Telematics Is Not The Answer to Supply Chain Visibility

Rob Stevens
Rob Stevens

We recently wrote a blog post describing some of the major technologies used to track inventory in transit. Eagle-eyed readers may have noted we focused on how companies track the inventory and not the vehicle - so today we are going to discuss the vehicle-tracking market and how it affects supply chain managers.

The Birth and Growth of Telematics

The technology for tracking trucks is commonly referred to as “telematics” and it’s a big business. Since the first mainstream cellular-based system was offered by Qualcomm as part of it’s Omnitracs solution in 1987, telematics has grown rapidly thoughout the trucking industry. Industry analyst MarketsandMarkets estimates that the global telematics and “tracking and monitoring industries (which they track separately) will together grow from $228 million in 2015 to almost $1.5 billion in 2020. Furthermore, in 2015 industry leader Fleetmatics was purchased by Verizon for $2.4 billion.

The “Connected Fleet” Is More And More Useful

Telematics has grown so rapidly presumably because it’s so darn useful for carriers. And indeed, telematics systems provided a number of benefits to fleet operators, including:
  • Reduced fuel consumption due to less idling and more efficient routing
  • Reduced downtime from improved maintenance scheduling
  • Reduced insurance premiums because the carrier can demonstrate safer driving behavior
More recently, some telematics systems have incorporated electronic logging devices (ELDs) that replace the paper logs where drivers recorded their driving hours. An upcoming regulation mandating ELDs for most truck fleets will likely accelerate this adoption.

But Who Is It Useful For?

Note that the benefits listed accrue mainly to the fleet operator. The question is, how do shippers benefit?

Obviously safer and more efficient fleets are in the interest of the shipper. But what most shippers really want to know is, "Where is my stuff?" and in some cases, "Is it okay?". And this is where telematics generally can’t help.

While the telematics system can tell the carrier where the truck is, what it generally can’t do is tell the shipper where the shipment is. This is because you need to know three things that are generally stored in different systems that don’t necessarily talk to each other:

  1. Which shipment belongs to me? (not telematics)
  2. Which truck is that shipment on right now? (not telematics)
  3. Where is that truck? (telematics)
Making this situation worse is the fragmented nature of the trucking industry - with more than 1.2 million trucking companies in the US alone, its likely that most shippers work with many different companies with many different systems, making it even harder to get the data they need.

What’s A Shipper To Do?

Track your stuff. Seriously.

In-transit tracking is now cheap and easy enough to make it economically viable for many shippers to put trackers on their goods that operate independently of any particular fleet operator. With data coming directly from the shipment itself, it’s easy for the shipper to know where the goods are, what condition they are in, and when they will be delivered. Even as telematics continues to grow among fleet operators, many observers expect an even more rapid growth of shipment tracking.

Maybe now that the fleet operators know where their stuff is, it's time for shippers to figure it out, too.

Topics: Supply Chain Trackers



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