According to Michael Blach, member of the board at German logistics provider BLG Logistics, carmakers are a demanding lot.

“We are faced with customers who want a continual lowering of prices,” said Blach, speaking for BLG and other service providers attending this week’s Automotive Logistics Europe conference. “They would like to have very high quality and low cost. They would like to have high flexibility in terms of service. And they would like us, as service providers, to continue to innovate either to improve processes or take cost out of the system”

Basically what they want is the product on offer to be either cheaper or better, or both, according to Blach.

These demands come at a time of modest growth and relatively low car sales, though the automotive sector, at least in northern Europe, is stable in its recovery from the economic crisis. Nevertheless, there are pressures on margins for service providers like BLG and Blach said the company was faced with an expectation on the part of the carmakers that it would accept worsening contractual conditions.

This assumption also comes in the context of uncertain volume developments and high fluctuation. Despite the efforts BLG has made, Blach said that it continued to see that forecasting quality was still relatively poor and the sharing of data and quality standards were still lacking.

One more added problem was the piecemeal tendering by OEMs of business to different companies at different times, which made it hard to come up with systemic solutions to the demands for better and cheaper services.

“For many parts of the business there are short term contracts and contracts with very limited guarantees, if any guarantee at all in terms of the volume you actually see,” said Blach. “The tendering is very often based on ‘as is’ – the way we did it yesterday is the way we will do it today; there is less focus on innovation and new solutions.

This is why any IT solution has to be flexible and, despite insufficient margins, it is in technology that BLG sees a way to deal with the demands of the carmaker and make its systems more effective.

“We need to know how to derive solutions from the Big Data available and we must learn to manage, analyse and benefit from that information,” said Blach.

So what exactly has BLG been doing? Blach outlined that over the last year it had been implementing an operating IT system that basically incorporates most of its service segments. This includes integrating the trucking fleet, the inland and ocean terminals and the technical centres in one system that allows better visibility for planning and improving processes. There are further plans to integrate rail into the system.

BLG has also implemented telematics into a fleet of 400 trucks in its German road business.

Blach added that it was in final preparations for introducing real time automatic routing of vehicles at its main hub in Bremerhaven, which would manage the flow of 90,000 vehicles.

“There are many opportunities and many challenges and it is for both the customers that we are serving, but certainly also for ourselves, to poke at the status quo to try to introduce changes,” concluded Blach.  

Further news and coverage from the Automotive Logistics Europe conference will be posted online. Videos of the main sessions are also available here.