of Vehicle Transportation Visibility
"Visibility" now encompasses a desire to see and understand the broader finished vehicle network. It is not enough to see my brand's inventory; we also need more comprehensive information on what is happening in the entire network. Today, when we speak about visibility, these are the types of questions that keep logistics managers up at night:
- Is there sufficient space to unload my cars?
- Will there be enough carrier capacity available to service my destination?
- Did a competitor's decision to divert volume to one of my key carriers jeopardize my loading plans for the next three days?
The call for better visibility makes sense from this perspective, but how do we fix this? If the technology exists to capture the data, what is holding us back? Simply, it is a question of trust.
Collaboration between Vehicle Distributors and Logistics Service Providers
As an industry, we often speak of the need to collaborate, but the depth of that collaboration is shallow. Sure, we can agree on standards around vehicle handling or what data needs to be in an API file, but there remains a reluctance to let others see into one another's network. This lack of trust, driven primarily by competitive concerns, means that not one OEM can fully understand how their network is performing. If I do not know if my competitor is about to flood a rail compound with additional volume, I cannot take proactive steps to reroute my freight to prevent compounding the situation.
Yet sharing that information is not without risk, as a competitor may gain clues about my company's distribution strategy, an impending quality hold, or other commercially sensitive action. Logistics Service Providers (LSPs) also have an understandable reluctance to embrace the idea of complete transparency. Carriers face daily decisions on where (and to whom) to deploy finite resources in the most economically beneficial manner possible. This may mean leaving an unprofitable load for one OEM on the ground while prioritizing a move for another OEM. Maintaining an appropriate balance is critical to keeping rates reasonable for all shippers. Still, if an OEM can easily peer into the supply chain and see these decisions in real-time, it is not hard to imagine the uncomfortable conversations and second-guessing that might ensue.
These are significant hurdles. The process of building trust amongst stakeholders is achievable, but it will take time. Building upon a series of small successes is a reasonable approach to initiate this process. An excellent place to start is with a well-designed, time-bound pilot involving a small number of stakeholders:
- Pick an appropriate location where there is a need and willingness by all the stakeholders to find a solution.
- Identify a shared goal.
- Treat it like a kaizen opportunity.
Better Vehicle Logistics Management Through Trust
Each win builds trust. All stakeholders need to be committed to the process. There must be clear ground rules agreed upon upfront as to what information will be shared between OEMs, expectations on resource allocation, the measurement criteria, etc. If successful, the parties can continue the process by identifying other opportunities and partners for improvement. Industry groups like the Automotive Industry Action Group (AIAG) can document and publish these successes for others to examine, discuss and emulate. Over time, as more OEMs and LSPs experience first-hand the benefits of these collaborative initiatives, trust will build to tackle more ambitious and impactful projects. With more confidence, the greater the willingness of each stakeholder to share information is the key to gaining better visibility.
While this industry has a natural tendency to seek out big, top-down answers to problems, establishing trust cannot occur overnight; this process will take years.
However, destroying that trust can happen in an instant. It falls upon the OEMs to keep one another accountable to a large degree. The minute someone exploits this collective trust to seek a short-term economic advantage, other participants will pull back from sharing their information, there will be less willingness to collaborate, and transparency diminishes. As hard as it is to build trust, maintaining it may prove to be the biggest challenge of all. But if we achieve the level of visibility the industry desires, building and maintaining trust is essential.
An accurate ETA to dealer has always been the shared goal between LSPs, OEMs, and dealers. Still, with an increased percentage of vehicles sold before shipping and dealers expecting Amazon-like service, the industry needs to redefine information sharing for final mile delivery. ICL hosted an Idea Lab at the Finished Vehicle Logistics North America conference with OEMs and LSPs exploring practical steps toward data sharing. Read our recommendations here.
Tom is a logistics and supply chain executive with over 28 years experience in finished automotive logistics. Currently the VP, Customer Experience and Administration, Tom oversees customer support and operational activities for ICL and Rubicon, as well as finance and human resources. Tom has a background in systems development and sales, as well as extensive operational experience at the OEM level, which shaped his unique perspective of the challenges of this dynamic industry. Tom is also a longtime leader in the Automotive Industry Action Group (AIAG), co-chairing the Standardized Electronic Messaging and Visibility workgroup.
The foundation of information sharing between OEMs and LSPs, or eventually, OEM to OEM, relies on accurate, timely data about the status and ETA of inbound shipments. With clear visibility to inbound volumes, OEMs and LSPs can coordinate capacity to match volumes, and collaborate to prioritize sold vehicles or specific models in the event of volume surges. More OEMs use ICL's Vehicle Logistics Management System (VLMS) to know the precise location and ETAs of shipments than any other system for finished vehicle logistics. VLMS can automate the reporting of pipelines to LSPs and provide shared scorecards and dashboards for monitoring capacity and performance to both the OEM and the LSPs.