AirRoad cuts capex with SCM

Private transportation and logistics company AirRoad has saved an estimated 60 per cent on capital expenditure for distribution tracking equipment with a two-way, computer controlled supply chain management solution.

Phil Newman, AirRoad's national client manager, said the company had been using barcode technology since its inception in 1989. "We have always used barcode technology to provide end-to-end visibility of assets," he said. "Back in 1989 knowing what was being dispatched was like looking into a black hole."

AirRoad had attempted to centralise the barcode information from its distribution warehouses, but stopped trying due to its complexity. "Since developing our own dispatch system we are now able to see what comes in," Newman said. "In the mid 90s we Internet-enabled the dispatch system; however, we still had a black hole at the delivery end where everything was paper based.

"We failed to realise a computing solution [that would] compute more data in a two-way fashion."

In an unlikely scenario, AirRoad was introduced to a SCM solution by accident. "We were introduced to HP consulting by HP logistics to which we were already a service provider due to delivering its computers and equipment," Newman said.

"We then held two workshops on SCM and went down the path of the truck driver scanning for the goods."

HP consulting has since implemented a two-way SCM system using iPaq PDAs to track the goods and a wireless network to gather the data to AirRoad's central servers.

"Drivers don't need to change anything in their work practices," Newman said. "The data is now transferred from the host server to the iPaqs via Bluetooth. Within the depot environment, the iPaqs are automatically detected and updated. If need be the driver can rearrange the delivery order manually." With the delivery data being collated by the iPaqs, the Windows NT server automatically updates AirRoad's Web site, which is accessible by customers and their customers.

"The idea with this system is to minimise the number of phone calls within the supply chain," Newman said.

"This method also allows us to develop systems for fault correction and cuts down exception reporting by 24 hours."

Although AirRoad did not consider anyone else for the consulting work, the company did speak to other scanner vendors. "They didn't know much about the two-way computing issues and if we went down the scanning path the capital cost would have been much higher," Newman said. "For example, we can use PDAs which are readily available and we didn't have to change any of our processes. We therefore saved an estimated 60 per cent on hardware capital expenditure.

Although the system is still being trialled, Newman said the company is close to full implementation.

"This will be rolled out to all our interstate branches," he said. In order to gain a more real-time picture of their goods in transit, the company is now testing GPRS connections to the PDAs and expects the trial to be complete within the next few weeks. Both AirRoad and HP have been using Optus as the carrier since the beginning of the project.

One thing the company will not be doing is attempting to integrate a delivery route optimisation package into the SCM system. "All drivers have set routes and frequently go to the same addresses," Newman said. "We use Quicktrack for fleet tracking and have looked at using various programs for route optimisation. However, we are yet to see any route optimisation package that is as good as a good driver."

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