The impact of new technology on vehicle logistics

Trisha Chowdhury speaks to Hervé Moulin of the Renault Nissan Alliance about the impact of new technology on automotive logistics and supply chain. 

Hervé Moulin is Alliance Project Leader – Telematics in Finished Vehicle Logistics and Transport Means Specialist in Alliance Logistics Europe - Vehicle Operations and is the perfect person to talk to about the effects of technology on the supply chain. Not only is he an expert in outbound logistics, with his main responsibilities being logistics quality and physical organisation of vehicle distribution, he is also the Alliance project leader for the use of connected vehicles in the logistics flow both for Renault, Nissan and Mitsubishi. 

Best practise and Project Caesar

We start our conversation with Moulin’s ideas of industry best practices from his experience of being at the forefront of the automotive logistics and supply chain segment for many years. And he does not disappoint, going on to give a bird’s eye view of the segment by saying: “There are many things that would summarise best practices, or would just simplify our operation in outbound logistics. One of the most important of these would be to elaborate transport forecasts. This is the objective of Project Caesar, an initiative by the ECG in which we participate. This project is based on the best practices of car makers and transport companies and we’re expecting a lot from it.  

“Another area to look at would be close-range identification of vehicles along the transport flow. Most carmakers are currently using barcodes to identify vehicles step-by-step on the flow, but this is a very old piece of technology. In fact, I quite clearly remember that it was the subject of my traineeship when I was in the third year of business school 32 years ago. The shocking part is that I’m still using what I learnt back then even after all this time, and nearly everything else has changed.”  

Connecting partners digitalising documentation

But it isn’t just a case of the problem being identified, Moulin and his partners at the ECG are working very hard to remedy the situation. “We are assisting and implementing connected technologies now on some flows,” he confirms. “We work with the ECG and VDA to determine which technology could be recommended to OEMs as the new general standard to equip all vehicles in the future. Moreover, there is something particular to Europe – the E CMR (A CMR note is the standard contract of carriage for goods being transported internationally by road) The Electronic CMR signifies the digitalisation of transport documents and this, we think, should become general standard in Europe. It is a best practice promoted by the European Commission that extends all across Europe and is an objective we share with our transport companies. And, of course, with digital transport documents comes digital damage reports, which will come in the same batch as the E CMR. In fact, some of our suppliers in Spain, for example, have already started to use this type of damage reports on some flows.”

Mergers, acquisitions and opportunities

And with that, the conversation turns to the crux of the matter - evolution of the automotive industry and the role that technology plays. This was the part that Moulin was most excited to talk about in depth, and he starts by giving an overview of where the automotive industry stands today.

He says: “In the recent years, and I’m only talking about the most recent years, our industry has encountered very hard times, particularly during the 2008 crisis, and our principal suppliers were also affected. As a result of this, over the years we have seen many mergers and acquisitions of prominent companies. Just like the OEMs, Logistics Service Providers (LSPs) had to become stronger and more efficient to overcome this difficult period. But now things have changed; the perspective has definitely become much brighter and there are lots of opportunities waiting to be seized, especially when it comes to harnessing technology to develop our businesses. “What’s made things better is that there exists this urge and general willingness not just to resume on the path of progress, but instead to accelerate it and gain more momentum. That's how I see things regarding the state of the business. And in my experience, mark my words, never has the finished vehicle logistics segment evolved as quickly and as deeply as it is going to evolve in the next few years. We’re coming to the time when everything is going to move quite fast. 

“The impact of technology has two different sides to it, and it is important for us to understand the steady origin of changes that are now going to come. On the one hand, the big LSPs are evolving from a technological standpoint. Compound and transport management softwares are getting more and more efficient and can now handle large volumes of data that help optimise operations. Digitalisation is also progressing fast for day-to-day processes. While this provides more data to help in the management of transport operations, now we will see even more data coming in at real time. It is a very significant evolution. 

“On the other hand, for the first time in decades, our vehicles are getting more and more connected than before. While autonomous technology will certainly be a benefit for the final customer, it could also provide a benefit to our own operations. Simply put, we are going to extend these capabilities to the logistics domain. If this technology is applied to the vehicles we distribute, it could enable them to interact with our logistics providers and, in a way, collaborate to their own distribution. 

“And so, as you can see, we have evolution on both sides for the first time in many years. By combining both these evolutions, we do not simply add one progress to another, we will essentially be multiplying our level of progress. But first, we must be prepared not to copy and paste our old processes in an environment of new technologies, but rather to reinvent the way we work based on the potential vehicle technologies will offer. Technology isn’t the only thing making sure that we evolve to trigger massive progress. It is a combination of the technology as well as the way we work together to implement it, between car makers and the LSPs, inside our own companies and with our staff. This is a personal estimation, and I'm not speaking as an authority on the subject, but as far as I can see, we should already see a major shift in the way we operate in the next five years.” 

Autonomous vehicles and their implications for logistics

The automotive industry has been very excited about the onset of autonomous technology, and visionary logisticians are already seeing how much of a boon this technology will be for the automotive supply chain and logistics segment. Moulin touched upon one interesting area, where vehicles become, for a considerable part, participants in their own distribution. When asked to elaborate on this interesting notion, he says: “Changes have already started and cars are now able to do things they couldn't do before. Connected vehicles have already become a reality and the obvious next step is autonomous technology. This will really act as a trigger of major evolution, especially so when it comes to yard management. In fact, following some discussions with the technology companies that partner with us at the Renault Nissan Alliance, we know for a fact that things such as vehicles moving on the compound, following one another, getting parked or getting out of their parking spot autonomously are quite close to seeing the light of day. 

“This means that we will be making significant progress with one of the automotive industry’s most persistent problems - damage to cars. In fact, it is already the case because many vehicles have sensors all around them, especially so when they are fitted with self-parking capabilities. This definitely increases when they get autonomous capabilities. One particularity of autonomous cars is the number of cameras and sensors that would be necessary to handle them in perfect safety. As a result, their logistics operations will also be impacted and they will avoid any obstacles when they are being handled.” 

Big data drives global digitalisation

Another area of interest that Moulin touched upon previously was data. Branded as the “new oil”, the rise of the science of handling and interpreting data meant the revolutionisation of entire industries, albeit in a good way. But just how susceptible was the automotive industry to a technology-led revolution that led to more precision, accuracy and an overall satisfaction of all parties involved? According to Moulin, very. 

He explains “There are several areas where technology will bring progress, but the key lies in combining these areas. Firstly, vehicles themselves are getting smarter and more connected and they are able to send their positions as well as other technical data more accurately than ever before. This, will be able to set rules for their movements using geo-location. Secondly, vehicles will get autonomous, meaning they will be able to move and park themselves in compounds. In fact, the entire industry is already conducting experiments and closely monitoring their results. 

“We have to understand that transport means also are constantly evolving. They will be more cost-efficient and environmentally friendly. Staying connected to vehicles alone is not enough anymore, we will have to look at ways to stay connected with their transport means. For instance, we would also have to be connected to the real-time location, data transmission of deliveries, estimated time of arrivals, additional transport documents, etc. This is why we should try digitalisation of transport means themselves, something that we’ve already started working on; we’ve started following vehicles and trucks in cooperation with LSPs in Colombia and India. 

“Now, we are following our vehicles uninterruptedly from the yards to the final destination in these locations. Moreover, the truck loading can also be optimised with dedicated software. This will help logistics provider’s staff in saving time, loading more vehicles when possible and avoiding potential damage. We will have to embrace these changes and evolve accordingly. Through this digitalisation of vital processes, we can get a mass of new data from the vehicles and a bird’s eye view of traffic in real time. With this process, we facilitate more accurate decision-making in the field and make our operations more proactive and reactive. This will actually solve a lot of problems before they get worse, and is an important way of accelerating progress, because we lose much time in catching up on mistakes and problems. If we can anticipate them in advance, we’ll be able to solve them more quickly and in much better ways than are done now. We have already digitalised the management of several compounds, examples of which are Renault’s operations in Moscow, Nissan’s operations in Canton, US and Renault's operations in Curitiba in Brazil. In some places we are using RFID on a large scale, while in others we are using more smartphones and GPS. To summarise, the real opportunity lies in connecting man, products and processes together.” 

Integrating and connecting intelligence 

From what it seems, the automotive industry, unlike many others, has realised that there isn’t just one piece of technology that does it all, that propels its progress with unthinkable speed. Rather, the ideal solution is to combine different technologies of varying capacities and integrate them into a process that is easily implemented, feasible, time-efficient and betters the working conditions for the people involved. Moulin agrees with this, saying: “Yes, I'm very convinced that there's not one miracle technology that can do everything. The secret lies in combining the different technologies within the whole transport chain. One piece of technology may be extremely adaptive to a certain issue, while another might be more adaptive to the same thing under different circumstances. You will need to connect everything together - the demand; the product; the processes to simplify operations and make the system more transparent all along. “This way, the LSPs and the OEMs can both be more proactive, reactive and well coordinated, and not only will we have better service quality for the final customers as well as our dealers, but we will also have better working conditions for our team. We have already seen that it's much more comfortable to be in an arrangement where everything is under control and you know exactly what's happening, than having to catch up with problems and having to manage the situation on the go all the time.” 

The challenges of collaboration

Today, OEMs have massive operations across the world, and to ensure that every wheel in the cog is running as it should, it is only obvious that they would increase levels of collaboration with their service providers at each and every step. One would presume that with technology playing a bigger role in the operations, challenges will emerge as many within the industry rely on legacy systems. But given what Moulin stated earlier, it is clear that the Renault-Nissan Alliance has worked its way through this challenge, and its successful operations are a result of a strong, coordinated effort between the Alliance and its suppliers. Moulin agrees: “Yes, most definitely. It's simpler, of course, when we have our internal operations, but we are witnessing more and more cooperation from our logistics service providers and that's exactly what we are looking for. Increased cooperation from our suppliers will allow us to take the full benefit of this combination of technologies and efforts. When you want transparency along the supply chain, everyone must play the same part.” 

Service providers are just one area when we speak of increased cooperation. The other, quite obviously, is with other OEMs, something that the industry has been talking about for years, but hasn’t really acted on to its fullest extent, as Moulin says: “We are all willing to cooperate where it is necessary with LSPs and other OEMs. To give a precise example, we are working on finding a standard norm for information exchange issued from connected vehicles. For instance, we want vehicles to be able to alert transport suppliers when they are low on battery or have a fuel shortage during the transport flow. While we want to get an alert, it's very important for the logistics service providers that we all have the same alert message irrespective of the car manufacturer. 

“What we are working on now is that the message we send to the logistics service provider would be the same, whether it is a Renault, Nissan, Daimler or an FCA vehicle. Renault- Nissan may not follow the same rules to trigger the fuel-alert message as BMW, because the way we trigger the message links to our own technology, which can and will be different. But, in the end, the alert message to the logistics service provider will be the same. It is an example of how we can cooperate in some ways despite retaining our individualities. More and more, we are working together on common issues and business rules, especially when it comes to technology despite the hardware and the technology remaining the property of every individual OEM. We are very engaged in this process, because we are also promoters of this type of cooperation with the ECG. It is something we already have a part in and we can see its positive effects more and more in the business.” 

Cooperation within the Alliance and beyond

According to Moulin, the last couple of years have been very favourable for this kind of cooperation, whether it is between OEMs and other OEMs or between OEMs and their suppliers. And what better proof of cooperation than the Renault-Nissan Alliance itself. “Although this might be a new concept for many people in the industry, we have been used to it for years in the Renault-Nissan Alliance, and now we are integrating Mitsubishi also as a part of this Alliance. Although we are successful as individual companies, it is the Alliance as a whole which has achieved the best performance. We have now achieved the first rank in the industry with 10.6 million vehicles sold in 2017 alone. We now sell one vehicle out of nine in the world. From what I've seen in my career, we have done much more together than we would have individually. This is also true for the companies that we have integrated along the way such as Dacia and Lada. Together we really are stronger, and that’s not just me saying it. It is a deep feeling in all our companies that we are much stronger together by having synergies and standards within the Alliance as a whole. 

A sustainable Alliance

Frédéric Robert, Supply Chain Environmental Manager, Groupe Renault commented on the impact of logistics on the environment and the need for sustainability in the supply chain.

“The Renault-Nissan Alliance is strongly aware of these sustainable stakes. Alliance Supply Chain commits to cut CO2 emissions (kg per car produced) by 1% each year. Renault has already reduced by 14% CO2 emissions for 2010-2016. One lever was to improve the filling ratio of trucks and containers. As a result, in 2017, 1980 containers were saved and 6,600 trucks put off the road, saving 14,700 tons of CO2. We also embedded our logistics suppliers in our sustainable activities. They are regularly assessed, especially for each tender, on their environmental and fuel performance. We identify opportunities such as ecodriving, fleet modernisation and speed limitation and agreed with them fuel reduction objectives. Results are very encouraging, fuel is reduced by around 3% per year. Innovative solutions are also a key driver. Renault is testing an alternative fuel, natural gas, with some carriers and truck makers in order to reduce CO2, Nox and particulate emissions. Another example comes from packaging - in Europe main regular flows are managed with returnable packaging in order to reduce waste and recycling plastic is increasingly used,” he says.

“Also, OEMs and LSPs have gone through the same process of working closely with partners in the same group. As I said before, there has been much company consolidation in the last years. Many companies have lived through the cooperation within the same group and adoption of common standards and, so, logically the next step is to cooperate with companies of the same sector to progress further in the same direction. I think it is more and more understood by everybody and more and more widespread than ever before, which is why Alliance Logistics Europe has chosen to develop its cooperation with the Association of European Vehicle Logistics (ECG). We’ve found good-willing and very proactive partners in Wolfgang Göbel, ECG President; the whole ECG board; and the Executive Director of ECG, Mike Sturgeon. Like us, they are very much in favour of improved cooperation with OEMs.” 

Working with the ECG

Moulin goes on to explain the relationship with the ECG: “The ECG facilitates predictable commonwealth groups between OEMs and their LSPs in different areas such as digitalisation; transport capacities, quality and standards and European normalisation of loaded lengths of vehicle transporters. Personally, I'm co-chairing the digitalisation working groups with Michael Bunning from BLG Logistics and it has met with much success. The group now comprises thirteen carmakers, numerous transport companies, as well as partners of the finished vehicle transport sectors such as software providers and authorities like ODETTE and CEN, the normalisation authority of the European Commission. We’re making quite substantial progress and a great example of this is our cooperation with the German carmakers from the VDA, who had decided to create a working group on the same subject. We rapidly made contacts with them and we now have four common working groups on different subjects on digitalisation, particularly the use of connected vehicles in the logistics flow, where we have two working groups out of four on this subject alone. Our objective is to find common standards by the end of 2018, because the connected vehicles are coming fast onto the markets, and little by little they will enable us to change our ways of distributing vehicles all along the transport flow. So, yes, we are doing significant work and many people are surprised to see that this is happening so widely and so fast, but with our partners from ECG, we have met with very good willingness from most carmakers to collaborate on areas such as this. They were pretty interested and reacted favourably when we suggested that we establish the standards where the whole industry needed them. 

“On the environment front, the supply chain world is facing increasing environmental challenges and constraints. Speaking of transport specifically, cities and now states are banishing diesel trucks, truck tolls are emerging and carbon tax is increasing fuel prices. Raw materials depletion is pushing industry to consider circular economy opportunities.” 

Customer-driven logistics 

Every industry has its own challenges and the automotive industry is no different. With all his experience as a logistician, it was an obvious question to Moulin about what challenges lie in the path of the automotive industry today, especially when it comes to the automotive supply chain and logistics sector. Moulin thinks for a while before answering: “Challenge is the right word for it. I think the sector will face several major challenges in the next few years. We have already touched upon technological issues. Not just transport freight, but also the transport fleet and the staff will have to adapt to the new ways of distributing vehicles. Apart from simple logistic operations, customers are now changing their behaviour - they are more reliant on the internet and prefer car sharing than going somewhere themselves. Customers now prefer staying in large cities, where they must, understandably, share their transport capabilities. Also, local authorities don't want traditional freight deliveries anymore. Cities are getting increasingly congested and trucks are not welcome in the cities. As an OEM, we are preparing for this, for change in the way we distribute vehicles. Distributing vehicles doesn’t just mean selling them differently, but also transporting differently, something that will have a massive impact on our logistics service providers and we must prepare for that.” 

Future challenges

That said, Moulin is of the opinion that the future of the automotive industry looks very exciting, especially because of technology coming into play. “I’m pretty excited about the next step - seeing technology being applied in the areas that will definitely benefit from it, but the question is how much of it will be readily available? It's not as if we were waiting for something we don't know. We can already see very interesting technologies appearing. They simply need to be adapted to our particular needs and made available to be mass produced, to become affordable. But we can see some coming already,” says Moulin. 

“I'm particularly thinking of yard management with autonomous vehicles that I touched upon earlier. Also high accuracy GPS chips - this will also be a major progress since it will allow vehicle location at parking space level. I can see them coming because they will equip some smartphones already in 2018. I’m very eager to see them being implemented on a large scale in the vehicle transport business. But before even thinking of that, we already have at our disposal a wide range of technology that is still to be introduced into our finished vehicle logistics functions. Quite often, we meet tech companies who have developed solutions for other sectors, but have never considered using these solutions in vehicle logistics.” 

Collaboration and commonisation

As our conversation draws to a close, Moulin concludes by sharing what he hopes for the industry - increased collaboration among all the players in the industry. “We discussed essential cooperation between car makers and logistics providers - trade standards that facilitate the technical choices. It is inevitable for us to progress in the same direction. Individual solutions, even if they are good, require much effort for their implementation and they are limited in their capabilities. Of course when you want to seduce the customers, being different from your competitors and offering unique solutions is an advantage. But when you want to be a part of the global supply chain, it's a major disadvantage. If we commonise our standards and run a smoother and better supply chain, in the end it will be for the benefit of the customer, because we will be delivering the vehicles more reliably and in a shorter time. It is in the interest of everybody to cooperate. Let our designers and engineers compete on the best cars to sell to the customer, but we in the logistics sector must cooperate to deliver this car at the right time and in good condition.” 

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