The Need for Real-Time Communications in European Logistics

I D C E X E C U T I V E B R I E F
T h e N e e d f or R e a l - T i m e C o m m u n i c a t i o n s i n E u r o p e a n L o g i s t i c s October 2007 Sponsored by Easynet
Ivano Ortis James Eibisch m Executive Overview oc.cdi With demand for freight transportation services continuing to grow .ww faster than GDP growth in Europe, the logistics industry has w structured itself around the provision of very specific value-added 00 services beyond just transportation. 17.78 Many logistics companies are vying to capture new opportunities in 98.0 the area of value-added services. To do this they are becoming 2.4 increasingly dynamic in their adoption and use of IT and networking 4+.l technologies. Leaders in this drive to improve operational efficiencies eT and enhance customer service are: .K.U . Enabling service innovation through the transformation of ,E inflexible operative chains into responsive service networks A4 4W . Integrating IT capabilities to enable automated workflows ,no encompassing accurate, real-time performance management dnoL , . Implementing real-time information synchronisation across all dao process participants R hgiH Real-time, online capabilities are a must, from inbound supply kci through to multichannel deliveries and support. Therefore, the key to wsi this innovation is the provision of shared infrastructure enabled by a hC common network backbone delivering multiple mobile edge-points. 983 ,AEME CDI
EB09P Situation Overview
Adoption of Networking Technologies The proportion of companies in the logistics sector that use each type of network service is very close to the average seen across other sectors. Figure 1 shows that IP VPNs are the most popular choice of networking technology in the sector, whether managed in-house and run over the public Internet ("DIY Internet VPN") or a managed solution from a service provider ("managed IP VPN").

F i g u r e 1
Types of Network Used by Logistics Companies Q. Which of the following types of private wide area network does your organisation currently use?
70% 62%60% 49%50% 42%40%
30% 26% 19%20% 15%
10%
0% Frame relay ATM X.25 DIY IP VPN Managed IP Private lineVPN Note: n = 113 Source: IDC, 2007

With an existing, relatively high use of IP VPN, the logistics sector is well placed to leverage network-based changes to its ICT environments through adding services on top of the existing network capability.
Key Business Drivers to Advanced Networking Services Operational excellence is the key to competitive advantage in the logistics industry. Specifically, that means efficient execution resulting in high levels of freight delivery performance, reliability and flexibility (for example, to accommodate last-minute requests, changes to orders and tailored value-added services).
2 ©2007 IDC To achieve this operational excellence the industry must significantly improve its processes and workflows while minimising the associated cost structure. All this must be accomplished without compromising the fundamental sector objectives of optimising asset use rates, effective stock management, reliable supply performance and fast order leadtimes.
As a result, as IDC found in a survey of 99 logistics companies in October 2006, logistics ICT executives are focusing their efforts on the following key short-term priorities:
. Top priority - Supply chain and logistics management, IT organisation responsiveness and product innovation.
. Medium priority - Sales effectiveness, managing regulatory compliance, customer service improvements, mobile workforce productivity enhancements and developing new business models.
The primary driver behind all of this proposed activity is quite simply to improve a logistics company's competitive positioning through the provision of high-quality services while retaining corporate margins. These improved services are typically being provided through advanced distribution efficiencies and the development of value-added services beyond warehousing, forwarding and freight. A modern, always-on, cost-effective and flexible network architecture is imperative in order to support these changes.
This competitiveness, and associated service provision, must be achieved while maintaining compliance with European directives. In particular, the indus... [download for more]