03 September 2019

Case Study – Michelin

Blog Post
Case Study – Michelin

The pursuit of best in class customer service  

 

Customer satisfaction is a key performance indicator for Michelin when it comes to evaluating its intercontinental sea freight flows. In order to guarantee a high standard of service, the French tyre manufacturer wanted to ensure it had accurate, real-time information on the whereabouts of its stock at any given time and could inform customers immediately if there was going to be a delay to their shipment. Majority of goods in transit are supported financially by Michelin, so prompt delivery of shipments was also key to ensuring a healthy cash flow for the business.

 

Whilst being able to provide definitive location data to its customers was important for their general peace of mind, the industries that Michelin routinely serves are also extremely sensitive to time fluctuations that might affect their goods in transit. An international shipment is potentially subject to over 200 interactions and a missed container (when a container misses its loading slot on a ship and has to wait for space on the next available vessel) can lead to a week’s delay in goods reaching their final destination. With significant financial ramifications for Michelin’s customers if the journey is not completed within a specific time period, it was crucial that Michelin monitor and manage any delays promptly, especially as the administrative policies of some vessels often result in late communications if delays have occurred.

 

Keen to innovate, Michelin was looking for an affordable, sustainable tracking solution for its critical intercontinental flows. It wanted continuous visibility that would allow its operations staff to communicate effectively with customers on the whereabouts of goods in transit, so that they were able to give accurate estimations of arrival times, especially when it came to urgent deliveries. A late shipment to a car manufacturer, for example, could mean an expensive hold up in the production line, while the cost of stopping a mining truck because a tyre needs replacing could run into several million euros.

 

Although tracking solutions like the one Michelin was looking for did already exist – they used GSM 3G or 4G technology – these came at a high price, working out at $100 per container tracked. With Michelin transporting more than 150,000 containers a year this just wasn’t viable, so they needed to find a more cost-effective solution to meet their needs. Other challenges with existing tracking solutions included a short battery life and difficulty transmitting from the inside of a container.

 

Cost-effective trackers and a global network

Michelin worked with Argon Consulting, a dedicated leading consulting firm that specialises in operations transformation, to research existing trackers and technology and work out how they could develop and optimise them. Quality and location accuracy were key drivers for Michelin, which influenced its decision when it came to the technology they chose to work with.

 

Global IoT service provider Sigfox was the only international, low power network provider that was able to supply Michelin with trackers as well as – through its 0G network – high quality connectivity in each of the countries where it operates.

 

The three companies also worked together to design an algorithm that would enable the trackers to detect physical movement, so the solution was able to report specific actions, such as the loading or unloading of shipments, as well as monitoring conditions such as temperature, humidity and shocks.

 

Michelin’s trials of the tracking solution led to gains of up to a 10% reduction of the on-sea inventory and a 40% increase in Estimated Time of Arrival (ETA) accuracy, thanks to the real time management of inventory. It also divided inventory ruptures caused by exceptional events like weather critical conditions by four. 

 

With geolocation services being heavily dependent on network strength, Sigfox’s connectivity, even in remote locations, enabled Michelin and its customers to benefit from the reliable functionality of the tracking device and the real-time data transmitted back to them. Both were able to login through a secure web service to view the status of shipments and get notifications of specific events.

 

After 1.5 years of working collaboratively on this project, Sigfox, Argon Consulting and Michelin have now come together to launch SafeCube, a new company which will market this solution, open it up to a wide variety of businesses and enable it to scale.

 

Key Benefits

  • Cost-effective: With basic trackers that only send data at specific moments in time, small batteries and low energy consumption, the cost per shipment tracked is significantly lower than that of competitors. The time and cost savings also have a considerable, tangible impact on customer satisfaction.
  • Diverse monitoring: The trackers do not just monitor the movement of freight but also the conditions goods are travelling in – including light, temperature and humidity – so that unexpected container opening or any conditions that could negatively impact shipments can be dealt with promptly. 
  • Scalable: Thanks to the creation of SafeCube, this solution can be adapted for a range of businesses and scale up quickly to meet varying requirements.
  • Reusable devices: The tracking devices are not single use but have been specifically designed to be reused for at least four years, thereby reducing their impact on the environment.

 

Optimising the intercontinental supply chain

In developing this affordable, consumer-centric asset tracking solution, Michelin and its partners have helped to bring the Supply Chain & Logistics industry into the digital era. With over 100 million container shipments each year and a global turnover of 5 billion euros, digital transformation in the supply chain is vital to ensure this industry keeps up with the businesses it serves. Michelin, together with Argon and Sigfox will continue to increase the types of data that can be transmitted to customers, to ensure even greater visibility and therefore efficiency going forward, leading to improved customer satisfaction.

 

The success of the trial has also now created the ability to offer this solution, through SafeCube, to a wide range of businesses, as well as port and border authorities, customs and maritime institutions, meaning a more efficient and effective supply chain for everyone.  

 

Facts and Figures

20-40 euros: the cost of the tracking solution per shipment

1 year: the time it took to develop and trial the tracking solution

4 years: the average life span of a tracker

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